Bell System

~ the obituary ~

The Bell Telephone Company was formed on 9 July 1877 around Alexander Graham Bell's patents, and its first business model was suing everyone else. When the patents expired in the 1890s the independents arrived in thousands, and Theodore Vail spent the next twenty years buying them, starving them of long-distance interconnection, or both. By 1913 the government was close enough to acting that AT&T offered the Kingsbury Commitment: it would sell Western Union and it would let independents connect to its long lines. In exchange it would be left alone. That trade held for sixty years and it is what a regulated monopoly looks like when both sides are content.

What it bought was total. Western Electric, owned since 1881, manufactured the equipment, and Bell Labs, formalized in 1925, did the research. Underneath them the operating companies ran the local exchanges under state regulators who set the rates, with AT&T sitting on top of all of it running long distance. Nothing attached to a Bell line that Bell had not made, and for most of that period it was against the tariff to attach anything at all.

The Antitrust Division sued in 1974. AT&T fought it for eight years and then concluded it was going to lose. It settled on 8 January 1982 with a consent decree that dismantled the structure rather than fining it. Judge Harold Greene approved the modified version that August. On 1 January 1984 the company divested its local operating companies into seven independent regional holdings. It kept long distance, and it kept Western Electric and Bell Labs. The company had $150 billion in assets and something over a million people on payroll the day before.

~ the case file ~

~ the phone was not yours ~

American households did not buy telephones. They leased them, month after month, as a line on the bill, and the instrument stayed the property of the operating company. This is why the Western Electric desk sets from the 1950s still work: they were built to be repaired and returned rather than replaced, by a manufacturer with no incentive to make them wear out.

The tariff also said what you were allowed to connect. A 1956 case about the Hush-A-Phone, a plastic cup you clipped to the mouthpiece so nobody could overhear you, went to a federal appeals court because AT&T argued that a piece of plastic touching its handset degraded the network. The Carterfone decision in 1968 finally broke the rule open and made third-party equipment legal, which is the small crack that eventually let a modem sit on a phone line at all.

~ what the laboratory made ~

Bell Labs invented the transistor in 1947 and published information theory in 1948, and it is hard to name a larger two-year run anywhere. Unix came out of the same building in 1969, and C followed it. The laser and the communications satellite both have Bell Labs authorship on them. So does the charge-coupled device that sits behind every digital camera lens.

The reason any of that escaped is an earlier antitrust settlement. The 1956 consent decree confined AT&T to common carrier telecommunications and required it to license its existing patents royalty-free to anyone who asked. The transistor was in that pile. A monopoly was forced to give away the component that built the industry that eventually replaced it, and the same clause is why Unix went out to universities for the cost of a tape.

~ the same shape, in Turkish ~

Turkey had its own version and kept it much longer. The PTT held the post office and the telephone network in one state institution, and the line into a Turkish apartment came from the same place as the stamps. The telecom side was not separated out until 24 April 1995, when Türk Telekom was created as a state company eleven years after the Americans had already finished breaking theirs up. The fixed-line monopoly ran until the end of 2003. Oger Telecom bought 55 percent of Türk Telekom in 2005 for $6.55 billion.

So the dial-up years here sat on a monopoly wire by default, and nobody thought that was unusual, because there had never been an alternative to compare it against. TTNet, the part of that company that sold the internet access, arrived later as an arm of the same organization that owned the copper. The American argument about whether one company should own both had been settled in 1984 and simply did not apply.

~ the pieces came back together ~

Southwestern Bell renamed itself SBC and spent the 1990s buying Pacific Telesis and Ameritech. In 2005 it bought AT&T itself and took the name. Bell Atlantic merged with NYNEX and then with GTE and called the result Verizon. Of the seven regional companies created on 1 January 1984, two ended up holding almost everything, and the logo on the truck outside says AT&T again.

Western Electric did not make it. It was folded into AT&T Technologies and then spun out as Lucent in 1996. Alcatel bought Lucent in 2006, and what came out the other side is part of Nokia. Bell Labs went with it and is now Nokia Bell Labs in New Jersey. The manufacturing arm that built every telephone in America for a century is a line item in a Finnish company's org chart.

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