The History and Evolution of the Telephone and AT&T
The telephone, invented in the 19th century, revolutionized the world and its impact is still felt today. Alexander Graham Bell was awarded the patent and his company played a crucial role in spreading the technology across America. The first phone call was made on March 10, 1876, and Bell’s company, backed by financiers like JP Morgan, was established in 1877, leading to the formation of the Bell Telephone Company and the New England Telephone Company in 1878.
Early Developments and Expansion
Alexander Graham Bell focused on his work as an inventor and sold his shares in companies to a Boston group, which formed the National Bell Telephone Company. The US never had a state-run telephone operator, unlike many other countries, and instead, telephone service was treated as a business. The Bell company licensed out operating services rather than building its own networks due to limited time and capital, as Bell’s patents were not indefinite.
- The Bell company licensed its telephone service to independent operators for 5-10 year contracts, receiving a fixed income and the right to buy the operator’s property afterwards.
- This allowed the company to expand without investing in telephone lines.
- However, the company prioritized investing in its own long-distance telephone network, as it was the only one rich enough to do so.
The Rise of AT&T
The Bell company acquired a monopoly on long-distance phone service, but accumulated significant debt, leading to the creation of the American Telephone and Telegraph Company (AT&T) in 1885. AT&T became the backbone of the Bell company, providing service across the nation, despite local independent operators emerging and running over half of America’s telephones by 1907.
AT&T invested heavily in research and development, setting up Bell Laboratories in 1925, which became a leading scientific institute, responsible for Nobel Prize-winning works. By the start of World War II, AT&T had $5 billion in assets, controlling a huge majority of US phones and long distance lines, and played a significant role in the war effort, with their research contributing to the war and subsequent space race.
Challenges and Breakup
AT&T developed satellite technology, including the Telstar 1, which relayed television and telephone calls through space. Despite working with NASA, the company faced questions over its business practices, particularly its control of the telecoms market. Agreements and rulings, including a 1956 agreement and a 1968 FCC ruling, aimed to limit AT&T’s monopoly, eventually leading to the creation of new technologies like answering machines and modems.
The government’s battle with AT&T culminated in an 8-year court case, ending with the breakup of the AT&T network, also known as the Bell System, in 1982. The Bell System was broken up into seven independent companies, known as the “Baby Bells,” due to anti-trust grounds.
Modern Developments and Acquisitions
Two of the “Baby Bells” eventually became Verizon, while another, Southwestern Bell, bought up three other Baby Bells and eventually AT&T itself. The breakup allowed AT&T to enter the computer market, which was previously restricted by a 1956 agreement. Over the next 20 years, AT&T underwent significant changes to keep up with the rapidly developing computer industry, including the erosion of its long-distance operations due to new legislation and the development of fiber optics.
Today, AT&T focuses on wireless services and has become the second-largest cellular provider in the US. The company has made notable acquisitions, including DirectV in 2015, and plans to acquire Time Warner, which would make it the second-largest broadband provider in the US and grant ownership of major media companies like Warner Brothers, DC Comics, and CNN.
Current Developments and Charitable Initiatives
AT&T has raised anti-trust concerns with its recent dealings, but the company has spent close to $30 million on political donations and has over 100 registered lobbyists, indicating its strong desire for a deal to go through. Meanwhile, a free browser extension called Tab for a Cause allows users to raise money for charity, including Puerto Rico’s hurricane recovery efforts, by simply browsing the web.
Collectively, small actions can make a big difference, so consider visiting the link to download a free browser extension to support charities, and share which charities you’ll be supporting on social media.
Key Vocabulary
| Term | Definition | Example Usage |
|---|---|---|
| Alexander Graham Bell | Scottish-born inventor credited with inventing the first practical telephone. | Alexander Graham Bell made the first phone call on March 10, 1876, revolutionizing communication. |
| AT&T | American Telephone and Telegraph Company, a leading telecommunications company. | AT&T became the backbone of the Bell company, providing service across the nation. |
| Bell Laboratories | A research and development organization that was the central research arm of AT&T. | Bell Laboratories was set up in 1925 and became a leading scientific institute, responsible for Nobel Prize-winning works. |
| Bell System | The system of companies that provided telephone service in the United States, dominated by AT&T. | The Bell System was broken up into seven independent companies, known as the “Baby Bells,” in 1982. |
| Monopoly | A market structure in which a single company or group owns all or nearly all of the market for a given product or service. | AT&T developed a monopoly on long-distance phone service, leading to anti-trust concerns and eventual breakup. |
| Anti-trust | Laws and regulations designed to promote competition and prevent monopolies. | The government’s battle with AT&T culminated in an 8-year court case, ending with the breakup of the AT&T network due to anti-trust grounds. |
| Telecoms Market | The market for telecommunications services, including telephone, internet, and television. | AT&T faced questions over its control of the telecoms market, leading to agreements and rulings aimed at limiting its monopoly. |
| Long-distance Operations | Telephone services that connect callers over long distances, often across different regions or countries. | AT&T’s long-distance operations eroded due to new legislation and the development of fiber optics. |
| Fiber Optics | A technology that uses thin glass or plastic fibers to transmit data as light signals. | The development of fiber optics contributed to the erosion of AT&T’s long-distance operations. |
| Wireless Services | Telecommunications services that use wireless technologies, such as cellular networks or satellite communications. | Today, AT&T focuses on wireless services and has become the second-largest cellular provider in the US. |
| Acquisitions | The act of one company buying or taking control of another company or asset. | AT&T has made notable acquisitions, including DirectV in 2015, and plans to acquire Time Warner. |
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Vocabulary Quiz
1. Which word means ‘a person who gives money to a business or project in order to make a profit’?
A) Inventor
B) Financier
C) Operator
D) Investor
2. What does ‘indefinite’ mean in the context of Alexander Graham Bell’s patents?
A) Lasting for a fixed period of time
B) Limited to a specific area
C) Having no end or limit
D) Requiring regular renewal
3. What is the term for ‘a company that has complete control over a particular market or industry’?
A) Monopoly
B) Oligopoly
C) Duopoly
D) Free Market
4. What does ‘anti-trust’ mean in the context of AT&T’s business practices?
A) Against the formation of trusts or monopolies
B) In support of trusts or monopolies
C) Related to the trust of customers in a company
D) Concerned with the trust between business partners
5. What is the term for ‘a small company that is formed from a larger company that has been broken up’?
A) Parent Company
B) Subsidiary
C) Baby Bell
D) Spin-off
Answer Key:
1. B
2. C
3. A
4. A
5. C
Grammar Focus
Grammar Focus: The Use of the Past Perfect Tense
Grammar Quiz:
Choose the correct answer for each question:
1. By the time Alexander Graham Bell made the first phone call, he ______ his patent for the telephone.
- had received
- received
- was receiving
- receives
2. The Bell company ______ its shares to a Boston group before it formed the National Bell Telephone Company.
- had sold
- sold
- was selling
- sell
3. AT&T ______ a monopoly on long-distance phone service before it invested heavily in research and development.
- acquired
- had acquired
- was acquiring
- acquire
4. By the start of World War II, AT&T ______ $5 billion in assets and controlled a huge majority of US phones and long distance lines.
- had
- has
- have
- had had
5. The government ______ an 8-year court case against AT&T before the company was broken up into seven independent companies.
- had fought
- fought
- was fighting
- fight
Answer Key:
1. had received
2. had sold
3. had acquired
4. had
5. had fought