From Wikipedia, the free encyclopedia.
AT&T is a giant old American telecommunications company with the NYSE ticker symbol T. AT&T provides voice, data and video telecommunications services, including cellular telephone and Internet services, to businesses, consumers and government agencies. At times during a long history, it has been the world's largest telephone company and the world's largest cable TV operator, and sometimes a monopoly.
The formation of the Bell Telephone Company superseded an agreement between Alexander Graham Bell and his financiers, principal among them Gardiner G. Hubbard and Thomas Sanders.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 1879, 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.
Alexander Bell's patent on the telephone expired in 1894, but the company was successful in staving off competition through the use of harassment lawsuits and price undercutting. On December 30, 1899, the American Telephone and Telegraph Corporation bought the assets of American Bell, creating what became an American telephone monopoly. It was known as the Bell System because Bell had gradually acquired all the companies that licensed its telephone equipment.
The telephone market was very competitive in the early 20th century. During this period, AT&T officials spread rumors that the company was not doing well; this caused nervous investors to sell stock in companies contracted to AT&T. AT&T would then buy the stock in these companies cheaply, and soon established itself nationwide as the primary provider of telephone service. In 1907 AT&T president Theodore Vail proposed that a monopoly would be more efficient. The federal government accepted this principle, initially in the Kingsbury Commitment of 1913.
For most of the 20th century, AT&T subsidiary AT&T Long Lines 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. There were many "independent telephone companies," General Telephone being the most significant, but the Bell System was very much larger than all the others, and was widely thought of as a monopoly.
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.
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, NBC network.
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 commercial communications satellite, Telstar I in 1962. This and other new technologies convinced the FCC to introduce competition in some sectors, and by 1975 general long-distance services were competing.
The rest of the telephone monopoly lasted until final settlement of a 1974 U.S. Department of Justice antitrust suit against AT&T on January 8, 1982, under which AT&T agreed to divest its local exchange service operating companies. 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. Since this split, the telephone industry has seen much more reorganisation, with many further splits, mergers and acquisitions.
In 1991, AT&T absorbed NCR Corp. (National Cash Register), but, in 1996, divested it again, and voluntarily demerged most of the AT&T equipment manufacturing operations and the renowned Bell Laboratories to create Lucent Technologies.
AT&T now focused again on telecommunications operations, buying significant cable television assets, including John Malone's TCI Corp. and Media One, thus gaining a 25% share of Time Warner Cable.) AT&T was the largest provider of cable television in the United States, intending 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. With falling long-distance rates and a sagging market for telecommunications services, AT&T could not sustain the debt incurred in making these purchases, and had to change its plans. In 2002, AT&T sold its cable TV (or "Broadband") assets to Comcast Communications Corporation.
American Telephone and Telegraph was also known as Ma Bell and affectionly called MOTHER by phone phreaks. Spinoffs like the Regional Bell Operating Companies or RBOCs were often called Baby Bells. One can see "Ma Bell" and "Baby Bells" are used even today in news headlines.