2.6 Ameritech and SBC Communications received permission from the FCC to combine to form the nation’s largest local telephone company. The FCC gave its approval, subject to conditions requiring that the companies open their markets to rivals and enter new markets to compete with established local phone companies, in an effort to reduce the cost of local phone calls and give smaller communities access to appropriate phone service. SBC had considerable difficulty in complying with its agreement with the FCC.

Over an 18-month period, SBC paid the US government $38.5 million for failing to provide rivals with adequate access to its network. The government noted that SBC failed to make available its network in a timely manner, meet installation deadlines, and notify competitors when their orders were filled. Comment on the fairness and effectiveness of using the imposition of heavy fines to promote government-imposed outcomes rather than free market-determined outcomes.