I once attended a talk by Ron Graham (mathematician who'd once worked at Bell Labs) where he explained that they had applied graph theory to minimize the distance of cable runs to minimize the amount of copper they had to buy.

And, transistors are certainly cheaper and more reliable than the vacuum tubes they replaced.

Economics is still a factor in regulated environments.

Bell Labs are also ran by the scientists themselves, with AT&T largely not caring because it has to spend that money anyways.

You can get a good grip of what's going on in the lab in Brian Kernighan's <Unix, A history and a memoir>. It's a good read.

For an idea about telecom monopolies, read Tim Wu's book The Master Switch.