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→Theodore Vail: The Leader Behind the Bell System
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>
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>
<ref>[http://memory.loc.gov/mss/magbell/285/28500129/0001i.jpg Boston Daily Advertiser: The Telephone Settlement, Oct. 25, 1879]</ref>
<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.
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.
Vail's also initiated the establishment of the long distance telephone service, the use of copper wire in telephone and telegraph lines, and created the company standard for service and technological development.He implemented the "One System, One Management, Universal Service" policy.<ref>[http://www.fi.edu/learn/case-files/att/chief.html The Case Files:American Telephone and Telegraph, Hail to the Chief]</ref>
In 1887, Vail resigned as General Manager of the AT&T because of conflict in management style and he doesn'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>
==Early International Expansion==
==Early International Expansion==