The second stage of the breakup of the Bell System occurred at the end of 1995 when the existing ATT (which had acquired the computer services company NCR several years earlier) made the decision to divest both the computer operations part of the business (selling it back to NCR) and the equipment manufacturing part of the business (with the creation of Lucent Technologies) in order to compete more actively in the areas of wireless and cable
services. As part of this trivestiture a large percentage of the resources of Bell Labs (as well as the rights to use of the Bell Labs name) went to Lucent Technologies for research and development in support of the creation of new products. About one-fourth of the research component of Bell Labs (along with significant development resources) joined ATT and formed ATT Labs, with the goal of conducting research and development that would be most appropriate to a services company that was venturing into the areas of wireless and broadband communication services.
Former Bell System entities continued to evolve. Over time Lucent Technologies spun off the component manufacturing part of the company as Agere Labs and the enterprise business systems part of the company as Avaya Labs. Telcordia was acquired by SAIC and later purchased by two private equity firms. ATT spun off the wireless services part of the business (as ATT Wireless, subsequently acquired by Cingular in 2004) and sold the cable services part to Comcast Communications. SBC and ATT then merged in early 2005 under the ATT name. Early 2006 saw a proposed acquisition by ATT of Bell South.
It initially appeared as though research might continue to grow and prosper within the former Bell family laboratories—Lucent Bell Labs, Bellcore research, the new ATT Labs, Agere Labs, and Avaya Labs—as well as within new telecommunications firms. Indeed, figures gathered by Michael Noll showed that the number of former Bell family company researchers grew from about 1000 in 1960 to 1200 in 1981 to about 1920 in 1997, but then fell off to 1570 in 2001. Data reported by Noll on research and development expenditures by the Bell family companies showed significant growth from 1981 ($3.2 billion) to 2001 ($6 billion).
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