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.
Former Bell System entities continued to evolve. Over time Lucent Technologies spun off the component manufacturing part of the company as Agere Labs and the enterprise business systems part of the company as Avaya Labs. Telcordia was acquired by SAIC and later purchased by two private equity firms. ATT spun off the wireless services part of the business
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