[2] As early as 1949, the American government had sued the company for conspiring to restrict the manufacture of handsets and other landline telephone equipment via its control of patents, and discussions about breaking up the AT&T monopoly due to abuses of its market power began during this period.

[1] By the 1950s the FCC began to allow devices manufactured by other firms to be connected to the AT&T landline telephone network, starting with the Hush-A-Phone in 1957.

[5] These developments, along with an appreciation of new technologies and business models for telephone service that were becoming available, convinced American regulators that AT&T should no longer be tolerated as the natural monopoly in that marketplace.

[6] A plan to break up the company into smaller components was proposed by the United States Department of Justice starting in 1974, citing authority under the Sherman Antitrust Act to reduce the power of a monopoly firm.

[25] On the other hand, further technological and financial developments in the telecommunications industry, such as the convergence of networks and services, have made the lessons of the divestiture unclear, as the marketplace is again dominated by an oligopoly of large firms.

[26][27][28] The judicial process that enabled the AT&T divestiture is often cited as an instructive historical example in modern discussions about possibly breaking up the big tech firms that have gained market dominance in the 21st century.