Until the antitrust breakup of AT&T in 1984, choosing a long distance carrier was very simple. Virtually everyone used AT&T for both local and long distance calls.

The 1984 breakup split AT&T into a long distance company, which retained the AT&T name, plus seven "baby bells." While AT&T would handle calls that went between area codes, the seven baby bells handled calls within an area code.

More notably, the breakup gave other long distance carriers the right to compete with AT&T to handle long distance calls. As a result, hundreds of companies emerged to compete for the new long distance market.

MCI and Sprint became among the best known, but many others attained some level of success.

Although opened to competition, the 1980s long distance market remained heavily tilted in favor of AT&T. AT&T had a high-quality network in place to carry long distance calls, while most other firms relied on patched-together networks that provided lower quality sound and much less reliability.

By the late 1980s, however, the situation began to change. Sprint, MCI and a few other firms installed fiber-optic networks that were the equal of AT&T in terms of quality and reliability. In addition, legislative changes made it possible for anyone to use alternative carriers without requiring users to first dial a long string of access numbers. The result was a rapidly declining market share for AT&T.

In the past few years, the long distance market has continued to become more competitive. Excess network capacity has allowed most smaller carriers to lease high quality long distance lines at low rates. This has placed downward pressure on rates offered by all the carriers, particularly for smaller businesses.

The relatively recent passage of the Telecommunications Act of 1996 should translate to even more competition for your long distance service business. Eventually, all the baby bells will be allowed to offer long distance service, adding several large competitors to the competitive mix.

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