1847, March 3: Alexander Graham Bell born in Edinbugh, Scotland. He was educated at the Royal High School. As a boy he constructed a "speaking machine" at the encouragement of his father.. [IEEEVM ][About.com] [LOC Bell Family Papers] [Kingsbury 19]
1864-65: Bell conducts experiments attempting to create the sounds of vowels as produced by the mouth. Helmholtz had already discovered these experiments and produced papers in 1863 on speaking machines that could produce vowel sounds.. [Kingsbury 20]
1867: Bell graduates from University College, London [Kingsbury 19]
1869: Shawk and Barton (aka Western Electric) established in Cleveland Ohio, taking over a former Western Union repair shop. One of the first customers was Elisha Gray. Shawk sold his interest to Gray. Gray and Barton opened at years end in Chicago, with investment from Anson Stager. [Iardella 27]
Bell moves to Boston, begins teaching at the Boston School for Deaf Mutes. He students included a child named George Sanders and a girl named Miss Hubbard. Their parents would finance Bells experiments.. [LOC Bell Family Papers] [Kingsbury 23]
Chicago Fire - Fire stops within two blocks of Barton and Gray; surviving, they emerge to produce equipment and restore communications in Chicago. [Iardella 28]
Barton and Gray is reorganized as Western Electric ($150,000 capital). Produces Morse equipment and Gray's telegraph printer. [Iardella 28]
1872: Bell produces initial drawings of a "harmonic telegraph" Bell's initial interest is to develop the harmonic telegraph, not the telephone, which would result in multiple telegraph messages being sent over a single telegraph wire. Bell reflected:
"Instead of having the dots and dashes recorded upon paper, the operators were in the habit of observing the duration of the click of the instruments, and in this way were enabled to distinguish by ear the various signals. It struck me that in a similar manner the duration of a musical note might be made to represent the dot or dash of the telegraph code, so that a person might operate one of the keys of the tuning-fork piano referred to above, and the duration of the sound proceeding from the corresponding string of the distant piano be observed by an operator stationed there. It seemed to me that in this way a number of distinct telegraph messages might be sent simultaneously from the tuning-fork piano to the other end of the circuit, by operators each manipulating a different key of the instrument. These messages would be read by operators stationed at the distant piano, each receiving operator listening for signals of a certain definite pitch, and ignoring all others. In this way could be accomplished the simultaneous transmission of a number of telegraphic messages along a single wire, the number being limited only by the delicacy of the listener's ear. The idea of increasing the carrying power of a telegraph wire in this way took complete possession of my mind, and it was this practical end that I had in view when I commenced my researches in Electric Telephony." [Kingsbury 27]
Experiment description: "The form of the apparatus constructed at that time consisted of tuning forks arranged substantially after the manner of Helmholtz. The transmitting tuning fork was placed in a local circuit. Upon causing the wire to vibrate, the wire attached to the prong was alternately lifted out of the mercury and depressed into it again. The circuit of which the fork formed a part was thus made and broken at every vibration of the fork. The poles of the electro-magnet attracted the prongs of the tuning fork at each kae of the circuit, and release them when the circuit was broken. The intermittent attraction of the electro-magnet thus caused the transmitting fork to remain in continuous vibration, emitting continuously its musical tone. By the depression of a telegraph key, the current rendered intermittent by the vibration of the transmitting fork was directed to a line wire which passed to a receiving instrument consisting of an electro-magnet between the poles of which appeared the prongs of a tuning fork. Every time the prong of the transmitting fork made contact with the mercury below it, the prongs of the receiving fork were attracted by the poles of the electro-magnet, between which they were placed; and every time the prong of the transmitting fork broke contact with the mercury below, the prongs of the receiving fork were no longer attracted by the electro-magnet, but were allowed to move freely in the manner of a tuning fork left to itself. Thus, at every vibration of the transmitting fork, the prongs of the receiving fork were attracted by the receiving electro-magnet and released. When the receiving fork had normally the same pitch as the transmitting fork, the intermittent attraction of the electromagnet would cause it to be thrown into vigorous vibration, thus producing a musical sound of similar pitch to that occasioned by the vibration of the transmitting fork." [Kingsbury 28]
1873: Bell's experiments switch from tuning forks to "vibrating armatures consisting of single flat plates - really musical reeds." [Kingsbury 29]
1874: Bell partners with Gardiner Greene Hubbard, who provides financial backing for Bell's research. Bell meets Watson. [About.com] Bell meets Thomas Watson at Charles William's electrician shop in Boston. [LOC Bell Family Papers]
Bell, Hubbard, and George Sanders form the Bell Patent Association. Sanders also provides financial backing for Bell's research. Bell would later marry Hubbard's daughter. [About.com] [LOC Bell Family Papers]
February: Bell visits Prof. Joseph Henry of the Smithsonian Institution [Coon 20]
January 20: Bells Patent application is sworn to in Boston and shipped to Washington. [Kingsbury 45]
January 25: Bell sails to Europe in order to file patent applications there [Kingsbury 45]
February 14: Hubbard files Bell's patent application.
""Having described my invention, what I claim, and desire to secure by letters patent is as follows:"
"1. A system of telegraphy in which the receiver is set in vibration by the employment of undulatory currents of electricity, substantially as set forth."
"2. The combination, substantially as set forth, of a permanent magnet or other body capable of inductive action, with a closed circuit, so that the vibration of the one shall occasion electrical undulations in the other or in itself, and this I claim whether the permanent magnet be set in vibration in the neighborhood of the conducting wire forming the circuit or whether the conducting wire be set in vibration in the neighborhood of the permanent magnet, or whether the conducting wire and the permanent magnet both simultaneously be set in vibration in each other's neighborhood."
"3. The method of producing undulations in a continuous voltaic current by the vibration or motion of bodies capable of inductive action, or by the vibration or motion of the conducting wire itself, in the neighborhood of such bodies, as set forth."
"4. The method of producing undulations in a continuous voltaic circuit by gradually increasing and diminishing the resistance of the circuit, or by gradually increasing and diminishing the power of the battery, as set forth."
"5. The method of and apparatus for transmitting vocal or other sounds telegraphically, as herein described, by causing electrical undulations similar in form to the vibrations of the air accompanying the said vocal or other sounds, substantially as set forth."
"In testimony whereof, I have hereunto signed my name this 20th day of January, A.D. 1876."
"Be it known that I, Elisha Gray of Chicago, in the County of Cook and State of Illinois, have invented a new art of transmitting vocal sounds telegraphically, of which the following is a specification:"
"It is the object of my invention to transmit the tones of the human voice through a telegraphic circuit, and reproduce them at the receiving end of the line, so that actual conversations can be carried on by persons at long distances apart."
"I have invented and patented methods of transmitting musical impressions or sounds telegraphically, and my present invention is based upon the modification of the principle of said invention, which is set forth and described in letters patent of the United States, granted to me July 27, 1875, respectively numbered 166,095 and 166,096, and also in an application for letters patent of the United States filed by me February 23, 1875."
"To attain the objects of my invention, I devised an instrument capable of vibrating responsively to all the tones of the human voice, and by which they are rendered audible."
"In the accompanying drawings, I have shown an apparatus embodying my improvements in the best way now known to me, but I contemplate various other applications, and also changes in the details of construction of the apparatus, some of which would obviously suggest themselves to a skillful electrician or a person versed in the science of acoustics on seeing this application."
Bell's application did not mention the word "telephone" nor did it promise the transmission of voice. The principle of Variable Resistance was written into the margin of the application (it is not clear that Bell had done any experiments on variable resistance prior to the application). Bell had yet to successfully transmit voice. The Telephone Cases, 126 US 1, 535 (1888)
March 6: Bell, Sanders, and Hubbard form the Bell Patent Association. [Iardella p 9]
March 10 “Mr. Watson, come here, I want you.” the first words that Mr. Bell spoke through his invention. This comment apparently was said as Mr. Bell had spilled acid while working on his experiments, and needed Mr. Watson's assistance. [Brooks p 49] This makes this both the first telephone call and the first emergency telephone call
April 6: Post Office grant's Bell's patent letters, Patent Number 161,739 for "a method of, and apparatus for, transmitting two or more telegraphic signals simultaneously along a single wire by the employment of transmitting instruments, each of which occasions a succession of electrical impulses differing in rate from the others, and of receiving instruments, each tuned to a pitch at which it will be put in vibration to produce its fundamental note by one only of the transmitting instruments, and of vibratory circuit breakers operating to convert the vibratory movement of the receiving instrument into a permanent make or break (as the case may be) of a local circuit, in which is placed a Morse sounder, register, or other telegraphic apparatus. I have also therein described a form of autograph-telegraph based upon the action of the above-mentioned instruments."" [Telephone Cases p 6 (1888)]
May 10, Bell presents paper, Researches in Telephony, to the American Academy of Arts and Sciences. [Kingsbury 49]
October 9: First two-way telephone call over outdoor wires between Watson and Bell. [Brooks p 52][Privatelines 1876-1879] Bell's salutation was "Hoy, Hoy" - which is how he believed the phone should be answered (this is how Mr. Burn's on the Simpson's answers the phone - playing with the theme of exactly how old is Mr. Burns).
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.
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."
Bell 1877 Advertisement:
"The proprietors of the Telephone . . . are now prepared to furnish Telephones for the transmission of articulate speech through instruments not more than twenty miles apart . . . Conversation can easily be carried on after slight practice and with occasional repetition of a word or sentence. On first listening to the Telephone, though the sound is perfectly audible, the articulation seems to be indistinct; but after a few trials the ear becomes accustomed to the peculiar sound . . ."[Brooks p 60]
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. WU's printing telegraph units were being taken out and replaced with Bell's telephones. [Kingsbury 98] Thus WU sought to buy patent rights from other telephone companies.
Mar 22, 1877: Thomas Edison and WU enter agreement whereby Edison assigns his telephone / telegraph inventions to WU. [Kingsbury 109]
In 1878, Western Union sought to use telephones invented by Thomas Edison and Elisha Gray in order to establish a rival service. Western Union create a subsidiary called the American Speaking Telephone Company in December 1877. [Brooks p 61 (stating that WU also based its actions on the work of Professor Amos E Dol bear)] [Scripophily] Photo of American Speaking Telephone. "The Harmonic Telegraph Company was owned and controlled by Elisha Gray and SS White... The American Speaking Telephone Company was organized to develop the Western Union telephone interests. Gray with his partner held one-third interest in it." [Kingsbury 187]
Bell sued in Sept 12, 1878. Bell had $850k; Western Union was the "largest corporation that ever existed." WU had ~$41m capital and was backed by the Vanderbilts. [Coon 41]
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.
"Insiders in Western Union and the Bell companies were thinking of their investments. To the public, however, it must have seemed strange that the Western Union lawyers should make overtures for a compromise. Apparently nobody in the communications field was fond of the idea of competition. They had all experienced competition and they definitely did not like it. As far as their business was concerned, they could see no advantages in it. They only people who could profit by competition were gamblers like Jay Gould who could use a competitive company for its nuisance value and sell out to the monopoly." [Coon 42]
In November 10, 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.
In his book Telephone: The First Hundred Years, John Brooks explains that Western Union's incentive to settle with AT&T may have come from the fact that financier Jay Gould had launched an unfriendly take over bid of Western Union - and Western Union needed to focus on fending off the attack. In addition, AT&T had submitted to the court substantial evidence that no fraud had taken place. [Brooks p 71] [Coon 42]
"Testimony was prepared, but the case never came to trial. Experts in electrical science and in law had examined all the evidence that could be got together, and advised the Western Union that it was impossible to plead anticipation or to impeach the validity of the Bell patents.
"Mr. Frank L. Pope, a well-known electrical and patent expert, advised to that effect, and Mr. George Gifford, an eminent lawyer who was leading counsel for the Western Union, reached the same conclusion. In consequence, overtures were made with a view to a settlement on terms. The nature of these overtures and the result were subsequently recorded by Mr. Gifford in an affidavit, in the course of which he stated that in the years 1878-1879 he was one of the counsel for the Western Union Telegraph Company." [Kingsbury 187]
US v American Bell, 128 US 315 (1888) (suit challenging Bell's patent based on the work of Phillip Reis and others, granting defendants motion to dismiss)
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 alternative 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]
The End of the Patent Era
Bell's telephone patent expires
Bell attempts to enforce the Berlinger patent (for a microphone device, applied for 1877, granted 1891), sends notice of infringement to independent telephone companies. 1897 patent sustained by Supreme Court. Subsequent courts would interpret the patent narrowly, however, limiting its utility, and ending the advantage of the initial patents for Bell. [Brooks 103]
An 1877 Circular: The Telephone
"The proprietors of the Telephone, the invention of Alexander Graham Bell, for which the patents have been issued by the United States and Great Britain, are now prepared to furnish Telephones for the transmission of articulate speech through instruments not more than twenty miles apart. Conversation can easily be carried on after slight practice and with occasional repetition of a word or sentence. On first listening to the Telephone, though the sound is perfectly audible, the articulation seems to be indistinct; but after a few trials the ear becomes accustomed to the peculiar sound and finds little difficulty in understanding the words.
The Telephone should be set in a quiet place, where there is no noise which would interrupt ordinary conversation.
The advantages of the Telephone over the Telegraph for local business are: (1) That no skilled operator is required, but direct communication may be had by speech without the intervention of a third person. (2) That the communication is much more rapid, the average number of words transmitted a minute by Morse Sounder being from fifteen to twenty, by Telephone from one to two hundred. (3) That no expense is required either for its operation maintenance or repair. It needs no battery, and has no complicated machinery. It is unsurpassed for economy and simplicity.
The terms for leasing two Telephones for social purposes connecting a dwelling house with any other building will be $20 a year, for business purposes $40 a year, payable semiannually in advance, with the cost of expressage from Boston, New York, Cincinnati, St. Louis or San Francisco. The instruments will be kept in good working order by the lessors, free of expense, except from injuries resulting from great carelessness.
Several telephones can be placed on the same line at an additional rental of $10 for each instrument; but the use of more than two on the same line where privacy is required is not advised. Any person within ordinary hearing distance can hear the voice calling through the Telephone. If a louder call is required one can be furnished for $5.
Telegraph lines will be constructed by the proprietors if desired. The price will vary from $100 to $150 a mile; any good mechanic can construct a line; No. 9 wire costs 8 1/2 cents per pound, 320 pounds to the mile' 34 insulators at 25 cents each; the price of poles and setting varies in every locality; stringing wire $5 per miles; sundries $10 per mile.
Parties leasing the Telephone incur no expense beyond the annual rental and repair of the line wire. On the following page are extracts from the Press and other sources relating to the Telephone.
Gardiner G Hubbard
Cambridge, Mass, May 1877" [Kingsbury 67]
Instructions to Agents No. 1 (Nov. 15, 1877)
In consequence of the difficulties that have arisen in different localities for want of uniformity in price for the rental of telephones the Bell Telephone Company has adopted the following rates for all its agencies, and prices are to be fixed in accordance herewith.
The annual rental for telephones shall be ten dollars each, payable in advance; not less than a pair of telephones must be used at each station, except as hereafter specified.
For social purposes, single telephones may be used at each station. By 'Social purposes' is mean the use of telephones as a matter of convenience between private houses; between a house and a private stable; a doctor's house and office, etc. etc.
For district telephone purposes a discount of twenty percent., and for house use a discount of fifty per cent. may be made, and the use of single telephones allowed at each station.
By 'house use' is meant all places where telephones are used in one building, or group of buildings, as, for instance, several buildings in the same yard used by the party; or, in fact, where telephones substantially take the place of speaking tubes. College lines may be included in this line.
The magneto bell calls may be sold for fifteen dollars each, or rented for five dollars each per annum.
By April, Bell contracted with Charles Williams for the manufacturing of telephones. [Kingsbury 65]
April 4: First dedicated outdoor telephone lines between the Williams Shop in Boston and Williams' home in Somerville. [Brooks p 53][Kingsbury 68]
May: First line installed for a customer, the Cambridge Board of Waterworks [Kingsbury 68]
May 17: an experimental telephone exchange is set up borrowing lines and the central office of the Holmes Burglar Alarm Co, bring together the lines of several customers and exchanges calls. Holmes orders a switchboard from Williams and acquires the rights to operate the telephone central office from Hubbard. Bell telephone would provide the phones. Holmes however used the opportunity to permit telephone customers to call into the central office so as to place orders for a General Express Agency, not to connect telephone calls. [Kingsbury 69]
May 18: First telephone line installed in New York between the house and office of HL Roosevelt [Kingsbury 68]
July 9: Bell Telephone Company established. [Brooks p 53] [About.com] [LOC Bell Family Papers] [Iardella p 9] Based on Hubbard's previous business model of renting shoe making machines, Bell Telephone decides to rent telephone service, not sell telephones. [Brooks p 55]
July, end of, 750 telephones in use. [Kingsbury 69]
July: Isaac D Smith sets up the New England Telephone Company in Connecticut. Smith would start by connecting local doctors, with his drug store acting as the central office. [Kingsbury 72] [Iardella p 9]
Aug: Bell Telephone Association formed (Bell - 3/10s share, Hubbard - 3/10s share, Sanders - 3/10s share, Watson - 1/10s share) [Kingsbury 179]
New England Telephone Company ($200,000 capital) and
the Bell Telephone Company.
"What the reorganization meant was that the founders, in the cause of bringing in new capital, had relinquished control to a group of aristocratic yet venturesome Boston capitalists" [Brooks p 67] [Kingsbury 96, 179]
Mar 8: Bell Telephone Co entered into agreement with the District Telephone Company of St. Louis [Kingsbury 181]
May 31: Bell entered into agreement with Connecticut District Telephone Company [Kingsbury 181]
Jul 3: Bell entered into agreement with Bell Telephone of New York. [Kingsbury 181]
Jul 30: Bell Telephone Co Incorporated ($45,000 capital) [Kingsbury 179]
Maryland Telephone of Baltimore City founded. Becomes Chesapeake and Potomac Telephone co. of Baltimore City in 1891. [Baltimore Sun]
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).
Mar. 13: Bell Telephone merges with the New England Telephone Company and becomes the National Bell Telephone Company ($850,000 capital). [LOC Bell Family Papers] [Kingsbury 179]
Watson resigned from Bell Telephone - both original inventors had now left the company. [Brooks p 57] [Braintree] He would travel through Europe and return to New England as a shipbuilder. [Coon 28]
Bell Telephone releases first annual report. 520 stockholders. Net earnings over $500k. [Brooks p 81] 700k telephones were in service at years end. [Iardella 27]
"The first report of the American Bell Company, issued in March 1881, shows that the general lines of its policy were to grant licenses for local use, to retain in its own hands the long distance service, and to study all the practical questions involved for its own benefit, and the advantage of its licensees generally." [Kingsbury 184]
Two wire circuits proposed in response to problem of noise generated from earth grounding. However, the migration to two wire circuits was slow going. John Brooks writes, "So long as subscribers were willing to tolerate interference on their lines - and their only recourse was to give up something for nothing - the owners of American Bell preferred not to make the the huge capital outlays necessary for conversion to two-wire circuits." [Brooks 86, 87] This is reflective of a larger policy issue of creating proper incentives for investment in a market, communications networks, which generally has not sustained much competition. See Net Neutrality Investment.
Bell had rented out 132,692 telephones. [Kingsbury 189]
Jan 1: First Dividends $3 per share. [Iardella p 10]
Feb. 28: 408 AT&T Exchanges in operation. [Kingsbury 267]
Dec. 31: 70,525 AT&T subscribers in the US. [Kingsbury 268]
American Bell acquired a controlling interesting in Western Electric Company (founded by Elisha Gray) from Western Union. Western Electric became AT&T's manufacturing unit, acting as it's sole supplier. WE has capitalization of $1m. [AT&T History Origins] [Iardella 8, 28] [Brooks p 84] . 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.
First underground telephone cables laid. [Brooks 86]
Dec. 31: 97,735 AT&T subscribers in the US. [Kingsbury 268]
"In the critical ten years now under consideration, telephone service, which was daily proving itself to be of enormous public benefit, was being developed with energy and resource against difficulties of varied kinds. Wherever official or public action was taken it was repressive, calling for the exercise of additional energy on the part of the promoters to overcome the artificial resistance inserted by public authorities against the advancement of a public benefit." [Kingsbury p 273]
Dec. 31: 123,533 AT&T subscribers in the US. [Kingsbury 268]
"The New York Legislature passed an Act requiring telephone companies in New York and Brooklyn to place all their wires underground before November 1, 1885, a time when no practicable system had been evolved which would permit the working of an entire telephone exchange system through underground conductors" [Kingsbury 273]
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][About.com]. "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]
New York passes law that in sites of more than 500k pop., telephone wires must be underground - responding to the overwhelming plethora of wires on telephone poles in the cite. The law was subsequently repealed as Bell had yet to perfect underground wiring over distances. [Brooks 87]
Dec. 31: 137,570 AT&T subscribers in the US. [Kingsbury 268]
"In April 1885 the State of Indiana passed a law restricting the price of rental of a telephone to three dollars per month. As it was impossible to conduct the service at that rate, the Central Union Company was obliged to close its exchanges in the principal cities and large towns, the public being put to serious inconvenience through the act of its own government. A Bill to repeal the law was passed by the House of Representatives in the following year, but did not pass the Senate owing to the arrest of business from other political questions. In 1888 it was unconditionally repealed by a large majority in both houses. In the meantime it had 'stopped absolutely any extension of business, and checked that steady improvement which is constantly going on towards greater efficiency and convenience to the public in the conduct of the business.' Such cases as these indicate the futility of public action in ignorance." [Kingsbury 273-74]
Dec. 31: 147,068 AT&T subscribers in the US. [Kingsbury 268]
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]
Independent telephone companies sprung up in rural markets where Bell had not yet brought service. The first in dependant telephone exchange was in Noblesville, Indiana. Ttowns soon saw two competing telephone systems, but the telephone services did not interconnect. Businesses would have to maintain separate phones and directories in order to reach all destinations or be reached by all potential customers. Callers would have to know which network a phone was on. Advertisements would have to indicate network, sometimes listing a phone number for each network. Independents entered markets with promises of lower prices and were able to gain franchises and customers. [Brooks 109 (a good description of the situation - noting the separate competing networks would often segregate customers along class lines - one group would be on one network where another group would be on another network)]
Compete on Network Effect (ability to call more subscribers). AT&T customers could reach anyone anywhere on the AT&T network. Independents could usually only reach those on the local in dependant network (note that long distance calling made up only a small fraction of traffic at that time) [Brooks 114]
"By the turn of the century... consumers demanded ubiquitous 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 in dependant telephone companies where Bell had not yet reached - forming partnerships with those companies before large regional in dependant companies could [Mueller p 110]
Note that Milton Mueller argues that the Independents 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 / use of local political power to deny franchises to competitors or make franchise terms burdensome
For struggling independents's, acquisition was an attractive means of mitigating loss of investment
Restricting access to capital "slow financial strangulation"
"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 motivated establishment of onerous terms for the independents." [Sterling p 76] The independents 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.
1894: AT&T had 240,000 telephones installed. [Mueller p 40] Horace Coon writes that "there were 582,506 instruments under rental from American Bell." [Coon 77] There were 396,674 miles of wire and 11,094 employees. [Coon 77]
1895: Telephone rates: $125 - $150 per year for a business phone; $100 per year for residential service. [Brooks 104]
Dec. 30: American Bell (MA) becomes AT&T (NY). Massachusetts' law restricted the financial structuring of American Bell; New York law was more progressive. In order to allow Bell to continue to grow, AT&T "acquired the assets of American Bell, and became the parent company of the Bell System," moving from Boston to NYC. AT&T had capitalization of $70m. [AT&T History Origins]. [AT&T 1885 Brochure] [About.com] [LOC Bell Family Papers] [Brooks 107] [Kingsbury 419]
Bell telephone, the New York Telephone Company, used the Empire City Subway Company's tunnels for conduit. NY Telephone also owned a majority state in Empire City Subway. Therefore when competing telephone companies requested access to the conduit (the tunnels), Empire City Subway refused - blocking competitive telephone service's entrance into New York City. [Brooks 106]
AT&T becomes the central organization of the Bell System; American Bell conveyed its assets to AT&T. [Iardella p 11]
AT&T purchased Michael Pupin's patent for a load coil, which amplified voice for long distance calls. [Porticus Western Electric]
Bell: 800k phones in service - $120m assets; Independents: 600k phones in service - $55m assets. [Brooks 108]
AT&T acquires competing manufacturer Kellogg Switchboard & Supply Company. The acquisition would be set aside by the courts in 1909. [Brooks 114] [Cortelco] [Conklin]
State legislatures begin to pass laws mandating interconnection [Brooks 114]
1906: over 4m telephones in the USA. [Iardella 30]
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 independents had not signed the licensing agreements and were not buying equipment from Bell.
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.Vail states that he has "no serious objection" to government oversight of telephone rates "provided it is independent, intelligent, considerate, thorough and just." [Brooks 124] [Hochheieser]
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.
American Bell's R&D office The Mechanical Department becomes the Engineering Department of AT&T. This ten became Western Electric's Engineering Department in New York City. [Iardella 17]
Cooperative telephone services: 17k rural circuits; 565k telephones; 486k miles of telephone wire. AT&T 3,132K phones in service; Independents 2,987K phones in service [Brooks 111, 127]
Bell Telephone Company of Philadelphia, and the Pennsylvania Telephone Company were merged into the Chesapeake and Potomac Telephone Company. Three companies service 300K phones [Telephone Company Merger, NYT Sept 22, 1907]
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 (some 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 in dependant telephone companies concerning acquisition of those companies and the elimination of competing "dual service" companies. [Mueller p 113]
The passage of the Willis Graham Act marked the closure of the era of telephone competition, as in dependant 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 occurring 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 universal, fully interconnected, network.
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
"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]
Western Electric's research and development work is restructed as Bell Labs, which is owned jointly by Western Electric and AT&T. [Porticus Western Union] [Iardella 18, 32]
1926: Bell Labs and Western Electric made the equipment for sound motion pictures. [Iardella 32]
1927: Bell Labs demonstrates TV by wire with a conversation between Secretary of State Herbert Hoover and AT&T President Walter Gifford. [Iardella 32]
1929: Western Electric's sales $411 m. [Porticus Western Union]
Western Electric 43,000 employees [Porticus Western Union]
"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]
1945: AT&T leases 600,000 new phones in the first few months of peace. By years end, 27,946,000 phones in US; 22,446,000 are Bell telephones. [Iardella 36]
1956: WH Brattain, W Shockley, and J Bardeen of Bell Labs receive Nobel Prices. [Iardella 19]
1960: AT&T releases the "Princess Phone" [Iardella 36]
1961: 84,450,000 phones in US; 68,640,000 are Bell telephones. [Iardella 35]
As it to prove Baran's point concerning the vulnerability of the existing communications network, on May 28, 1961, American radicals blew up AT&T microwave towers in the South West, going over the Rockies, interrupting the central transcontinental microwave routes, severing 2200 circuits. Porticus has great coverage of the incident including many photographs of the damage. [Porticus Long Lines] [Porticus Explosion Da mange]
1966: FCC initiates the Computer Inquiries. contemplating the regulatory response to both computers operating the network and computers being operated over the network.
AT&T declines to bid on ARPA's RFQ to build the first ARPANet IMPs.
Pres Nixon "calls" Astronauts on the moon using a C&P Telephone.
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]
"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]
AT&T tests cellular telephony. [Porticus Western Union]
"In April 1978, AT&T was supposed to develop something called the Bell Data Network. They never did." [Babbage (Kleinrock) 27] [Nerds p 115] AT&T filed petition with FCC July 10, 1978 for FCC approval that it did not need Sec. 214 authorization from the FCC to build the BDN; the AT&T filed for Sec. 214 approval, which was granted by the FCC. To offer BDN and to comply with Computer II Sep Sub requirements, AT&T formed American Bell Inc [History of Telenet 42]
1979: " In 1979 they started talking about AIS, Advanced Information Service, another network they never made." [Babbage (Kleinrock) 27] [Nerds p 115]
"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]
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 resubmitted the application with the new name Basic Packet Switching 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[History of Telenet 42]
"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 customers, prompting FCC concern 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)
AT&T introduces cellular mobile telephone service in Chicago. [Porticus Western Union]
AT&T launches Net 1000. ("Net 1000 consisted of multiple distributed processing centers, each containing several DEC VAX minicomputers and IBM Series 1 mini- computers as front end communication processors.;") [History of Telenet 42] The centers were linked together by BPSS.
"The results have indeed been disappointing. To develop the product, envisioned as a network enabling many dissimilar computers to talk to one another, AT&T has devoted 10 years, hundreds if not thousands of employ ees, and an estimated $1 billion. In the process, the system has had five names and suffered repeated delays, and even now never fulfilled its original purposes: to stave off International Business Machines Corp., in the fast paced world of data communications. Today, the product, now called Net 1000, has only a handful of paying customers.” [“Missing Links: AT&T Plan to Market a Computer Network Hits Snags Repeatedly — After 10 Years and $1 billion, Few Complex Systems are Currently Operating — ‘This Could Die on the Vine’,” Claudia Ricci, Wall Street Journal, July 13, 1984.]
Filing and Review of Open Network Architecture Plans, Memorandum Opinion and Order, 4 FCC Rcd 2449 (1988) ("approving AT&T's plan involving a basic packet switching service underlying an enhanced protocol processing service")
"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." [AT&T: History: Post Divestiture]
"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]
Chesapeake and Potomac Telephone Co. of Baltimore City (1891) becomes Bell Atlantic. Will merge with NYNEX to become Verizon [Baltimore Sun]
John Brooks, Telephone: The First Hundred Years (Harper & Row 1975) (this is a very wonderful book and an excellent read. Note, as indicated by the author in the forward, this book was written with the cooperation of and in partnership with AT&T. See p. xi).
Robert Bruce, Bell: Alexander Graham Bell and the Conquest of Solitude (Cornell University Press 1990)
Albert B. Iardella, Western Electric and the Bell System: A Survey of Service (Western Electric Company 1964)
John E. Kingsbury, The Telephone and Telephone Exchanges (Longmans, Green and Co. 1915) (an extensive history that recounts many of Bell's influences, and a lengthy description of the Bell experiments, migrating from tuning forks, to reeds, to membranes)