History of AT&T

The history of AT&T originates in the invention of the telephone. The Bell Telephone Company was established in 1877 by Alexander Graham Bell, who was granted the first U.S. patent for what became the telephone, and his father-in-law, Gardiner Greene Hubbard. Bell and Hubbard also established American Telephone and Telegraph Company in 1885, which acquired the Bell Telephone Company, and became the primary telephone company in the United States. This company maintained an effective monopoly on telephone service in the United States until anti-trust regulators agreed to allow AT&T to retain Western Electric and enter general trades computer manufacture and sales in return for its offer to split the Bell System by divesting itself of ownership of the Bell Operating Companies in 1982. AT&T Corporation was eventually purchased by one of the Regional Bell Operating Companies, the former Southwestern Bell Company, in 2005, and the combined company became known as AT&T Inc.

Origins

The formation of the Bell Telephone Company superseded an agreement between Alexander Graham Bell and his financiers, principal among them Gardiner Greene Hubbard and Thomas Sanders. Renamed the National Bell Telephone Company in March 1879, it became the American Bell Telephone Company in March 1880. By 1881, it had bought a controlling interest in the Western Electric Company from Western Union. Only three years earlier, Western Union had turned down Gardiner Hubbard's offer to sell it all rights to the telephone for $100,000 ($3.34 million in 2009 dollars). In 1880, the management of American Bell created what would become AT&T Long Lines. The project was the first of its kind to create a nationwide long-distance network with a commercially viable cost-structure. This project was formally incorporated into a separate company named American Telephone and Telegraph Company on March 3, 1885. Starting from New York, the network reached Chicago in 1892. Bell's patent on the telephone expired in 1893, but the company's much larger customer base made its service much more valuable than alternatives and substantial growth continued. On December 30, 1899, the American Telephone and Telegraph Company bought the assets of American Bell; this was because Massachusetts corporate laws (which limited market capitalization to ten million dollars, preventing the direct growth of American Bell itself) were more restrictive than those of New York, where AT&T was headquartered. With this transfer of assets, AT&T became the parent of the Bell System. By 1902, there were 1,317,000 telephones under AT&T. National long-distance service reached San Francisco with the First transcontinental telephone call in 1915. This connection used a system of lines with loading coils and the Audion vacuum tube repeater first tested between New York and Philadelphia in 1913. Transatlantic services started in 1927 using two-way radio, but the first trans-Atlantic telephone cable did not arrive until Sept. 25, 1956, with TAT-1.

Monopoly

As a result of a combination of regulatory actions by government and actions by AT&T, the firm eventually gained what most regard as monopoly status. In 1907, AT&T president Theodore Vail made it known that he was pursuing a goal of "One Policy, One System, Universal Service." AT&T began purchasing competitors, which attracted the attention of antitrust regulators. To avoid antitrust action, in a deal with the government, Vail agreed to the Kingsbury Commitment of 1913. One of the three terms of the agreement forbade AT&T from acquiring any more independent phone companies without the approval of the Interstate Commerce Commission.

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