The Bell System was allowed to exist as a monopoly because it was assumed telephone service would produce a natural monopoly. The US government stepped in to re

The Bell System was allowed to exist as a monopoly because it was assumed telephone service would produce a natural monopoly. The US government stepped in to regulate it because of the lack of effective competition, and the result was a pretty cozy situation for AT&T for many years. Eventually the prevailing theories changed, and AT&T was forcibly broken up by an antitrust suit.