 of the conditions that they would first have to meet by opening their local markets to competition. The result was one of the most litigated laws ever passed by Congress-the Tele- communications Act of 1996. AT&T in the Crosshairs As those of us within AT&T understood only too well, the Telecom Act was a death sentence for stand-alone long distance, which accounted for 80 percent of AT&T's revenue and IOO percent of its profits (and then some, making up for losses in other areas). AT&T was living on borrowed time. While the Bells challenged the Telecom Act in court, effectively keeping AT&T out of their local markets, they pressed for further legislation to let them into long distance. And everyone knew that the Bells would eventually wear the regulators down and join the long-distance fray. Introduction 5 Thanks to Allen's 1996 divestiture of AT&T's equipment busi- nesses, the company had the strongest balance sheet in the industry, with relatively little debt. Profits, for the moment, were at record lev- els.6 But the crossroads through which the company had maneuvered put it in the crosshairs of competitors from the so-called New Econ- omy, whose stock prices seemed untethered to anything as mundane as profits or even cash flow. AT&T's serial efforts to diversify internationally and into new lines of business, on the other hand, were constrained by investors' fixation on growth in the company's earnings per share. New services, like the company's award-winning WorldNet Internet service, had their bud- gets cut SO that the company could meet its earnings targets. One executive called it "the Grown Man Syndrome." We were like grown men in a sealed room with a dwindling air supply, he said. At some point, to save ourselves, we'd pinch a baby's nose. Shaken by the storm clouds he saw forming, Allen's heir apparent, AT&T president Alex Mandl, jumped ship to join a start-up. The print- ing company executive hired to replace him, R. R. Donnelly's John Walter, was such an unlikely choice that he was dubbed "heir unap