The article is here [UPDATE: link fixed]; here is the Introduction:
It is usually a mistake to suppose that a company is the best judge of how its business works. Or that an industry is the best judge of how the industry works. AT&T is a good example. When the Justice Department sat down with management in 1981 to negotiate a breakup of what was then a monopoly provider of telephone service, government lawyers asked which part of the company management wanted to keep after the breakup—the long-distance operations or the regional networks. The long-distance operations had long been the company's most profitable, so management asked for those.
It was a mistake. The long-distance operations had been profitable only because AT&T had owned the regional networks and could use them to deny access to competing long-distance companies seeking to complete calls. Once AT&T had spun off the regional networks, the company could no longer do that. Competitors flooded the long-distance market, driving down AT&T's profits. But the regional networks remained protected from competition thanks to the prohibitive cost of running new wires to individual homes. They flourished. Management had failed to grasp that the real source of AT&T's power was its regional-network monopolies, not its long-distance operations. Two decades later, AT&T was forced to sell itself—to one of the regional networks.
If management sometimes has trouble understanding the value proposition of the single company that it runs, we can forgive newspapers for not understanding the value proposition of the entire industry that they constitute.
