Q25 AT&T spent some $10 million ... [FREE SOLUTION]

Chapter 18: Q25 (page 442)

AT&T spent some $10 million dollars lobbying Congress to block entry of competitors into the telephone market in 1978. Why do you think it efforts failed?

Short Answer

Expert verified

AT&T' lobbying efforts failed because of : Mandated split of Company, Technical Innovations & Upgradations, Industry Transformation & deregulation (of entry).

Step by step solution

Lobbying Meaning

Lobbying is the effort to legally influence legislators, government officials, regulatory members - for own or organisational interest.

Corporate Giants engage in Lobbying to protect interests of their organisation.

Failure Reasons Explanation

AT&T also spent enormous money & efforts in Lobbying, which made it gain monopolistic powers in telephone industry.

However, these benefits declined & it failed because :

a. The comprehensive telephone equipments & services company was split in 1980s by government litigation, into many local phone companies, a long distance company & a phone equipment company

This diluted the power of company. But it also broke the monotony and encouraged diversification, in terms of variety of payment plans & telephone equipments design & colours.

b. Afterwards, there were innovations in technology for providing telephone services from wires to microwave & satellite transmissions, specially with growth in cellular phone systems.

They were unable to catch upto these technically upgrading innovations, which made them loose monopoly power.

c. Due to industrial transformations, a wave of government deregulation also started, which liberated entry of firms & weakened their position.