The storied “David-and-Goliath” battle between MCI and AT&T literally changed the way we communicate. In the early 1970s, MCI had one microwave system in the Midwest while AT&T was the nation’s “Ma Bell,” the sole provider of telephone service across the country. At issue was a 1971 order by the Federal Communications Commission that opened the way for companies like MCI to launch competitive long-distance service with the Bell System nationwide. AT&T responded by directing its local Bell companies around the country to deny MCI access to local switching systems needed to reach its customers. After nearly going out of business In 1974, MCI sued and complained to the U.S. Department of Justice about these anticompetitive tactics. In turn, the Justice Department brought suit to break up AT&T.
On this day in 1980, a federal court ordered AT&T to pay MCI $1.8 billion after a jury found that Bell had violated federal antitrust laws in denying service to MCI. “The award was stunning to AT&T both monetarily and psychologically,” the New York Times reported, “because the MCI victory could generate other actions against the communications giant.” Because of the victory, it became inevitable that the government would proceed to trial in its divestiture case.
The award would later be reduced after appeal, but the impact of the case could not be overstated. On January 8, 1982, AT&T and the U.S. Department of Justice announced that AT&T would split up its $136.8 billion domain. AT&T and DOJ representatives said the move -- with AT&T relinquishing 22 operating regional subsidiaries -- would lead to increased competition for telephone service and equipment and eventually lower long-distance rates. The move revolutionized the telephone and computer industries.
By the early 1980s, MCI, based in Washington, DC, invited Jenner & Block to establish a presence in the Capital. And in 1982, when the firm opened its Washington, DC office, MCI was its anchor client.