The Carterfone decision

For many years, the Bell System (AT&T) maintained a monopoly on the use of its phone lines, allowing only Bell-supplied devices to be attached to its network. Before 1968, AT&T maintained a monopoly on what devices could be electrically connected to its phone lines. This led to a market for 103A-compatible modems that were mechanically connected to the phone, through the handset, known as acoustically coupled modems. Particularly common models from the 1970s were the Novation CAT and the Anderson-Jacobson, spun off from an in-house project at Stanford Research Institute (now SRI International). Hush-a-Phone v. FCC was a seminal ruling in United States telecommunications law decided by the DC Circuit Court of Appeals on November 8, 1956. The District Court found that it was within the FCC's authority to regulate the terms of use of AT&T's equipment. Subsequently, the FCC examiner found that as long as the device was not physically attached it would not threaten to degenerate the system. Later, in the Carterfone decision of 1968, the FCC passed a rule setting stringent AT&T-designed tests for electronically coupling a device to the phone lines. AT&T's tests were complex, making electronically coupled modems expensive,^{[citation needed]} so acoustically coupled modems remained common into the early 1980s.
In December 1972, Vadic introduced the VA3400. This device was remarkable because it provided full duplex operation at 1,200 bit/s over the dial network, using methods similar to those of the 103A in that it used different frequency bands for transmit and receive. In November 1976, AT&T introduced the 212A modem to compete with Vadic. It was similar in design to Vadic's model, but used the lower frequency set for transmission. It was also possible to use the 212A with a 103A modem at 300 bit/s. According to Vadic, the change in frequency assignments made the 212 intentionally incompatible with acoustic coupling, thereby locking out many potential modem manufacturers. In 1977, Vadic responded with the VA3467 triple modem, an answer-only modem sold to computer center operators that supported Vadic's 1,200-bit/s mode, AT&T's 212A mode, and 103A operation.