Vertical integration stands as the salient structural configuration of the telecommunications equipment market. Computer hardware manufacturers are obviously potential competitors with the captive telecommunications equipment suppliers. Direct government policies, such as patents and a permissive attitude toward mergers, and indirect policies, such as tariff practices, import duties, and government buying practices, have contributed toward this vertical integration. The Federal Communications Commission (FCC), which has encouraged private point-to-point microwave systems and sanctioned at least one specialized common carrier, and the Communication Satellite Act of 1969 represent attempts by the government to foster competition. Vertical integration in an unregulated market protects an industry from both the regulation of a public utility and the accountability of a firm exposed to direct competition. In order to rectify the situation the government should adopt a uniform policy. Four choices exist: make the telecommunications suppliers into a public utility, accept the status quo, extend the satellite procurement rules to all operating carriers, or restore competition by divesting telephone utilities of manufacturing operations. Present antitrust laws together with the power of the FCC provide the legal means to restore this necessary competition. (JY)