I can add an intolerable amount of detail to this story. I joined Business Information Systems at the Labs in 1973, after completing my PhD at MIT. I didn't like doing research: I wanted to write programs, not papers. (If I had known what Bell Labs Research was about, I might well have applied there). A small supervisory group, maybe 4 or 5 people, headed by someone who had participated in the California test, was looking into re-implementing the project. I don't know why the original didn't fly... perhaps the way our effort died offers some insight.
"Information (411)" was a free service growing at an unsustainable rate. The name was itself part of the problem. People would dial 411 to find out about the weather. Changing the name to "Directory Assistance" helped. Just talking about charging for calls helped even more. It cost AT&T nothing to talk about it. But it was also clear that free paper-based search was unsustainable. Operators got a daily "Frequently Called Numbers List (FCNL)", things like hospitals and major retailers and IRS (in season). Then there were the versions of the customer directories. These were grouped by location, for which reason calls always started with "What City, Please". If you didn't know the city, you were largely out of luck. Operators couldn't plow through a stack of directories. The daily addenda always struck me as bizarre. Operators were rated on call completion time, so there wasn't much chance they'd take the time to check the addenda first if the number showed up in the main directory. They probably served a useful purpose for new numbers, which would be a logical reason for calling 411 to begin with. Typical calls were broken into three parts, getting the information from the caller, searching for the number, and reporting the number to the customer ("Oh, just a minute, I need to get a pencil.") Each took about 10 seconds. Every second we could shave off a call was projected to save the Bell System about a million dollars a year (back when 1 million dollars was real money).
We had access to the directory information from the California trial, so we did some analysis to suggest that 3 characters of Surname, plus 3 more of City or of Street name, could be combined to produce a manageable list of candidate numbers, and would shave several seconds off the search time. (The approach would have mitigated the need to know City, and would have consulted up-to-date information, which would have been regenerated daily). A second phase, automated audio response to the customer, would have eliminated the final phase of the calls. (It would also have eliminated what little satisfaction the operators got from the job, which was already well hated). It was easy to convince our department head that the project was worth pursuing, and our director was also an easy convert. When we went to our executive director, the final level of approval we needed to go ahead, we expected an easy sell. Surprise! He was in charge of keeping track of customer equipment, a huge and complicated effort. He told us, "In Alabama, where I come from, we only hunt one rabbit at a time." He also informed us that "micro-fiche had stolen the market". Our executive director executed the fastest 180 I had ever seen, declaring that maybe the project wasn't worth pursuing. I instantly lost all respect for him.
Two other notes. The executive director realized that by eliminating paper directories, micro-fiche would save "the cost of glue for the binders". (I and he were unaware that they were loose leaf, thanks, Ralph). He told my supervisor to conduct a study of the cost of glue savings. My supervisor (wisely) assigned the study to someone else in the group, knowing that I would have walked before I wasted time on that. The executive director was eventually promoted to "Vice President of Electronic Systems" at Western Electric, possibly in recognition of his keen insight into the superiority of micro-fiche over computers. With management like my director and executive director, it's not too surprising that the original California project folded.