> One thing that I'm unclear about is why all this Arpanet work was not filtering more into the versions of Unix done at Bell Labs.

The short answer is that Bell Lbs was not on Arpanet. In the early
80s the interim CSNET gave us a dial-up window into Arpanet, which
primarily served as a conduit for email. When real internet connection
became possible, network code from Berkeley was folded into the
research kernel. (I am tempted to say "engulfed the research kernel",
for this was a huge addition.)

The highest levels of AT&T were happy to carry digital data, but
did not see digital as significant business. Even though digital T1
was the backbone of long-distance transmission, it was IBM, not
AT&T, that offered direct digital interfaces to T1 in the 60s.

When Arpanet came along MCI was far more eager to carry its data
than AT&T was. It was all very well for Sandy Fraser to build
experimental data networks in the lab, but this was seen as a
niche market. AT&T devoted more effort to specialized applications
like hotel PBXs than to digital communication per se.

Doug