Invention of the phone
 1875: Alexander Graham Bell, along with his assitant Thomas A. Watson , invents the telephone. [AT&T History ] See also Telephone page which discusses Antonio Meucci and Elisha Gray.
"On June 2, 1875, Alexander Graham Bell while experimenting with a technique called "harmonic telegraph" discovered he could hear sound over a wire. The sound was that of a twanging clock spring. On March 10, 1876, Bell transmitted the first complete sentence heard over a wire. He said: "Mr. Watson, come here, I want you." [Some stories claim that he had spilled some acid while working on his invention - PBS does not agree.] It was received by his associate, Thomas A. Watson, in an adjoining room of their tiny Boston laboratory." - Derived From History of Wire and Broadcast Communication, FCC (May 1993)
Bell's financial partners were Gardiner Greene Hubbard and George Sanders; the three signed a partnership in 1875. Bell would later marry Hubbard's daughter.
“Mr. Watson, come here, I want you.” the first words that Mr. Bell spoke through his invention. One historical account atrributes this comment to Mr. Bell spilling acid while working on his experiments, and needed Mr. Watson's assistance.
[Picture of Alexander Graham Bell]
1876: Bell demonstrates his telephone at the Centennial Exposition in Philadelphia.
Era of Bell's Patent
"The U.S. Patent Office issued patent #174,465 to Bell on March 7, 1876" for an improvement of telegraph (not telephone) [AT&T: Inventing the Telephone] Use the PTO Patent search engine to view Bell's patent. See also Who Invented the Telephone: Why Bell, of Course, Privateline.com; [Brands p 2] [Brenner p 1]
On June 2, 1875, Bell and Watson were testing the harmonic telegraph when Bell heard a sound come through the receiver. Instead of transmitting a pulse, which it had refused to do in any case, the telegraph passed on the sound of Watson plucking a tuned spring, one of many set at different pitches. How could that be? Their telegraph, like all others, turned current on and off. But in this instance, a contact screw was set too tightly, allowing current to run continuously, the essential element needed to transmit speech. Bell realized what happened and had Watson build a telephone the next day based on this discovery. The Gallows telephone, so called for its distinctive frame, substituted a diaphragm for the spring. Yet it didn't work. A few odd sounds were transmitted, yet nothing more. No speech. Disheartened, tired, and running out of funds, Bell's experimenting slowed through the remainder of 1875.
During the winter of 1875 and 1876 Bell continued experimenting while writing a telephone patent application. Although he hadn't developed a successful telephone, he felt he could describe how it could be done. With his ideas and methods protected he could then focus on making it work. Fortunately for Bell and many others, the Patent Office in 1870 dropped its requirement that a working model accompany a patent application. On February 14, 1876, Bell's patent application was filed by his attorney. It came only hours before Elisha Gray filed his Notice of Invention for a telephone.
Mystery still surrounds Bell's application and what happened that day. In particular, the key point to Bell's application, the principle of variable resistance, was scrawled in a margin, almost as an afterthought. Some think Bell was told of Gray's Notice then allowed to change his application. That was never proved, despite some 600 lawsuits that would eventually challenge the patent. Finally, on March 10, 1876, one week after his patent was allowed, in Boston, Massachusetts, at his lab at 5 Exeter Place, Bell succeeded in transmitting speech. He was not yet 30. Bell used a liquid transmitter, something he hadn't outlined in his patent or even tried before, but something that was described in Gray's Notice.
-Tom Farley's Telephone History Series (cc) |
Facing competing patents and an incomplete invention, in 1877, Bell and supporters offered to sell the telephone Patents to Western Union for $100,000. The offer was refused.
Western Union memo, 1876.
In 1876, Alexander Graham Bell and his financial backer, Gardiner G. Hubbard, offered Bell's brand new patent (No. 174,465) to the Telegraph Company - the ancestor of Western Union. The President of the Telegraph Company, Chauncey M. DePew, appointed a committee to investigate the offer. The committee report has often been quoted. It reads in part:
"The Telephone purports to transmit the speaking voice over telegraph wires. We found that the voice is very weak and indistinct, and grows even weaker when long wires are used between the transmitter and receiver. Technically, we do not see that this device will be ever capable of sending recognizable speech over a distance of several miles.
"Messer Hubbard and Bell want to install one of their "telephone devices" in every city. The idea is idiotic on the face of it. Furthermore, why would any person want to use this ungainly and impractical device when he can send a messenger to the telegraph office and have a clear written message sent to any large city in the United States?
"The electricians of our company have developed all the significant improvements in the telegraph art to date, and we see no reason why a group of outsiders, with extravagant and impractical ideas, should be entertained, when they have not the slightest idea of the true problems involved. Mr. G.G. Hubbard's fanciful predictions, while they sound rosy, are based on wild-eyed imagination and lack of understanding of the technical and economic facts of the situation, and a posture of ignoring the obvious limitations of his device, which is hardly more than a toy... .
"In view of these facts, we feel that Mr. G.G. Hubbard's request for $100,000 of the sale of this patent is utterly unreasonable, since this device is inherently of no use to us. We do not recommend its purchase."
Note that AT&T would later acquire Western Union. Note also that in 1971 AT&T would turn down an offer to own the Internet. |
1877: "the Government of the United States moved to annul the patent issued to Bell on the grounds of fraud and misrepresentation, a case that the Supreme Court found viable and remanded for trial" [H Res 269]
As telephone service proved successful, Western Union regretted its decision and sought to buy patent rights from other telephone companies. In 1878, Western Union sought to use telephones invented by Thomas Edison and Elisha Gray in order to establish a rival service. Bell sued.
Western Union was "not alone. At least 1,730 telephone companies organized and operated in the 17 years Bell was supposed to have a [patent] monopoly. Most competitors disappeared as soon as the Bell Company filed suit against them for patent infringement, but many remained. They either disagreed with Bell's right to the patent, ignored it altogether, or started a phone company because Bell's people would not provide service to their area." [Farley at 4] [See also Mueller p 34] Some services may have been offered with inventions outside of Bell's patent, but the threat of litigation would terminate the venture. Naturally, Bell refused to interconnect with these competing services.
In 1879, Bell and Western Union settled out of court Western Union's challenge to AT&T's patent. AT&T and Western Union agree not to compete with each other. AT&T would depart from the telegraph market and Western Union would depart from the telephone market (note that at this time long distance communications was feasible only using a telegraph, not a telephone). Western Union agreed to recognize Bell's patent. AT&T agreed to pay 20% of its profits to Western Union for 17 years, and to buy 55 Western Union telephone exchanges. [Sterling p 55] [Farley at 4] [Mueller p 33] [FCC 1939 p 124] [Catania] [Porticus]
1897: USG challenge to Bell's patents, based on Meucci's prior art, is terminated after the death of Meucci and the expiration of Bell's patents; it was terminated as moot without resolution of who actually invented the telephone.
Having secured its monopoly position, AT&T engaged in the 1880s in a series of rate hikes under the justification of expanding the service. The public faced with no alterntive service responded negatively. Responses included establishing legal authority to regulate the rates (See Common Carriage) and also the establishment of municipal networks. [Mueller p 36]
Bell Telephone
"in 1877, construction of the first regular telephone line from Boston to Somerville, Massachusetts were completed. [See Atlanta (first phone in Atlanta 1877 - first exhange in Atlanta 1879)] - Derived From History of Wire and Broadcast Communication, FCC (May 1993)
1878 The first telephone exchange opened in New Haven CT operating under a license from the Bell Telephone company. [AT&T History Origins].
1878: First Telephone Directory New Haven [List of Subscribers to the New Haven exchange]
1878: First telephone installed in the Whitehouse. [Farley at 4]
1878: Bell files for a ringer patent. [Farley at 4]
1878: Hubbard hires Theodore Vail for his first term as President. [Farley at 4]
1879: The first phone numbers were used at Lowell, MA during a measles outbreak which threatened the four telephone operators. Prior to this, the operators identified the lines by the name of the subscriber. The line ports were assign numbers rather than names, then a preliminary telephone directory was created associating names and numbers. This facilitated the ability of operators to connect telephone calls, and the idea quickly spread. Sources: Sterling, Bernt, Weiss, Shaping American Telecommunications, p. 54 (2006); Wikipedia.
1882 American Bell acquired a controlling interesting in Western Electric Company (founded by Elisha Gray) which became its manufacturing unit. [AT&T History Origins]. The phones would be sold to American Bell, which would then lease them to the Bell Operating Companies, which would then lease them to customers.
AT&T Established
1885 American Telephone and Telegraph was incorporated "as a wholly owned subsidiary of American Bell, chartered to build and operate the original long distance telephone network." [AT&T History Origins].
"On February 28, 1885 AT&T was born. Capitalized on only $100,000, American Telephone and Telegraph provided long distance service for American Bell. Only local telephone companies operating under Bell granted licenses could connect to AT&T's long distance network. Vail thought this would continue the Bell System's virtual monopoly after its key patents expired in the 1890s. He reasoned the independents could not compete since they would be isolated and without long distance lines." [Farley at 4]
1887: Theodore Vail resigns as a result of a dispute with Boston Financial backers. [Farley at 4]
1889: First payphones, set up in Hartford. [Farley at 4]
In 1899, AT&T "acquired the assets of American Bell, and became the parent company of the Bell Ssystem." [AT&T History Origins]. [AT&T 1885 Brochure]
"On December 30, 1899, the American Telephone and Telegraph Company 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." Wikipedia
Patent Expires: Telephone Service Competition 1893 - 1921 "Dual Service"
In 1894, Bell's telephone patent expired. Until that time, only Bell or Bell licensed companies legally operated as telephone companies in the US. "Between 1894 and 1904, over six thousand independent telephone companies went into business in the United States, and the number of telephones boomed from 285,000 to 3,317,000... But the multiplicity of telephone companies produced a new set of problems -- there was no interconnection, subscribers to different telephone companies could not call each other. This situation only began to be resolved after 1913." [AT&T History Origins] [See Bell's Solution: Universal Service].
AT&T's Competitive strategy:
- Refuse Interconnection [Brands p 3]
- Compete on Network Effect (ability to call more subscribers)
- "By the turn of the century... consumers demanded ubiquitious service: the ability to reach as many people as possible. Thus, the Bell System began an aggressive campaign of entering into interconnection agreements with independents operating in areas where Bell lacked a presence, while continuing to refuse to interconnect with competing exchanges." [Brands p 3]
- After 1906, Interconnect with independant telephone companies where Bell had not yet reached - forming partnerships with those companies before large regional independant companies could [Mueller p 110]
- Note that Milton Mueller argues that the Independants also refused to interconnect with Bell because that gave the indies a competitive advantage - only they reached the customers in their territory. [Mueller p 38]
- Refuse to sell Western Electric Equipment
- Lobbying
- Predatory pricing
- Buying competitors [Brands p 3]
- For struggling independants's, acquisition was an atractive means of mitigating loss of investment
- Service
- Restricting capital
"By the 1890's, Bell had become a prominent organization with many contacts in the business community, particularly after the Morgan interests gained control. AT&T's strategy was to use its influence to restrict the independents' access to desperately needed investment capital. This had the effect of slowing the independent's rate of expansion. Bell's strongest political influence was with municipal authorities. Many cities required telephone companies to obtain operating licenses. In some cases, Bell's influence with prevailing politicians motiviated establsihment of onerous terms for the independents." [Sterling p 76] The independants also imposed onerous terms upon themselves. In order to complete, they would undercut Bell's price. But as their networks grew more complex, their costs went up. They had to grow in order to achieve network effect, but if they grew, they had to raise their prices.
1900: AT&T purchased Michael Pupin's patent for a load coil, which amplified voice for long distance calls. [Porticus Western Electric]
1903: City and Suburban Telegraph becomes Cincinnati and Suburban Bell [Cincinnati Bell History]
1904: Cincinnati Bell introduces its first street payphone. [Cincinnati Bell History]
Until 1907, AT&T refused to sell equipment from its subsidiary Western Electric to independents. Local Bell Operating Companies agreed to lease, not buy, equipment from AT&T, and only to interconnect with AT&T's long distant network and other BOCs. [Mueller p 38] Independent networks were not permitted to interconnect and become a part of the AT&T network because the independants had not signed the licensing agreements and were not buying equipment from Bell.
1907: As a result of competition, AT&T made more capital investments and went further in debt. This resulted in a financial struggle with JP Morgan taking a majority control of the company. In 1907, the JP Morgan group returned Theodore Vail to the presidency of AT&T. Vail would remain president until 1919.
AT&T's strategy shifts at this time from expanding its own network and excluding the independents through restricting capital, refusing to sell equipment, and political pressure - to expansion of AT&T through acquisition of independent telephone companies.
[Picture of AT&T Long Distance operators, Kansas City, 1920. Note that the supervisor is on roller skates]
1909: AT&T negotiates with Postal Telegraph for a merger. The negotiations break down. AT&T then approaches Western Union, which was experiencing financial difficulties and accepted the offer - AT&T and Western Union Merged in 1909. (so accounts say 1908). AT&T will be forced to divest itself of Western Union in 1913 pursuant to the Kingsbury Agreement.
1910: AT&T negotiates with the owners of large independant telephone companies concerning acquisition of those companies and the elimination of competing "dual service" companies. [Mueller p 113]
1911: Western Electric Research Branch established [Brooks p 11] [Porticus WE]
1913: Harold Arnold in Western Electric Research Branch develops high-vacuum electronic amplifying tube [Brooks p 11] [Porticus WE]
1919 First Dial Phones were introduced into the Bell System in Norfolk VA. The last manual phone was converted to dial in 1978. [AT&T: History: Milestones] [Picture of an 1921 AT&T Dial Phone]
AT&T "Natural" Monopoly 1921-
The passage of the Willis Graham Act marked the closure of the era of telephone competition, as independant telephone companies with financial difficulties sought to be acquired by AT&T. In time, telecommunications policy operated with the belief that the telephone network was a natural monopoly. Telecommunications policy determined that the proper way to regulate the telephone monopoly and determine appropriate rates was through rate-of-return regulation.
Note that Prof. Milton Mueller rejects both the argument of natural monopoly and of the AT&T monopoly occuring as a result of predatory actions. Instead, Mueller argues that AT&T's monopoly was established pursuant to Vail's concept of "universal service," that the only way to overcome fragmented non interconnecting competing telephone services was to eliminate the competition and establish one company as the one unversal, fully interconnected, network.
Reasons justifing the AT&T Monopoly
- natural monopoly
[Brands p 16]
- Opposed to this:
- it was believed that increasing the numbers of subs increased the complexity of the network and therefore was a diseconomy of scale. [Mueller p 15]
- 1925 Report pointing to Network Effect as justiification for the monopoly. [Mueller p 15]
- Studies during US v AT&T did not find economies of scale (although they did find economies of teledensity). [Mueller p 17]
- Vail's "Universal Service" - aka, universal interconnection
- Network Effect
1921 Congress passed the Willis Graham Act. "This law exempted telephone
companies from the antitrust laws in order to make it possible for them
to "unify the service" by merging competing telephone exchanges. In so doing, it provided the legal foundation for the first generation universal service policy." - Milton Mueller, "Universal service" and the new Telecommunications Act: Mythology Made Law 1997
1924 AT&T demonstrates the telephotography services, aka fax, and begins service in 1925. [1930 telephotography shot of Babe Ruth]
1924: Western Electric Hawthorne Plant goes online [Harvard]
In 1925 Walter Gifford, newly elevated to the presidency of AT&T, decided that AT&T and the Bell System should concentrate on its stated goal of universal telephone service in the United States." [AT&T: History: Early Intl] [See Mueller]
"For much of its history, AT&T and its Bell System functioned as a legally sanctioned, regulated monopoly. The fundamental principle, formulated by AT&T president Theodore Vail in 1907, was that the telephone by the nature of its technology would operate most efficiently as a monopoly providing universal service. Vail wrote in that year's AT&T Annual Report that government regulation, "provided it is independent, intelligent, considerate, thorough and just," was an appropriate and acceptable substitute for the competitive marketplace." [AT&T : History: The Bell System]
1925: Western Electric's research and development work is restructed as Bell Labs. [Porticus Western Union]
1929: Western Electric's sales $411 m. [Porticus Western Union]
1930: Western Electric 43,000 employess [Porticus Western Union]
1933: Western Electric's sales $70 m; 6000 employees. [Porticus Western Union]
"The system made steady progress towards its goal of universal service, which came in the twenties and thirties to mean everyone should have a telephone." [AT&T : History: The Bell System]
1939: Telephone is deployed as "a weapon of preparedness." [Porticus Western Union]
1946: AT&T introduces first mobile telephone service in St Louis. [Porticus Western Union]
1947: Bell Labs develops the transistor. [Porticus Western Union]
1954: Western Electric produces colored telephones for first time. [Porticus Western Union]
1963 AT&T introduces touch tone telephone service. [Picture of 1963 Touch Tone Phone]
1971: AT&T is offered the opportunity to take over, own and operate ARPANet. "AT&T could have owned the network as a monopoly service, but in the end declined. "They finally concluded that the packet technology was incompatible with the AT&T network," Roberts said." [Wizards p. 232]
Resurrection of Competition
1977 "In Chicago, AT&T installs the first fiber optic cable in a commercial communications system." [AT&T: History: Milestones]
1977 AT&T sets up its first NOC, replacing network control centers. [AT&T: History of the AT&T Network] [Picture of the AT&T NOC, 1987]
"Stockholders at AT&T's annual meeting approve changing the legal name of the company from American Telephone and Telegraph Corporation to AT&T Corp." [AT&T: History: Milestones]
1978: AT&T tests cellular telephony. [Porticus Western Union]
1983: AT&T introduces cellular mobile telephone service in Chicago. [Porticus Western Union]
1991: AT&T experiences several major network outages. Outage results in the Congressional Report "Asleep at the Switch" and the creation of the FCC FACA the Network Reliability and Interoperability Council. [AT&T Failure of 1990] [Making the Connection, Disaster Recovery] [Reed Hundt, Avoiding Digital Disruptions 1997]
- Hush a Phone, Carterfone, Modems
Broadband
1948 AT&T opened its first microwave relay system between Boston and New York. [AT&T : History: The Bell System] [Picture of Microwave Relay Tower 1947]
AT&T installed the first experimental coax cable in 1936 betweeh Philadelphia and New York. "The first “regular” installation connected Minneapolis, Minn., and Stevens Point, Wis., in 1941. This L1 coaxial-cable system could carry 480 telephone conversations or one television program. " [AT&T: History of Network Transmission]
1983 AT&T installs its first fiber optics in its long distance network. [Picture of fiber installation 1983]
1963: AT&T installs first electronic switch in a private branch exchange in Coco Beach, Fl (NASA??). [Porticus Western Union]
1965 AT&T installs the first electronic switch special purpose computer in Succasunna, NJ. [Picture of installation of first electronic switch]
1969: AT&T declines to bid on ARPA's RFQ to build the first ARPANet IMPs.
1972: AT&T decides not to take over control of the Internet.
1975 "AT&T installs the world's first digital electronic toll switch, the 4ESS®, in Chicago. This switch could handle a much higher volume of calls (initially 350,000 per hour) with greater flexibility and speed than the electromechanical switch it replaced." [AT&T: History: Milestones] [Picture of Control Room of the first 4ESS Switch 1975]
1978: "In April 1978, AT&T was
supposed to develop something called the Bell Data Network. They never did." [Babbage (Kleinrock) 27] [Nerds p 115]
1979: " In 1979 they started talking about
AIS, Advanced Information Service, another network they never made." [Babbage (Kleinrock) 27] [Nerds p 115]
1982: "Then finally in 1982, they came out with Net
1000. In 1986 they closed down Net 1000; they lost a billion dollars on that effort." [Babbage (Kleinrock) 27] Putting it on the Line, Network World (March 26, 2001) [Nerds p 116]
1982: AT&T announced Bell Packet Switching Service. The FCC responded to AT&T's application saying "it was uncomfortable with Bell's proposal because it appeared the service had been designed so that American Bell would be the only company that could use it." [Bell Turned Down on Data Link Rate, NY Times (July 30, 1982)] ATT Tariff FCC No 270 Rates and Reg for Bell Packet Switching Service, 92 FCC2d 48, FCC 82-335 (1982). [Nerds p 115]
AT&T Accunet
1983: AT&T resubmitted the application with the new name Basic Packet Swtiching Service (BPSS), and was approved for service.. [Nerds p 115] AT&T renamed BPSS as Accunet. In 1985 the FCC ordered AT&T to withdraw Accunet Packet Service from service on the grounds that
"it gives AT&T Information Service (AT&T IS) unreasonable preference in its provision of services. AT&T-IS was given rates lower than those offered other cusomters, prompting FCC conern that other AT&T-C ratepayers, rather than stockholders, were subsidizing the money-losing APS. AT&T IS was the primary user of APS at 94.8 percent." -- AT&T Vows Commitment to Packet Service Following FCC Accunet Withdrawal Order, Communications News (August 1985) (republished on Find Articles website)
1988: Filing and Review of Open Network Architecture Plans, Memorandum Opinion and Order, 4 FCC Rcd 2449 (1988) ("approving AT&T's plan invoilinvg a basic packet switching service underlying an enhanced protocol processing service")
1988: AT&T receives contract from NSF to operate NSFNet.
Era of Competition
Wireless
AT&T initiates the first mobile telephone service [AT&T: History: Milestones] [Picture of a mobile phone user in Chicago in 1947]
"One such merger came in 1991 when AT&T acquired computer maker NCR in a $7.3 billion deal designed to give the company's customers an edge as communications and computing converged. Another, the agreement to acquire McCaw Cellular in 1994 for $11.5 billion, gave AT&T direct access to consumers for the first time in a decade. The unit, renamed AT&T Wireless, established AT&T as a leading force in the fast growing wireless telecommunications industry." [AT&T: History: Post Divestiture]
1894: AT&T had 240,000 telephones installed. [Mueller p 40]
Resources:
Government
- FCC, Telephone Investigation (1939)
- H Res 269, 107th Congress, 1st Sess Sept 25, 2001
Books
- John Brooks, Telephone: The First Hundred Years (Harper & Row 1975)
-
Sterling, Bernt, Weiss, Shaping American Telecommunications: A History of Technology, Policy, and Economics
 (2006)
- Milton Mueller, Universal Service : Competition, Interconnection and Monopoly in the Making of the American Telephone System (MIT Press 1997) (one of the best books on the subject)
- William Sharkey, The Theory of Natural Monopoly (Cambridge University Press 1982).
- J Warren Stehman, The Financial History of the American Telephone and Telegraph Company (Houghton Mifflin 1925).
Papers
Audio
- NPR: Engines of our Ingenuity:
Links
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