regulation cause technological progress, or does technological progress force deregulation? This is a philosophical question with no simple answer. Technology can be applied to solve, or work around, regulatory problems. Effective regulation needs to take into account technology, in large part to make it unnecessary for technology to need to work around regulatory problems. Monopoly, however, removes most of the technological pressure from the equa- tion. Absent competition, the monopolist and its regulators can choose to roll out technology at a leisurely pace. When demonopolization [3] occurs, a burst of technological progress may soon follow, as the market catches up with the possi- bilities that had previously been suppressed. Such a burst of progress swept through the PBX marketplace in the 1970s. Before Carterfone, AT&T saw fit to provide its large business subscribers with switching technology that could best be described as "time-tested" and "well- proven." Right through the 1960s, a common large PBX system was the Type 701, a model little changed from the designs of the 1920s, based on Strowger's step-by-step technology. This was often accompanied by a cord switchboard. A more advanced PBX, widely deployed in the 1960s and into the mid-1970s, was the Type 770. This used crossbar technology, which AT&T had introduced to central office switching in the 1930s. Its common control logic, built out of relays, supported touch-tone dialing and enabled users to transfer their own calls; its switchboard did not use cords. During the first few post-Carterfone years, the Bell System's "electronic-type" [4] PBX systems, such as the Type 801, used wired-logic control circuits controlling electromechanical relay switching matrices. Computers were still too costly, to be sure, for all but the largest customer-premise equipment (CPE). But it was not Bell who introduced them to market. Carterfone opened the doors on a new industry-competitive provision of telephone terminal equipment. There were, of course, no firms in th