ommon knowledge in those days, or at least conventional wisdom, was that the most profitable part of the telephone industry was long distance. High toll rates had been subsidizing local service for years. So the terms of divesti- ture seemed to favor AT&T, which took the long distance network as well as manufacturing. The RBOCs, or "Baby Bells" as they were nicknamed, spun- off local companies, seemed to be weaker, especially given the many restrictions imposed on them. Among these rules, the RBOCs were kept out of the long distance and manufacturing markets, SO they could not compete with AT&T's remaining core businesses. And they were given a new obligation: equal access. The RBOCs would have to give their subscribers a choice of long dis- tance provider and interconnect with AT&T and the latter's competitors on equal terms. MCI, Sprint, and various smaller start-ups had been competing for long distance; they were the key beneficiaries of divestiture. With AT&T separated from the RBOCs, all long distance companies would theoretically be on an equal footing. But given economies of scale, AT&T would still have the advan- tage over its smaller rivals. And it would be several years before the lucrative 800-number business would see any competition. Divestiture created a strict separation between the local and long distance industries. But it did not quite work out as expected: The RBOCs ended up quite comfortable indeed, whereas the long distance companies engaged in cut- throat competition. The difference, as we shall see, is that the RBOCs still had a monopoly on a critical part of the network. That monopoly was a powerful shield against the turmoil that buffeted the industry over the next two decades. The RBOCs did not, as it turned out, need the most adroit management skills in order to prosper; a little bit of litigation and a lot of lobbying went a long way. As the shackles they were born with unraveled, the Baby Bells were to grow up to be the true heirs to the old Bell System legacy of monopolistic practice