AT&T: The Company Behind the Telephone

published on July 20, 2020

Undoubtedly one of the greatest inventions of the 19th century was the telephone and it is safe to say that the world would not be the same without it that's why today we'll be exploring the company that built the American telephone system and that remains the

World's largest telecom business to this day AT&T this video is brought to you by tab fir calls a free browser extension that donates money to charity with every new tab be open without costing you a single dime while there is some

Controversy over the true inventor of the telephone it is Alexander Graham Bell that was awarded the patent and it was his company that would go on to spread it across America the phone came to life on March the 10th 1876 and the

First phrase ever whispered down the wires was mr Watson come here I want to see you spoken by Bell to his assistant just a year later he had already found several finance ears to back his invention including JP Morgan in this in

1877 they set up with the Bell Telephone Company and then the New England telephone company in 1878 their motto was to license the telephone to local operating companies around Chicago Boston and New York Bell himself was

Much more focused on his work as an inventor and by 1879 he had sold his share in both companies to a group from Boston who consolidated the two parts into the National Bell Telephone Company if all these different names sound

Confusing well I see your point but the real history of AT&T is all about whether it's one company or many if you look at the largest telecom businesses in the world you see that most of them were state-run telephone operators China

Mobile Deutsche Telekom telefónica all these and others started out as government entities that were originally run by the post office but the us never had a state-run telephone operator partly because it goes against the

Nature of American values but also because for America the telephone service was a business first and a utility second so why did the Bell company license out the operating service rather than

Building its own networks and having complete control it's not like they had any rivals and they did own the patent in short it was simply a matter of time and capital bells patents weren't indefinite so the Bell company had a

Limited time to cover as much area as possible before competitors could pop up by licensing it could avoid spending the millions of dollars necessary to set up the telephone service in a new area instead it gave five to ten-year

Contracts to independent operators who would pay the Bell company $20 per phone per year and then also given the right to buy the operators property once the contract was over it was actually a pretty sweet deal the company didn't

Have to invest a single diamond telephone lines and would get a fixed income with which to buy out the operator in less than a decade but Bell had a more important place to spend its money so in the end the company only

Bought about a 30 to 50% stake in most of its operators so what was this other project there was investing in well part of the deal with the operators was that they could expand into their own territory but could not link up with

Other operators regardless of whether they were a part of the Bell System this meant that there was no effective way to make long-distance calls and that is what the Bell company was interested in it was the only company rich enough to

Build its own network of long distance telephone lines and although when doing so it ended up with a ton of debt it now had a complete monopoly on the long-distance phone service if the Bell company set up a subsidiary to manage

This new network in 1885 and it called it the American telephone and telegraph company or AT&T for short over time the long-distance network would become the backbone of the Bell company even after bells patents had expired AT&T were the

Only company that could provide service across the whole nation of course local independent operators started popping up left and rights and by 1907 they actually ran just over half of America's telephones by that point around 20

Percent of American homes had a telephone so there was a lot of demand for the service but while you could use your Loco operator to call your boss or shout complaints at the mayor the only way to

Make calls outside the city was through AT&T of course this early network wasn't particularly good the service quality was downright abysmal not to mention the customer support because of this public relations crisis and AT&T is a man's

Debt JP Morgan was able to take control of the company and to in-state his own man Theodore Newton Vail as president he set about restoring a tnt's image and also decided to invest heavily in a research and development setting up the

Now famous bell laboratories in 1925 Bell Labs by the way is now owned by Nokia and it's been one of the world's leading scientific institutes for almost a century it's responsible for eight Nobel prize-winning works including the

Creation of the transistor the C programming language and the discovery of cosmic background radiation one of the key pieces of evidence for the big bang theory but back to AT&T by the start of the Second World War

They had 5 billion dollars in assets which was light years ahead of any competitor thanks to aggressive acquisition tactics they controlled a huge majority of US phones and ran 98% of long distance lines they played a big

Part in the war effort thanks to the research done through Bell Labs and Western Electric an early phone manufacturer who they had purchased in 1881 the war effort paid off for them too since it caused a big jump in

Long-distance calls which continued even after the fighting was over after the war came the space race where Bell Labs was once again a major player this time with satellite technology their communication satellite Telstar 1 was

The first to relay television and telephone calls through space as well as giving the first transatlantic live feed they worked hand-in-hand with NASA but despite their heavy involvement with the government on research and development

There were some big question marks over their business practices especially around how they controlled the telecoms market an agreement was signed in 1956 that limited AT&T to the telephone business alone and that also required it

To license its patents to anyone who was interested in 1968 a further ruling by the FCC forced AT&T to allow third parties to connect to their network in a name to stop their monopoly over the long-distance telephone lines this

Eventually led to the creation of the answering machine of the fax machine and the modem so see the FCC wasn't always bad but even after giving away access like that AT&T still had huge power over the network and so the government fought

A long and bitter battle with the courts that would take eight years to settle finally in 1982 United States vs AT&T ended with the breakup of the AT&T network or Bell System as it was called on antitrust grounds a total of seven

Independent companies were carved out of the former AT&T leaving it a shell of its former self these new companies came to be known as the Baby Bells two of them went on to become Verizon another one called Southwestern Bell Corporation

Eventually bought up three of the other baby bells and the weakened AT&T itself in the end although most of the baby bells ended up back together the breakup did give them a unique opportunity you see the 1956 agreement

That made AT&T stick to the telephone business had prevented them from entering the computer market so after 1982 while AT&T did lose power over the regional networks they kept the long-distance operations and most

Importantly could finally take a bite at computers no pun intended of course it wasn't easy and the next 20 years saw the company constantly changing strategies in order to keep up with the lightning pace of development happening

In the computer industry it's long-distance operations were slowly eroded partly through new legislation but also thanks to the development of fiber optics which coincidentally was inspired by Alexander

Graham Bell's photo phone that had transmitted a voice message using light all the way back in 1880 by 2005 when Southwestern Bell Corporation finally bought his former parent for 16 Billy dollarz AT&T was like roadkill picked

Apart by buzzards only their consumer and business services had remained their wireless broadband and telephone systems were gone not to mention Bell Labs so the AT&T we know today is really the work of SBC

Simply rebranded under this more famous name today the company's new direction is Wireless through a series of acquisitions AT&T became the second largest cellular provider in the us just barely behind Verizon in 2015 they

Acquired DirecTV a satellite television service providing some of the biggest channels such as ESPN HBO and numerous major news networks they spent almost fifty billion dollars to get it but of course the real elephant in the room is

A tnt's plant acquisition of Time Warner it's not very clear where the US regulators are gonna approve it but if they do the combined company would be the second largest broadband provider in the us on top of that it would also

Have ownership of Warner Brothers DC Comics CNN and a bunch of other major properties naturally antitrust concerns have been raised by pretty much everyone but this time around AT&T have definitely learned their lesson since

2015 they have spent close to 30 million dollars on political donations and today they have over a hundred registered lobbyists it's pretty obvious that AT&T really wants this deal to go through but for now we'll just have to wait and see

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