The 1984 Bell System divestiture that brought an end to the affiliation branded as the Bell System was the result of a lawsuit alleging illegal practices by the Bell System.
The lawsuit alleged that AT&T and its Bell System operating companies were using its near monopoly in telecommunications to attempt to establish allegedly unfair advantage in related technologies, especially the fledgling computer industry. AT&T Corp. settled the suit and agreed to divest (”spin off”) its local exchange service operating companies in return for a chance to go into the Internet services industry. AT&T Corp.’s local operations were split into seven independent Regional Bell Operating Companies known as “Baby Bells.” RBOCs were originally known as Regional Holding Companies, or RHCs.
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