| AT&T
landmarks
related
Profile:
Liberty
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This
note considers AT&T, supplementing the more detailed
profile on Liberty Media.
It covers -
introduction
American Telephone & Telegraph Corporation (AT&T),
at one time the world's largest telephone company, was
instrumental in the development of the US broadcasting
and film industries before acquiring and disposing of
Liberty Media in the closing years of last century.
telegraph and telephony
AT&T traces its history from establishment of
Bell Telephone Company in 1877 by Alexander Graham Bell
and a group of Boston financiers.
The company expanded rapidly, despite disputes over management
and intellectual property, being renamed the National
Bell Telephone Company in 1879 and American Bell Telephone
Company in 1880. It acquired manufacturer Western Electric
in 1881, a year after establishment of Bell Canada (later
BCE), and in 1885 established AT&T
to operate its long-distance telephone network. Bell established
local operating companies across the US (with the long
distance network first reaching San Francisco in 1915)
and acquired independent operators that had proliferated
amid expiry of key Bell patents in 1894.
In 1899 Bell's local operating companies were consolidated
under AT&T. Control passed to Wall Street interests
led by financier JP Morgan in the aftermath of the 1907
Crash. At that time its president Theodore Vail argued
that telephony was a natural monopoly, with AT&T deserving
special treatment from the federal and state governments
in return for 'universal' service to business, government
and domestic consumers. Washington's acceptance of that
argument was embodied in the so-called Kingsbury Commitment
of 1913.
radio and film
In 1919 AT&T joined with General
Electric, United Fruit and Westinghouse
to form Radio Corporation of America (RCA), at that time
oriented towards business and military communications
rather than domestic broadcasting. RCA provided a mechanism
for sharing the patents of the parent organisations (and
for acquisition of British Marconi's interest in American
Marconi) amid growing disputes about control of the new
technology
In 1922 AT&T established Broadcasting Corporation
of America (BCA) as its broadcasting subsidiary, centred
on a New York radio station subsequently identified as
WEAF, and by 1924 had linked 16 owned or affiliated stations
as part of its National Brioadcasting System.
AT&T, Westinghouse and General Electric resolved the
disputes in 1926. RCA acquired BCA for US$1 million, with
AT&T's radio activities essentially being restricted
to long-distance radiotelephony. RCA agreed that AT&T
would provide the landlines needed for its new NBC
network. RCA and AT&T cross-licensed their radio patents.
During the preceding year AT&T had sold most of Western
Electric's non-US manufacturing operations to ITT, under
the control of Sosthenes Behn, for US$30 million.
AT&T research into communications technology was reflected
in partnership between Western Electric and Warner
Bros subsidiary Vitaphone about sound recording and speakers
for motion films. That was used for the landmark 1926
Don Juan and 1927 Jazz Singer, with
AT&T's Electrical Research Products Inc (ERPI) being
established in 1927 to service and distribute Western
Electric sound equipment.
By
the end of the following year over 1,000 cinemas used
that gear and most Hollywood studios were leaning to Western
Electric as a supplier in the transition to sound production.
That drove RCA's acquisition of a stake in FBO during
1927 and creation with Joseph Kennedy of the Radio Keith
Orpheum (RKO) film production,
distribution and exhibition group. AT&T in turn financed
studios and cinema chain purchases of its equipment through
loans from ERPI or taking a stake in the film companies.
Western Electric's dominance in film sound patents, manufacturing
and service agreements attracted government attention.
Western Electric signed a consent decree in 1938, with
ERPI being sold through an MBO (later becoming Altec Lansing)
and competitors having access to the patents.
During the rest of the decade and following years AT&T
reinforced its position as the dominant telecommunications
operator. It had amalgamated its research operations as
Bell Laboratories in 1925 (with staff gathering a slew
of Nobel Prizes and other awards) and gained international
recognition for excellence in manufacturing at its Western
Electric arm. It launched commercial radio-telephony services
across the Atlantic (with what is now British Telecom)
in 1927. AT&T commissioned the first commercial communications
satellite, Telstar I, in 1962 and was active in development
of the internet.
dismantling Ma Bell
The defining US antitrust actions during the second
half of last century were arguably those against AT&T,
IBM and Microsoft. In 1956 AT&T settled antitrust
action initiated in 1949 with a consent decree (sometimes
called the final judgement) that restricted Western Electric
to telecommunication-related manufacturing, constrained
AT&T to only engage in telecommunications and - perhaps
most critically - committed AT&T to granting non-exclusive
licenses to those wishing to access the network. That
drove moves for greater competition as entities such as
MCI established long distance networks linking AT&T
local operations.
That decree formed the basis of the landmark 1974 suit
against AT&T, settled in 1982 when Ma Bell agreed
through the 'modification of final judgement' to divest
its local operations.
That agreement came into effect at the beginning of 1984,
with establishment of seven Regional Bell Operating Companies
(RBOCs), aka the 'Baby Bells'. AT&T retained its long
distance operations (with freedom to expand overseas in
competition with ITT), along with its research and manufacturing
operations. Its overall assets shrank by around 70%.
Moves to provide international connectivity - particularly
for major corporations through a partnership with IBM
- proved disappointing. During 1991 AT&T paid US$7.4
billion for computer hardware and software group NCR,
only to dispose of that operation in 1996. It acquired
McCaw Cellular (delivering control of LIN Broadcasting,
spun off as LIN TV) in 1994 for
US$11.5 billion. It hived off most of the AT&T equipment
manufacturing operations and Bell Laboratories as Lucent
Technologies.
TCI and beyond
AT&T then focused again on telecommunications
operations, buying cable group MediaOne (which had absorbed
the Providence Journal
Co's cable operations) for US$62 billion and TCI for US$54
billion in 1999. The intention was that AT&T, with
the largest cable television network, would breach the
RBOC's monopoly on 'last mile' access to households and
thereby prosper in local markets amid ongoing erosion
of its dominance in the long distance market. Acquisition
of TCI made John Malone AT&T's largest individual.
It provided AT&T with a substantial stake in Murdoch-controlled
News Corporation, a 25% share of Time Warner Cable and
39% of cable ISP @Home.
Management and investor expectations were affected by
the 2000 telecom and dot-com crash, lower than expected
revenue growth and uncertainty about AT&T's strategic
direction.
AT&T spun off AT&T Wireless in 2001 (in what was
then the world's largest IPO) and sold AT&T Broadband
- its cable television operations - to Comcast
for US$47.5 billion during the following year. Liberty
had been spun off in 2001.
Comcast subsequently sold its interests in QVC to Liberty
for US$7.9 billion. AT&T Wireless was acquired by
Cingular in 2004 for US$41 billion.
In July 2004 AT&T announced that it was no longer
seeking residential customers. In 2005 it agreed
to a US$16bn takeover by SBC Communications
chronology
A detailed chronology of AT&T and Liberty Media is
here.
studies
John Brooks' Telephone, The First Hundred Years
(New York: Harper & Row 1976) is an elegant corporate
history of AT&T. Sonny Kleinfeld's The Biggest
Company on Earth: A profile of AT&T (New York:
Holt Rinehart 1981) is a thinner study immediately before
the break-up.
Other works include George David Smith's The Anatomy
of a Business Strategy: Bell, Western Electric & the
Origins of the American Telephone Industry (Baltimore:
Johns Hopkins Uni Press 1985), Robert Garnet's The
Telephone Enterprise: The Evolution of the Bell System’s
Horizontal Structure 1876-1909 (Baltimore: Johns Hopkins
Uni Press 1985) and Kenneth Lipartito's The Bell System
and Regional Business: The Telephone in the South, 1877-1920
(Baltimore: Johns Hopkins Uni Press 1989). The standard
history of ITT - the very model of the bad telco - remains
Anthony Sampson's Sovereign State: The Secret History
of ITT (London: Coronet 1974).
Peter Temin's The Fall of the Bell System (Cambridge:
Cambridge Uni Press 1988) remains the major study of deconstructing
Ma Bell. Issues are explored in Gerald Brock's Telecommunication
Policy for the Information Age: From Monopoly to Competition
(Cambridge: Harvard Uni Press 1994), Reed Hundt's
You Say You Want A Revolution: A Story of Information
Age Politics (New Haven: Yale Uni Press 2000), and
Larry Kahaner's On the Line: The Men of MCI - Who
Took on AT&T, Risked Everything, and Won! (New
York: Warner 1986).
For manufacturing see in particular Optical Illusions:
Lucent and the Crash of Telecom (New York: Simon
& Schuster 2004) by Lisa Endlich and Manufacturing
the Future: A History of Western Electric (Cambridge:
Cambridge Uni Press 1999) by Stephen Adams & Orville
Butler.
For expansion into cable see Stephen Keating's Cutthroat:
High Stakes and Killer Moves on the Electronic Frontier
(Boulder: Johnson 1999), Mark Robichaux's Cable Cowboy:
John Malone and the Rise of the Modern Cable Business
(New York: Wiley 2002), L J Davis' The Billionaire
Shell Game: How Cable Baron John Malone and Assorted Corporate
Titans Invented A Future Nobody Wanted (New York:
Doubleday 1998) and Vertical Integration in Cable Television
(Cambridge: MIT Press 1997) by David Waterman & Andrew
Weiss.
Context is provided by Brian Winston's Media Technology
& Society: A History from the Telegraph to the Internet
(London: Routledge 1999), The Creation of the Media:
The Political Origins of Mass Communications (New
York: Basic 2004) by Paul Starr, America Calling: A
Social History of the Telephone to 1940 (Berkeley:
Uni of California Press 1992) by Claude Fischer, Connections:
Social & Cultural Studies of the Telephone in American
Life (New Brunswick: Transaction 2000) by James Katz
and the 1998 An Overview of Telecommunications Market
Evolution: Telegraphy & Telephony 1837-1934 (txt)
by Gary Madden & Scott Savage.
Bell and Vail feature in HM Boettinger's The Telephone
Book: Bell, Watson, Vail and American Life, 1876-1983
(New York: Stearn 1984) and RV Bruce's Alexander Graham
Bell & the Conquest of Solitude (Boston: Little
Brown 1973).
Michelle Martin's "Hello Central?" Gender,
Technology, & Culture in the Formation of Telephone
Systems (Montreal: McGill-Queen's Uni Press 1991)
should be read in conjunction with Lois Kathryn Herr's
Women, Power, and AT&T: Winning Rights in the
Workplace (Boston: Northeastern Uni Press 2003),
My Sisters Telegraphic: Women in the Telegraph Office
1846-1950 (Athens: Ohio Uni Press 2000) by Thomas
Jepsen, Race on the Line: Gender, Labor and Technology
in the Bell System, 1880-1980 (Durham: Duke Uni Press
2001) by Venus Green, Gregory Downey's Telegraph
Messenger Boys: Labor Technology & Geography, 1850-1950
(New York: Routledge 2002) and Stephen Norwood's Labor's
Flaming Youth: Telephone Operators & Worker Militancy,
1878-1923 (Urbana: Uni of Illinois Press 1990).
Neil Wasserman's From Invention to Innovation: Long-Distance
Telephone Transmission at the Turn of the Century
(Baltimore: Johns Hopkins Uni Press 1985) is a cogent
study of innovation and economics, complemented by Leonard
Reich's The Making of American Industrial Research:
Science & Business at GE and Bell, 1876-1926 (Cambridge:
Cambridge Uni Press 1985).
Ithiel de Sola Pool's Forecasting the Telephone: A
Retrospective Technology Assessment (Norwood: Ablex
1983) and The Social Impact of the Telephone (Cambridge:
MIT Press 1977) are useful point of reference.
For regulation see in particular Alan Stone's How
America Got On-Line: Politics, Markets & the Revolution
in Telecommunications (Armonk: Sharpe 1997), Electronic
Media & Government: The Regulation of Wireless &
Wired Mass Communication in the United States (White
Plains: Longman 1995) by Leslie Smith & Milan Meeske,
Breaking Up Bell: Essays on Industrial Organisation
& Regulation (New York: North Holland 1983) edited
by Donald Evans, Telecommunication Policy for the Information
Age: From Monopoly to Competition (Cambridge: Harvard
Uni Press 1994) by Gerald Brock and the 1997 thesis
by Robert Ward on The Chaos of Covergence: A Study
of the Process of Decay, Change, and Transformation within
the Telephone Policy Subsystem of the United States
offer insights into regulatory and market changes in the
US.
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