AT&T

AT&T (formerly an abbreviation for American Telephone and Telegraph) Corporation {{nyse|T}} is an American telecommunications company. AT&T provides voice, video, data, and Internet telecommunications and professional services to businesses, consumers, and government agencies. During its long history, AT&T has at times been the world's largest telephone company, the world's largest cable television operator, and a regulated monopoly. At its peak, it employed one million people and its revenue was roughly $300 billion annually in today's dollars. In early 2005, SBC Communications (commonly called one of the "Baby Bells" that was split-off from AT&T itself) began the legal process to purchase its once parent AT&T.

History

The formation of the Bell Telephone Company superseded an agreement between Alexander Graham Bell and his financiers, principal among them Gardiner G. Hubbard and Thomas Sanders. Renamed the National Bell Telephone Company in March 1877, 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.

Related Topics:
Bell Telephone Company - Alexander Graham Bell - 1877 - 1880 - 1881 - Western Electric - Western Union

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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 nationwide long-distance network with a commercially viable cost-structure. This project was formly incorporated into a separate company christened American Telephone and Telegraph Corporation on March 3, 1885. Starting from New York the network reached Chicago, Illinois in 1892.

Related Topics:
1880 - March 3 - 1885 - New York - Chicago, Illinois - 1892

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Bell's patent on the telephone expired in 1894, but the company's much larger customer base made its service much more valuable than alternatives and substantial growth continued.

Related Topics:
Patent - 1894

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On December 30, 1899, the American Telephone and Telegraph Corporation bought the assets of American Bell--this was because Massachusetts corporate laws were very restrictive and limited capitalization to ten million dollars, forestalling the growth of American Bell itself.

Related Topics:
December 30 - 1899

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National long distance service reached San Francisco in 1915. Transatlantic services started in 1927 using two-way radio, but the first transatlantic telephone cable did not arrive until 1956, with TAT-1.

Related Topics:
San Francisco - 1915 - 1927 - Radio - Transatlantic - Telephone cable - 1956 - TAT-1

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National monopoly : 1913-1982

In 1907, AT&T president Theodore Vail proposed that a formal monopoly would be more efficient. The federal government accepted this principle, initially in the Kingsbury Commitment of 1913.

Related Topics:
1907 - Theodore Vail - Monopoly - Kingsbury Commitment - 1913

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For most of the 20th century, AT&T subsidiary AT&T Long Lines thus enjoyed a near-total monopoly on long distance telephone service in the United States. AT&T also controlled 22 Bell Operating Companies which provided local telephone service to most of the United States. While there were many "independent telephone companies", General Telephone being the most significant, the Bell System was far larger than all the others, and widely considered a monopoly itself.

Related Topics:
Long distance - General Telephone

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During the early 1920s, AT&T bought Lee De Forest's patents on the "audion", the first triode vacuum tube, which let them enter the radio business. Thanks to the pressures of World War I, AT&T and RCA owned all useful patents on vacuum tubes. RCA staked a position in wireless communication; AT&T pursued the use of tubes in telephone amplifiers. Some patent allies and partners in RCA were angered when the two companies' research on tubes began to overlap; there were many patent disputes.

Related Topics:
1920s - Lee De Forest - Vacuum tube - World War I - RCA - Patent

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AT&T, RCA, and their patent allies and partners finally settled their disputes in 1926 by compromise. AT&T decided to focus on the telephone business as a communications common carrier, and sold its broadcasting subsidiary Broadcasting Corporation of America to RCA. The assets included station WEAF, which for some time had broadcast from AT&T headquarters in New York City. In return, RCA signed a service agreement with AT&T, ensuring any radio network RCA started would have transmission connections provided by AT&T. Both companies agreed to cross-license patents, ending that aspect of the dispute. RCA, GE, and Westinghouse were now free to combine their assets to form the National Broadcasting Company, or NBC network.

Related Topics:
Broadcasting Corporation of America - WEAF - New York City - GE - Westinghouse - National Broadcasting Company

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In 1925, AT&T created a new unit called Bell Telephone Laboratories, commonly known as Bell Labs. This research and development unit proved highly successful, pioneering, among other things, radio astronomy, the transistor, the photovoltaic cell, the Unix operating system, and the C programming language. However, its parent company did not always capitalize on these achievements. In 1949 the Justice Department filed an antitrust suit aimed at forcing the divestiture of Western Electric, which was settled seven years later by AT&T's agreement to confine its products and services to common carrier telecommunications and license its patents to "all interested parties". A key effect of this was to ban AT&T from selling computers despite its key role in electronics research and development.

Related Topics:
1925 - Bell Labs - Research and development - Radio astronomy - Transistor - Photovoltaic cell - Unix - Operating system - C programming language - 1949

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Public utility commissions in all state and local jurisdictions regulated the Bell System and all the other telephone companies. The Federal Communications Commission (FCC) regulated all service across state lines. These commissions controlled the rates that companies could charge, and the specific services and equipment they could offer. Nonetheless, technological innovation continued. For example, AT&T commissioned the first experimental communications satellite, Telstar I in 1962.

Related Topics:
Public utility - Jurisdiction - Federal Communications Commission - Satellite - Telstar - 1962

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The Erosion of Natural Monopoly

For many years, AT&T had been permitted to retain its monopoly status under the assumption that it was a natural monopoly. The rise of cheap microwave communications equipment in the 1970s opened a window of opportunity for competitors--no longer was the acquisition of expensive right-of-ways necessary for the construction of a long-distance telephone network. In light of this, the FCC permitted MCI (Microwave Communications, Inc) to sell communication services to large-businesses. Ironically, this technical-economic argument against the necessity of AT&T's monopoly position would hold for a mere fifteen years until the beginning of the fiber-optics revolution sounded the end of microwave-based long distance.

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Break up, spinoffs and restructuring

The rest of the telephone monopoly lasted until final settlement of a 1974 United States Department of Justice antitrust suit against AT&T on January 8, 1982, under which AT&T ("Ma Bell") agreed to divest its local exchange service operating companies, in return for a chance to go into the computer business (see AT&T Computer Systems). Although the Department of Defense did not want AT&T to be broken, effective January 1, 1984, AT&T's local operations were split into seven independent Regional Bell Operating Companies known as "Baby Bells". AT&T, reduced in value by about 70%, continued to run all its long distance services, although it lost some market share in the ensuing years to competitors MCI and Sprint Corporation.

Related Topics:
United States Department of Justice - Antitrust - Suit against AT&T - January 8 - 1982 - AT&T Computer Systems - Department of Defense - January 1 - 1984 - Regional Bell Operating Companies - MCI - Sprint Corporation

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:"There are two giant entities at work in our country, and they both have an amazing influence on our daily lives . . . one has given us radar, sonar, stereo, teletype, the transistor, hearing aids, artificial larynxes, talking movies, and the telephone. The other has given us the Civil War, the Spanish American War, the First World War, the Second World War, the Korean War, the Vietnam War, double-digit inflation, double digit unemployment, the Great Depression, the gasoline crisis, and the Watergate fiasco. Guess which one is now trying to tell the other one how to run its business?" -- a sign that hung in many Bell facilities in 1983.

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After its own attempt to penetrate the computer marketplace failed, in 1991, AT&T absorbed NCR Corporation (National Cash Register), hoping to capitalize on the burgeoning personal computer and UNIX networked server markets, but was unable to extract lasting financial or technological gains from the merger. After deregulation of the U.S. telecom industry via the Telecommunications Act of 1996, NCR was divested again. At the same time, AT&T's equipment manufacturing operations and the renowned Bell Laboratories were spun off into Lucent Technologies. The industry as a whole had many other reorganizations since the 1990s, both due to deregulation and because of technological advances reducing demand and pricing power in telecommunications.

Related Topics:
1991 - NCR Corporation - Personal computer - UNIX - Merger - Deregulation - Telecommunications Act of 1996 - Bell Laboratories - Lucent Technologies - 1990s

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In 1997, AT&T hired former IBM executive Michael Armstrong as its chief executive officer. Armstrong's vision was to change AT&T from a long-distance carrier into a global "telecommunications supermarket", eyeing Internet services for the booming dot-com industry.

Related Topics:
1997 - IBM - Michael Armstrong - Chief executive officer - Supermarket - Dot-com

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Armstrong's most prominent strategy was buying significant cable television assets. After acquiring John Malone's TCI and Media One (gaining through the latter a 25% share of Time Warner Cable), AT&T was the largest provider of cable television in the United States. It intended to use these assets to bridge the so-called "last mile" and break the Regional Bell Companies' access-monopoly of the consumer household for data and telephony services, but the wager was costly, substantially increasing the company's debt.

Related Topics:
Cable television - TCI - Media One - Time Warner Cable - United States - Last mile

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In 1998, AT&T announced a US$1 billion alliance with BT to offer global voice over IP (VoIP) services, sparking rumors of a potential merger (http://www.cnn.com/WORLD/europe/9807/26/bt.att/). But the parties fought for control of the project and could not even agree on the alliance's name. By mid-2001, customers were being directed to sign contracts with the parent companies, and Concert, as the venture was eventually known, was scrapped in October that year.

Related Topics:
1998 - BT - Voice over IP - 2001 - October

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In 1999 AT&T acquired the Olivetti & Oracle Research Lab, from Olivetti and Oracle Corporation. In 2002 it closed down the research part of the lab.

Related Topics:
1999 - Olivetti - Oracle Corporation - 2002

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With long-distance rates falling and the market for telecommunications services overall weakening, AT&T could not sustain the debt it had incurred in these ventures. Moreover, the cost of upgrading TCI's equipment to handle two-way communications proved far higher than pre-merger estimates. AT&T undertook a major reorganization in October 2000, moving its mobile phone and broadband units into separate companies, to allow each unit to raise capital independently.

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On July 9, 2001 it spun off AT&T Wireless Corp. in what was then the world's largest initial public offering (IPO). Later that year it spun off AT&T Broadband and Liberty Media, which comprised its cable TV assets. AT&T Broadband was subsequently acquired by Comcast Communications Corporation in 2002, and AT&T Wireless merged with Cingular Wireless in 2004.

Related Topics:
July 9 - 2001 - AT&T Wireless Corp. - Initial public offering - Liberty Media - Cable TV - Comcast Communications Corporation - 2002 - Cingular Wireless - 2004

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In 2004, the U.S. government eliminated equal access regulations that allowed long-distance phone companies to access the networks owned by the regional Bell carriers at reasonable rates. This ultimately caused AT&T to move away from the residential telephone business--declaring in the process that it would no longer market residential telephone service. Instead, its residential focus shifted to offering a voice service over a broadband Internet connection called AT&T CallVantage.

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On January 31, 2005, SBC Communications announced that it would buy AT&T for more than $16 billion. AT&T stockholders, meeting in Denver, approved the merger on June 30, 2005. The merger is expected to be completed in 2006, barring any regulatory difficulties. The name of the merged company has not been decided, but it is expected that SBC will adopt the AT&T name in some form.

Related Topics:
January 31 - 2005 - SBC Communications - June 30

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