You seem to be starting with some loaded assumptions. For one thing, AT&T's Bell Labs were the ones inventing a lot of the new technology, things like transistors and fiber optics.

But AT&T saw telephone service as a natural monopoly, where the public was best served by having a single provider with limited but guaranteed profits. After experience with competing local phone companies at the turn of the 20th century, most cities and states agreed.

The Long Lines division for long-distance connections between cities was where technology first upset the applecart. Southern Pacific Railroad had microwave links between its various railroad yards, and started a company to sell the unused capacity to give businesses a cheaper option for long distance. That business eventually became Sprint. Soon other companies were leasing or building cross-country links and petitioning the FTC and FCC to unbundle long-distance from local service, and that led to the advent of "dial-around" services where you'd dial a prefix such as 10321 to route your call via MCI or Sprint, etc.

Around the same time came the Carterphone decision. AT&T's local operating companies had fiercely resisted allowing subscribers to connect their own phones to the network, citing technical concerns that a court eventually found unconvincing. So at first subscribers could connect using an isolating interface, then directly as long as the ringing impedance didn't exceed a threshold, and finally no one worried much about it any more. The Big Bang came in 1984 when the operating companies were spun off, everyone on AT&T had to choose a long-distance carrier, and subscribers could buy their already-installed phones from the local telco for a modest fee.