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===The Bell System: The Largest Telecommunications Monopoly===

===The Bell System: The Largest Telecommunications Monopoly===

He initiated management and organizational strategies which resulted to the company's remarkable growth such as the issuance of formal contracts and systematic accounting control over licensees and delegated travelling agents to monitor the licensing business.<ref>[http://faculty.insead.edu/adner/research/Wester%20Union%20case%20sample.pdf The Bell Western Union Patent Agreement of 1879]</ref>

Theodore Vail, as General Manager, initiated management and organizational strategies that resulted in remarkable growth for the company.<ref>[http://faculty.insead.edu/adner/research/Wester%20Union%20case%20sample.pdf The Bell Western Union Patent Agreement of 1879]</ref> Vail also succeeded in negotiating an out of court settlement in connection with a patent infringement case against Western Union in 1879. In the settlement, Western Union recognized Alexander Graham Bell as the inventor of the telephone and as such agreed that it will stay out of the telephone business. In addition, Western Union also transferred all of its patent rights on Elisha Gray and Thomas Edison's telephone inventions to Bell, making it so that all entities with interests in the telephone business would be licensed under the Bell patents. Furthermore, Western Union also agreed to pay 20% of the total cost of every newly-developed telephone patent. In return, Bell Telephone Company agreed that it would not enter into the telegraph business, and Western Union would be given a license to use Bell's telephone system to transmit telegraphic messages, and that it would be given 20% of all Bell telephone rentals and royalties.<ref>[http://faculty.insead.edu/adner/research/Wester%20Union%20case%20sample.pdf The Bell Western Union Patent Agreement of 1879]</ref><ref>[http://memory.loc.gov/mss/magbell/285/28500129/0001i.jpg Boston Daily Advertiser: The Telephone Settlement, Oct. 25, 1879]</ref>

Vail also succeeded in negotiating an out of court settlement in connection with the company's patent infringement case against Western Union in 1879. Western Union recognized Alexander Graham Bell as the inventor of the telephone and agreed that it will stay out of the telephone business. In addition, Western Union also transferred all of its patent rights on Elisha Gray and Thomas Edison's telephone inventions. All entities who have interests in the telephone business will be licensed under the Bell patents. Furthermore, Western Union also agreed to pay 20% of the total costs of every new developed telephone patents. In return Bell Telephone Company agreed that it will not engage in the telegraph business and Western Union will be given a license to use the telephone to transmit telegraphic message and it will be given a 20% of the Bell telephone rentals and royalties. <ref>[http://faculty.insead.edu/adner/research/Wester%20Union%20case%20sample.pdf The Bell Western Union Patent Agreement of 1879]</ref>

The settlement agreement gave Bell Telephone Company full control over telephone technology and monopoly over the telecommunications industry. It also gave the company leverage to develop a well-founded national system: the Bell System.  

<ref>[http://memory.loc.gov/mss/magbell/285/28500129/0001i.jpg Boston Daily Advertiser: The Telephone Settlement, Oct. 25, 1879]</ref>

 

The settlement agreement gave Bell Telephone Company the full control over the telephone technology and monopoly over the telecommunications industry. It also gave the company the leverage to develop a well-founded national system--the Bell System.  

The Bell System was composed of the American Telephone & Telegraph (AT&T) Long Lines, also known as "Ma Bell;" 22 regional operating companies known as "Baby Bells," which provide telephone exchange services and equipment within the United States; Bell Laboratories, the research and development subsidiary of AT&T; and the Western Electric Company, its manufacturing arm. The companies within the Bell System embraced the spirit of united service to the public, and were the biggest employer in America, where employees felt secured in their job.<ref>[http://www.porticus.org/bell/bellsystem_history.html The Bell System]</ref>

The Bell System was composed of the American Telephone & Telegraph (AT&T) Long Lines, also known as "Ma Bell;" 22 regional operating companies known as "Baby Bells," which provide telephone exchange services and equipment within the United States; Bell Laboratories, the research and development subsidiary of AT&T; and the Western Electric Company, its manufacturing arm. The companies within the Bell System embraced the spirit of united service to the public, and were the biggest employer in America, where employees felt secured in their job.<ref>[http://www.porticus.org/bell/bellsystem_history.html The Bell System]</ref>

In 1887, Vail resigned as General Manager of the AT&T because of conflict in management style with his superiors. He didn't want to compromise his management principle.  He believed that the company needs to expand its service to attain growth but his superiors believe otherwise, for them dividend is more important.<ref>[http://www.porticus.org/bell/capsule_bell_system.html#The Corporation Is Born AT&T (Long Lines) Appears and Mr. Vail Exits]</ref>

In 1887, Vail resigned as General Manager of the AT&T because of a conflict in management styles with his superiors. He was against compromising his management principles, and believed that the company needed to expand its service to attain growth, while his superiors believed that dividend was more important.<ref>[http://www.porticus.org/bell/capsule_bell_system.html#The Corporation Is Born AT&T (Long Lines) Appears and Mr. Vail Exits]</ref>

 

AT&T continued to grow but the company incurred a large financial debt. In 1907, JP Morgan gain control of the AT&T debt financing and decided to convinced Theodore Vail to serve as President of the company. Vail accepted the position on May 1, 1907. Under his leadership, Vail implemented the '''One Policy, One System, One Universal Service'''. He also implemented good public relations and acknowledge that the Bell System is natural monopoly cooperating with state regulation. He instituted standard operating procedures within the company and regained the national control in telephone service. Vail retired in 1919 and during that period AT&T's structure and operation was already well established and modernized.<ref>[http://www.porticus.org/bell/capsule_bell_system.html#The Corporation Is Born Mr. Vail Goes to Work]</ref>

===Early International Expansion===

===Early International Expansion===

AT&T started to expand internationally by supplying equipment to other telephone companies through its manufacturing subsidiary, the Western Electric Company, and its affiliates around the world. By 1914, AT&T's manufacturing subsidiary established locations in Antwerp, London, Berlin, Milan, Paris, Vienna, St. Petersburg, Budapest, Tokyo, Montreal, Buenos Aires, and Sydney.<ref>[http://www.corp.att.com/history/history2.html A Brief History: Early International Activity]</ref> Beginning in 1925, the new AT&T President Walter Gifford gave up the company's manufacturing business, including its international locations except those in Canada, and pursued the company's objective to provide a universal telephone service in the United States. The company also established its research and development subsidiary, Bell Telephone Laboratories, Inc. By 1927, AT&T successfully launched its first trans-atlantic telephone service from US to London using radio, which cost $75, while the trans-pacific telephone service between US to Japan was realized in 1934 at $39 for the first three minutes respectively. Both international telephone services were only able to accommodate one call at a time. The company's "TAT-1," the first trans-atlantic telephone cable, was launched in 1956. It had the capacity to accommodate 12 calls at a time and price was set at $12 for the first three minutes. In 1964, the first submarine telephone cable, "TPC-1," was inaugurated. In 1965, the world's first electronic switch was installed. The national emergency call number 911 was also introduced during that year. During the 1970s, international long distance call customer dialing was introduced to the public, and AT&T's network became computerized and had the initial capacity to handle a high volume of calls, as many as 350,000 per hour. Since then, AT&T has continued to expand its telecommunications service globally.<ref>[http://www.corp.att.com/history/milestones.html Milestones In AT&T History]</ref>

 

AT&T started to expand internationally by supplying equipment to other telephone companies through its manufacturing subsidiary, the '''Western Electric Company''' and its affiliates around the world. By 1914, AT&T's manufacturing subsidiary established locations in Antwerp, London, Berlin, Milan, Paris, Vienna, St. Petersburg, Budapest, Tokyo, Montreal, Buenos Aires, and Sydney.<ref>[http://www.corp.att.com/history/history2.html A Brief History: Early International Activity]</ref> The new AT&T president '''Walter Gifford''' gave up the company's manufacturing business including its international locations except Canada and pursued the company's objective to provide a universal telephone service in the United States beginning in 1925. The company also established its research and development subsidiary, '''Bell Telephone Laboratories, Inc.''' By 1927, AT&T successfully launched its first trans-atlantic telephone service from US to London using radio which cost $75 while the trans-pacific telephone service between US to Japan was realized in 1934 at $39 for the first three minutes respectively. Both international telephone services can only accommodate one call at a time. The company's '''TAT-1''', the first trans-atlantic telephone cable was launched in 1956. It has the capacity to accommodate 12 calls at a time and price was set at $12 for the first three minutes and subsequently in 1964, the first submarine telephone cable '''TPC-1''' was inaugurated. In 1965, the world's first electronic switch was installed. The national emergency call number '''911''' was also introduced during that year. During the 1970s, the international long distance call customer dialing was introduced to the public, AT&T's network became computerized and had the initial capacity to handle a high volume of calls to as much as 350,000 per hour.Since then, AT&T continued to expand its telecommunications service globally. <ref>[http://www.corp.att.com/history/milestones.html Milestones In AT&T History]</ref>

===The Bell System Divestiture===

===The Bell System Divestiture===

In 1974, the United States Department of Justice (DOJ) filed an anti-trust lawsuit against AT&T alleging the company with monopoly and conspiracy to monopolize the entire telecommunications industry both equipment and services. At&T denied the allegations and fought the case for five years in court and lobbied the Congress to conduct hearings and amend the 1934 Communications Act which created the Federal Communications Commission (FCC), an independent regulatory body which conducted a full scale investigation of the telephone industry. The agency also implemented regulations to increase competition. In 1979, Charles L. Brown then Chairman of AT&T admitted that the company is prosperous in terms of revenue and and it has developed new technologies, but the company is facing difficulties in pursuing its business operations and implementing its new technologies because of the legal battles and regulations particularly the U.S. antitrust lawsuit. In 1982, Brown initiated a settlement agreement with the Department of Justice through U.S. Attorney General William Baxter.<ref>[http://www.porticus.org/bell/decisiontodivest.html The Decision to Divest,Incredible or Inevitable?]</ref> Both parties reached a settlement agreement January 8, 1982. AT&T agreed to divest the 22 Bell operating companies. In return, the DOJ dissolved the 1956 Consent Decree which limited the business operations  of AT&T to common-carrier communications service, to license its inventions to all interested parties and its manufacturing subsidiary, the Western Electric will only manufacture equipment for the use of Bell operating companies. The Divestiture which took effect on January 1, 1984 dissolved the Bell System. <ref>[http://www.porticus.org/bell/bellsystem_history.html Divestiture and Restructuring -The End of the Bell System]</ref> Its 22 local operating companies were divided into seven independent companies to handle the regional telephone services in the United States. The seven independent companies include: Bell South, Bell Atlantic, NYNEX, American Information Technologies, Southwestern Bell, US West, and Pacific Telesis.

In 1974, the United States Department of Justice (DOJ) filed an anti-trust lawsuit against AT&T alleging the company with monopoly and conspiracy to monopolize the entire telecommunications industry, both equipment and services. AT&T denied the allegations and fought the case for five years in court, lobbying Congress to conduct hearings and amend the 1934 Communications Act which created the Federal Communications Commission (FCC), an independent regulatory body that conducted a full scale investigation of the telephone industry and implemented regulations to increase competition. In 1979, Charles L. Brown, then Chairman of AT&T, admitted that the company was prosperous in terms of revenue and and it had developed new technologies, but the company was facing difficulties in pursuing its business operations and implementing its new technologies because of legal battles and regulations, in particular the U.S. antitrust lawsuit. In 1982, Brown initiated a settlement agreement with the Department of Justice through U.S. Attorney General William Baxter.<ref>[http://www.porticus.org/bell/decisiontodivest.html The Decision to Divest,Incredible or Inevitable?]</ref> Both parties reached a settlement agreement January 8, 1982. AT&T agreed to divest the 22 Bell operating companies. In return, the DOJ dissolved the 1956 Consent Decree which had limited AT&T's business operations to common-carrier communications services, forced it to license its inventions to all interested parties, and limited its manufacturing subsidiary, the Western Electric, to manufacture equipment only for the use of Bell operating companies. The divestiture, which took effect on January 1, 1984, dissolved the Bell System.<ref>[http://www.porticus.org/bell/bellsystem_history.html Divestiture and Restructuring - The End of the Bell System]</ref> Its 22 local operating companies were divided into seven independent companies to handle the regional telephone services in the United States. The seven independent companies include: Bell South, Bell Atlantic, NYNEX, American Information Technologies, Southwestern Bell, US West, and Pacific Telesis.

===The New AT&T===

===The New AT&T===

In 2005, [[SBC Communications Inc.]] acquired AT&T for $16 billion and decided to adopt AT&T as the name of the company. The two companies combined their capabilities in providing consumers with innovative and high quality wireless communications and broadband experience, integrated with voice, data and video services. The new AT&T was geared to become globally competitive in the 21st century.<ref>[http://www.corp.att.com/news/2005/01/31-1 SBC to Acquire AT&T]</ref> <ref>[http://www.att.com/gen/press-room?pid=7368 SBC Communications to Adopt AT&T Name]</ref>

In 2005, [[SBC Communications Inc.]] acquired AT&T for $16 billion and decided to adopt AT&T as the name of the company. The two companies combined their capabilities in providing consumers with innovative and high quality wireless communications and broadband experience, integrated with voice, data and video services. The new AT&T was geared to become globally competitive in the 21st century.<ref>[http://www.corp.att.com/news/2005/01/31-1 SBC to Acquire AT&T]</ref> <ref>[http://www.att.com/gen/press-room?pid=7368 SBC Communications to Adopt AT&T Name]</ref>

Today, AT&T is considered the fastest mobile broadband network provider and wireless carrier in the United States, with the largest international coverage. AT&T also provides the AT&T U-verse TV and the AT&T Direct TV.<ref>[http://www.att.com/gen/investor-relations?pid=5711 AT&T Company Information]</ref> The company has 95.5 million wireless subscribers with voice coverage in 220 countries, data roaming in 200 countries and mobile broadband in 130 countries. Its wired services (broadband, local, and long distance calls) are concentrated within 22 American states.<ref>[http://www.att.com/gen/investor-relations?pid=5711 U.S. Presence and Global Reach]</ref>

Today, AT&T is considered the fastest mobile broadband network provider and wireless carrier in the United States, with the largest international coverage. AT&T also provides the AT&T U-verse TV and the AT&T Direct TV.<ref>[http://www.att.com/gen/investor-relations?pid=5711 AT&T Company Information]</ref> The company has 95.5 million wireless subscribers with voice coverage in 220 countries, data roaming in 200 countries and mobile broadband in 130 countries. Its wired services (broadband, local, and long distance calls) are concentrated within 22 American states.<ref>[http://www.att.com/gen/investor-relations?pid=5711 U.S. Presence and Global Reach]</ref> AT&T is also a global provider of [[IP]] networks, Internet connectivity, web hosting, among other related services, as well as operator of a number of [[DNS]] servers and routers.<ref>[http://www.icann.org/en/correspondence/att-to-icann-07oct03.htm Letter from AT&T to ICANN, 7 October 2003]</ref> AT&T uses [[MelbourneIT]] as its backend provider for registrar services to its web hosting customers.<ref>[http://www.att.com/gen/webhosting?pid=10339 AT&T Domain Name Registration Agreement]</ref>

==Awards==

==Awards==

==References==

==References==

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[[Category:Companies]]

[[Category:Telecommunications]]