AT&T: A Historical Background
Alexander Graham Bell and his two partners established the Bell Telephone Co. in 1877 with the aim to start promotion of the newly-invented telephone. To manage the licensing of a variety of exclusive rights, Bell Telephone established the New England Telephone Co. In 1879, Bell Telephone joined New Haven District Telephone to establish the National Bell Telephone Co., which updated as the American Bell Telephone Company in 1880, after buying a range of assets from Western Union. In 1881, American Bell purchased Western Union’s telegraph machinery supplier, Western Electric Manufacturing Co. On account of the deal, American Bell became the sole producer of Western Union machinery. The company expanded into long-distance telephone operations with the establishment of American Telephone and Telegraph Co. (AT;T) in 1885. American Bell thought its new business would be able to form an extensive national telephone set-up before some of its copyrights finished in 1893.
Just after its foundation, AT;T started manufacturing its first long-distance telephone line, which would hook up New York City to Philadelphia, Pennsylvania. In 1888, after quite a lot of snowstorms in the northeastern U.S. destroyed long-distance lines, AT;T started looking into alternative cable choice. In 1990, American Bell began developing its one-wire circuits to two-wire circuits to consider long-distance communications. Within two years, these two-wire, or metallic, circuits linked about 12 % of American Bell’s 240,000 clients. When Bell’s first telephone copyright ended in 1893, several challengers appeared on the scene, resulting in claims by AT;T, which struggled to maintain its domination in the long-distance market. Busy with these lawsuits, AT;T ultimately lost significant market share to challengers in the West and Midwest.
AT;T’s network consists of more than 2.2 million telephones in 1905. Despite the fact that that number increase to over 3 million in 1907, the firm toiled hard with public relations problems, low employee spirits, and increasing debt. These problems pressed management to start taking over challengers, rather than taking lawsuits against them. AT&T also started reducing prices, low-cost bond prices in an effort to create fresh capital, and advanced its research and development arm. In 1913, confronted with accusations of illegal scheme to control the long-distance market in the Northwest, AT&T decided to put up for sale earlier bought Western Union holdings and to let rival local telephone service providers to utilize its long-distance lines.
In World War I, AT&T provided phone service to the U.S. military. The firm also established a communications system of radios, telephones, and telegraphs lines in France for use by US forces. In 1918, President Wilson took into the public sector the U.S. phone network, promising that rates would fall under public control. Nevertheless, operating expenses related to wartime activities encouraged AT&T to increase prices, and people began calling for the government to release control of the phone system. AT&T at that time ran a network of about 10 million telephones. Growing public pressure pressed the government to privatize AT&T in 1919.
In 1921, AT&T connected Key West, Florida, and Havana, Cuba, by means of its first underwater cable. After the government started giving permission to telephone company mergers in the early 1920s, AT&T started a development effort that was stimulated by a number of acquisitions. AT&T spun off its research and development arm as Bell Telephone Laboratories in 1925. The new company was supported by both AT&T and Western Electric.
The early years of the Great Depression critically hurt AT&T. Many subscribers could not pay for telephones. AT&T sales for 1929 were $1.05 billion; by 1933, they were $853 million. AT&T had to layoff 20 percent of its employees.
In 1934, the U.S. government set up the Federal Communications Commission (FCC) to control the interstate telephone industry. The FCC initiated an inquiry of AT&T’s aggressive modus operandi the following year. In 1939, the company was running 83 % of U.S. phones and 98 % of long-distance cables. The commission was also concerned about its Western Electric firm, which held a 90% share of the US telephone equipment market. With assets of $5 billion, AT;T was the major company in the USA.
The end of the World War brought serious labor problem. AT;T and the National Federation of Telephone Workers dealt with problems of over wages, working conditions, and benefits, producing a general strike in 1947. Public attitude went against the strikers, and the ultimate deal supported AT;T.
Wilson took over from Gifford as a new president in 1948. His immediate task was to advocate a rate increase past government controllers. He got one in 1949 that helped AT;T to raise needed capital.
In 1951, after the death of Wilson, Cleo Craig became president. In the next few years, AT;T made it possible to telephone directly to other cities without using an operator. This and following improvements helped long-distance charges to be constantly slashed.
Later in 1955 AT;T in conjunction with a British and Canadian firm established the first transatlantic telephone cable. In 1957, AT;T and Western Electric decided to build an early warning radar system for the U.S. forces. AT;T also established a new firm to produce communications machinery for the U.S. space program. The company started a $2.6 billion infrastructure overhaul in 1960. Progress during the first part of the decade included the first wide area telephone service, which allowed clients to pay a fixed fee for indefinite long-distance calls; Centrex, which helped offices to keep their own automatic switching exchange; and Telstar as the company’s first satellite. AT;T also established Comsat to direct its U.S. satellite communications business and launched its touch-tone service for the first time. In the mid-decade, AT;T had created the seven-digit phone number as standard all over North America. The setting up of electronic switching equipment facilitated for an improved volume of calls.
In 1960s, other firms began trying to secure particular segments of AT;T’s business. For instance, The Hush-a-Phone Company sold a plastic telephone accessory that decreased surroundings noise. Microwave Communications Inc. (MCI) tried to launch private-line service between Chicago and St. Louis. Carter Electronics Corporation sold a device that linked two-way radios with the telephone system. AT&T reacted by preventing the connection of challengers’ device to the Bell System.
In the early 1970s, sales by the communication industry were increasing, and firms were buying telephone machinery from AT;T challengers. The U.S. government blamed AT;T of victimizing workers. AT;T, without accepting it had done so, signed approval orders under which it agreed to raise the hiring, promotion, and salaries of workers.
Both 1980 and 1981 were years of record profits for AT;T. The company made $6.9 billion in 1981 and was the highest profit for any company to that time.
In mid-1990, AT;T increased its long-distance charges after low second-quarter earnings. It had been harmed by failing long-distance income and slow machinery sales. AT;T, nevertheless, soon made several major sales. It secured an increase of a $100 million personal computer sale to American Airlines’s Sabre Travel Information Network and got a contract to improve China’s international communications system. AT;T made its first access into Mexico’s communications market, securing a $130 million deal from Mexico’s national telephone company, Telefonos de Mexico. It endorsed a $157 million deal to build a submarine fiber-optic cable between Hawaii and the U.S. mainland, and revealed that it intended to build a high-capacity submarine cable between Germany and the US, with Deutsche Bundespost Telekom. It also secured a $600 million deal from GTE Corporation to manufacture cellular network machinery.
AT;T: An Introduction
AT;T Inc. is the major service provider of both local and long distance telephone services, wireless service, and DSL Internet access in the USA with 71.4 million customers. In 2005, “Baby Bell” SBC Communications Inc. bought former “Ma Bell” AT;T Corporation and then changed the name of the company after the merger AT;T title and the T stock-trading symbol (for “telephone”).
The present AT;T is comprised of eleven of the initial Bell Operating Companies, and the initial long distance division (Kleinfield, 1981). Despite the fact that it reconreconstitutes of the former Bell System, AT;T Inc. does not have the vertical integration of the erstwhile AT;T Corp. which brought about the antitrust suit and disintegration in 1984.
AT;T Corporation Acquisition
On January 31, 2005, Southwestern Bell Corp (SBC) announced that it would buy AT;T Corp. for over $16 billion. The proclamation came about 8 years after SBC and AT;T called off their first merger talks and almost a year after preliminary merger talks between AT;T and BellSouth failed. AT;T stockholders, meeting in Denver, supported the merger on June 30, 2005. The U.S. Department of Justice approved the merger on October 27, 2005, and the Federal Communications Commission cleared it on October 31, 2005. The merger was confirmed on November 18, 2005. SBC changed its company name to AT;T Inc., and revised the ex-AT;T’s graphic insignia, yet the present AT&T Sound brand name continues to be used.
On December 1, 2005 the combined company started trading under the famous “T” stock ticker symbol on the NYSE. To distinguish from the past company, AT&T is officially known as “AT&T Inc.”, whereas the former company was “AT&T Corp.”
On Friday December 29, 2006, the Federal Communications Commission (FCC) cleared the purchase of BellSouth valued at about $86 billion. The new combined company continued the name AT&T (Bartash and Burton, 2006). The deal reinforced rights of both Cingular Wireless and Yellowpages.com, once joint business enterprises between BellSouth and AT&T. All services, including wireless, are presently offered under the AT&T name (AT&T, 29 December 2006).
In 2006, the Electronic Frontier Foundation lodged a class action claim, Hepting v. AT&T, which charged that AT&T had permitted agents of the National Security Agency (NSA) to examine phone and Internet communications of AT&T customers without authorization. If factual, this would contravene the Foreign Intelligence Surveillance Act of 1978 and the First and Fourth Amendments of the U.S. Constitution.
In April 2006, a retired ex- AT&T technician, Mark Klein, lodged an affidavit supporting this charge (Singel, 2006).
On June 21, 2006, the San Francisco Chronicle reported that AT&T had amended rules on their confidentiality policy. The policy, which became in force June 23, 2006, says that “AT&T — not customers — owns customers’ confidential info and can use it ‘to protect its legitimate business interests, safeguard others, or respond to legal process’ “(Lazarus, 2006).
On August 22, 2007, National Intelligence Director Mike McConnell confirmed that AT&T helped the government’s wire-tapping program on telephone calls between foreign and local sources (Shrader, 2007).
On November 8, 2007, Mark Klein, a ex-AT&T technician, told Keith Olbermann of MSNBC that all Internet traffic passing on AT&T lines was reproduced into a sheltered room at the company’s San Francisco office — to which only staff with National Security Agency clearance had access (Olbermann, 2007).
AT&T (29 December 2006). “AT;T and BellSouth Join to Create a Premier Global Communications Company”. Press release.
Bartash, Jeffry and Burton, Jonathan. (2006). AT&T to pay $67 billion for BellSouth. Dow Jones Market Watch.
Kleinfield, Sonny. (1981). The biggest company on earth: a profile of AT&T. New York: Holt, Rinehart, and Winston.
Lazarus, David. (2006). AT&T rewrites rules: Your data isn’t yours. San Francisco Chronicle.
Olbermann, Keith. (2007). Whistleblower saw AT&T assist Bush administration. MSNBC.
Shrader, Katherine. (2007), Spy chief reveals classified surveillance details. Associated Press.
Singel, Ryan. (2006). Whistle-Blower Outs NSA Spy Room. Wired.