00. At this point, the indepen- dents could defeat whatever advantage AT&T might have gained by its refusal to interconnect simply by banding together to form a network of equal size (Noll and Owen 1989). It is thus unlikely that network economic effects played a significant role in allowing the Bell System to reassert its dominance. As we shall discuss below, the true causes of the return of the Bell monopoly lay elsewhere. 3. Vertical Exclusion Although initially the entire telephone system was regarded as a monopoly, the emergence of potential competition in portions of the network raised the possibility that the Bell System would use its control over the portions of the network that remained a natural monopoly, such as local telephone service, to harm competition in those portions of the network where competition was now possible. Vertical exclusion was thus the central concern underlying the Part 68 rules mandating that the Bell System open its local telephone networks to CPE manufactured by other companies. The same concern motivated requiring the Bell System to open its local telephone networks to competing long distance companies. It also underlay the Computer Inquiries requirement of structural separation and equal access to unaffiliated information service providers. As we discuss in greater detail in the next chapter, each of these decisions was reinforced by the consent decree settling the government's case against AT&T, which similarly mandated structural separation and equal access for long distance and information service providers. All of these restrictions were eventually incorporated into the Telecommu- nications Act of 1996, which prohibited the local telephone companies formerly affiliated with the Bell System, known as Bell operating companies (BOCs), from providing long-distance services, manufacturing equipment, or engaging in two designated information services (specifically electronic publishing and alarm mon- itoring) in their home regions. The 1996 Act permitted the BOCs to offer other 