Government Sanctioned Monopoly

In 1934 the government set up AT & T as a regulated monopoly under the jurisdiction of the Federal Communications Commission, the Communications Act of 1934.

As a result, in 1940 the Bell System effectively owned most telephone service in the United States, a local and long distance to the phones themselves. This allowed Bell to prohibit their customers from connecting phones not manufactured or sold by Bell to the system without having to pay. For example, if a customer wants a type of phone that is not rented by the local Bell monopoly, he or she had to buy the phone at cost, give it to the phone company and pay fees "re-wiring" and a monthly rental fee for use.

In 1949 the U.S. Department of Justice has alleged in a lawsuit that competition AT & T Bell companies and operating system used their near-monopoly in telecommunications to attempt to establish an unfair advantage in related technologies, especially the emerging computer industry. The 1956 result was a consent decree limiting AT & T for 85% of United States' national telephone network and certain public and preventing the system from Bell to extend its reach in emerging computer industry and continue to hold interests in Canada and the Caribbean. The Canadian operations included the Bell System Operating Company Bell Canada Regional and Northern Electric manufacturing subsidiary of Bell System Western Electric equipment manufacturer. Northern Electric Company and Bell Canada were processed in 1956 as separate companies outside the bell suitable system. Corporations operating system of Caribbean regional Bell were sold to ITT Corporation, known at the time as International Telephone & Telegraph Co.

The Bell System had also several regional companies operating in the Caribbean, and 54% of NEC and a post-World War II reconstruction relationship with NTT before the 1956 borders were established. Prior to 1956, the scope of the Bell System was really huge. Even during the period from 1956 to 1984, carried the dominant Bell System in all forms of communications was pervasive in the United States and influential in telecommunication standardization in the industrialized world.

In 1984 Bell System divestiture ended the affiliation branded as the Bell System. This resulted in another antitrust lawsuit filed by the U.S. Department of Justice in 1974 alleging illegal practices by the Bell System companies to stifle competition in the telecommunications sector. The complaint was settled on 8 January 1982 replacing the former restrictions that AT & T and the Department of Justice had agreed in 1956.