For a good spell, however, AT&T freely admitted to employing monopolistic practices, reasoning that such tactics would enable it to provide the most efficient service. In place of competition, AT&T welcomed government regulation, "provided it is independent, intelligent, considerate, thorough and just."
The government largely bought into this logic, save for a 1956 consent decree that forced AT&T to limit its domain to the national phone system and government contracts.
AT&T sailed along, withering stray anti-trust suits and the introduction of modest competition. However, the development of new transmission technology, as well as the rapid advancement of a little thing called the computer, prompted major changes in the government's trust-friendly philosophy.
In 1974, the government brought an anti-trust suit against AT&T and, after a decade of legal wrangling, forced the phone behemoth to divest itself of companies that provided local service.
While the birth of the baby Bells hardly whittled AT&T into a mom-and-pop shop, the ruling still took a chunk out of their mammoth operations. The company's assets suddenly shrunk from $149.5 billion to $34 billion and the workforce was trimmed from 1.9 million to 373,000 employees.
Source: History.com
