A number of other companies were also involved at the time in developing new telecommunications technologies and equipment. The work of companies like GTE Automatic Electric, TRW Vidar, and Northern Telecom, along with Bell’s own Western Electric, pushed telephony forward through advances in handset design and digital switching, for example.
Bell Labs also served as an important nucleus for the broader telecommunications research community: in the predivestiture era, university researchers and telecommunications research leaders from around the world commonly spent summers or sabbaticals at Bell Labs, where they could conduct exploratory research that could not have been undertaken elsewhere.
Despite its many successes, there were many criticisms of the predivestiture regulated monopoly (and this report is certainly not calling for a return to the Bell System structure). For instance, until government actions forced a change, the Bell System prohibited the attachment of third-party equipment on customer premises, which many viewed as stifling innovation. Monopoly status also meant that there were few pressures on the Bell System for rapid innovation in its services, and a number of innovative technologies developed by Bell Labs either were not adopted or were adopted very slowly.
The second stage of the breakup of the Bell System occurred at the end of 1995 when the existing ATT (which had acquired the computer services company NCR several years earlier) made the decision to divest both the computer operations part of the business (selling it back to NCR) and the equipment manufacturing part of the business (with the creation of Lucent Technologies) in order to compete more actively in the areas of wireless and cable
services. As part of this trivestiture a large percentage of the resources of Bell Labs (as well as the rights to use of the Bell Labs name) went to Lucent Technologies for research and development in support of the creation of new products. About one-fourth of the research component of Bell Labs (along with significant development resources) joined ATT and formed ATT Labs, with the goal of conducting research and development that would be most appropriate to a services company that was venturing into the areas of wireless and broadband communication services.
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