Kingsbury Commitment

The Kingsbury Commitment of 1913 was an out-of-court settlement of the government's antitrust challenge of AT&T's growing vertical monopoly over the phone industry. In return for the government's agreement not to pursue its case against AT&T as a monopolist, AT&T agreed to divest the controlling interest it had acquired in the Western Union telegraph company, and to allow non-competing independent telephone companies to interconnect with the AT&T long distance network.

The government had been increasingly worried that AT&T and the other Bell Companies were monopolizing the industry. Under Theodore N. Vail from 1907, AT&T had bought Bell-associated companies and organized them into new hierarchies. AT&T had also acquired many of the independents, and bought control of Western Union, giving it a monopolistic position in both telephone and telegraph communication. A key strategy was to refuse to connect its long distance network — technologically, by far the finest and most extensive in the land — with local independent carriers. Without the prospect of long distance services, the market position of many independents became untenable. Vail stated that there should be "one policy, one system [AT&T's] and universal service, no collection of separate companies could give the public the service that [the] Bell... system could give."

AT&T's strategies prompted complaints and attracted the attention of the Justice Department. Faced with a government investigation for antitrust violations, AT&T entered into negotiations.

In the Kingsbury Commitment, actually a letter from AT&T Vice President Nathan Kingsbury of December 19, AT&T agreed with the Attorney General to divest itself of Western Union, to provide long distance services to independent exchanges under certain conditions and to refrain from acquisitions if the Interstate Commerce Commission objected.

The Commitment did not settle all the differences between independents and Bell companies, but it did avert the federal takeover many had expected. AT&T was allowed to buy market-share, as long as it sold an equal number of subscribers to independents. Crucially, while the Kingsbury Commitment obliged it to connect its long distance service to independent local carriers, AT&T did not agree to interconnect its local services with other local providers. Nor did AT&T agree to any interconnection with independent long distance carriers.

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