not very far-fetched. back in the beginning your local bell was where you went to get wide-area link level service. and it was a huge pain. extremely costly, months long installations, abysmal service.

somewhat later, these same people were responsible for nonsense like ATM. they were going to prop up their own internet - with hookers, and circuits, and per-cell QOS based charging. and they were gonna do it right. and it was gonna be great.

would they have leveraged their monopoly on the underlying circuits to try to dominate layer 3? almost certainly.

Yes but there is a world outside of America. GSM for example came from Finland, and I believe that ARPANET et al were military and wouldn't give a shit about what AT&T were doing, and even then the inventor of packet switching networks (Donald Davies) was from the UK.

If AT&T had just carried on I am sure that the internet and mobile phones would have happened anyway. Sure things may have been different it happened at different times, but I don't think AT&T not being broken up would have stopped things that were already happening elsewhere from continuing to happen.

The quality of telephone services took of and the prices plummeted here in Norway when the phone monopoly was broken around 1998.

I was there and remember going from expensive landlines with complicated pricing structures all the way to cell phone plans so cheap every kid has one.

IMO no way it would have happened with the monopoly we had in the nineties.