Network World questions if the AT&T break up 25 years ago had any real impact on innovation saying that other countries didn't force divestiture and are in the same place.
I would contend that other than Russia and China, no country covers the kind of geography that the USA does, and as such comparison's are out the window.
I'll also contend that what we have today with cable and wireless companies is the Bell System put back together if you look at the map.
For example, AT&T and Verizon are still the most dominant forces in landlines, followed by Quest.
In Mobile AT&T and Verizon are one and two. Sprint is what Sprint was in alternative long distance and T-Mobile is the MCI of the wireless world. Other players like Cricket, Metro PCS and Boost are next rung, just like there were other Alternative Long Distance Players back in the 80s.
When it comes to landlines, the cable guys are picking off subscribers to the point where both AT&T and Verizon, as well as Quest, are finally saying, "we've had enough" and are rolling out the big guns with UVerse and FIOS as a countermeasure. In turn, CableVision counters locally with WiFi, while Cox begins to play with Mobile phone service. Time Warner and Comcast look to WiMax as their out of market play and even a mobile in-market play, as WiMax becomes the 21st century equal to the mobile phone play of the 80's and 90s.
So did divestiture spur innovation? No. It spurred on a type of competition where the people who had imagination saw opportunity to make money by making it easier for new competitors to enter the market plain and simple.