AT&T
(Redirected from American Telephone and Telegraph Company)
Categories: Companies traded on the New York Stock Exchange | Communications companies of the United States | Telephone companies | Telecommunications history | Companies based in New Jersey | National Medal of Arts recipients
| Image:Att-logo.png | |
| Type | Public |
| Founded | 1885 |
| Location | Bedminster, New Jersey |
| Key people | David Dorman, CEO & Director |
| Industry | Communications Services |
| Products | Broadband Services Cellular Telephony Security Application Services Voice over IP VPN Professional Services |
| Revenue | Image:Red down.png$30.537 billion USD (2004) [1] |
| Employees | 61,600 |
| Website | www.att.com |
AT&T (formerly an abbreviation for American Telephone and Telegraph) Corporation NYSE: T is an American telecommunications company. AT&T provides voice, video, data, and Internet telecommunications and professional services to businesses, consumers, and government agencies. During its long history, AT&T has at times been the world's largest telephone company, the world's largest cable television operator, and a regulated monopoly. At its peak, it employed one million people and its revenue was roughly $300 billion annually in today's dollars. In early 2005, SBC Communications (commonly called one of the "Baby Bells" that was split-off from AT&T itself) began the legal process to purchase its once parent AT&T.
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History
The formation of the Bell Telephone Company superseded an agreement between Alexander Graham Bell and his financiers, principal among them Gardiner G. Hubbard and Thomas Sanders.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 1877, 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.
In 1880, the management of American Bell, created what would become AT&T Long Lines. The project was the first of its kind to create nationwide long-distance network with a commercially viable cost-structure. This project was formally incorporated into a separate company christened American Telephone and Telegraph Corporation on March 3, 1885. Starting from New York the network reached Chicago, Illinois in 1892.
Bell's patent on the telephone expired in 1894, but the company's much larger customer base made its service much more valuable than alternatives and substantial growth continued.
On December 30, 1899, the American Telephone and Telegraph Corporation bought the assets of American Bell--this was because Massachusetts corporate laws were very restrictive and limited capitalization to ten million dollars, forestalling the growth of American Bell itself.
National long distance service reached San Francisco in 1915. Transatlantic services started in 1927 using two-way radio, but the first transatlantic telephone cable did not arrive until 1956, with TAT-1.
National monopoly
In 1907, AT&T president Theodore Vail proposed that a formal 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 thus 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. While there were many "independent telephone companies", General Telephone being the most significant, the Bell System was far larger than all the others, and widely considered a monopoly itself.
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, or NBC network.
In 1925, AT&T created a new unit called Bell Telephone Laboratories, commonly known as Bell Labs. This research and development unit proved highly successful, pioneering, among other things, radio astronomy, the transistor, the photovoltaic cell, the Unix operating system, and the C programming language. However, its parent company did not always capitalize on these achievements. In 1949 the Justice Department filed an antitrust suit aimed at forcing the divestiture of Western Electric, which was settled seven years later by AT&T's agreement to confine its products and services to common carrier telecommunications and license its patents to "all interested parties". A key effect of this was to ban AT&T from selling computers despite its key role in electronics research and development.
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 experimental communications satellite, Telstar I in 1962.
Erosion of natural monopoly
For many years, AT&T had been permitted to retain its monopoly status under the assumption that it was a natural monopoly. The rise of cheap microwave communications equipment in the 1970s opened a window of opportunity for competitors--no longer was the acquisition of expensive right-of-ways necessary for the construction of a long-distance telephone network. In light of this, the FCC permitted MCI (Microwave Communications, Inc) to sell communication services to large-businesses. This technical-economic argument against the necessity of AT&T's monopoly position would hold for a mere fifteen years until the beginning of the fiber-optics revolution sounded the end of microwave-based long distance.
Break up, spinoffs and restructuring
The rest of the telephone monopoly lasted until final settlement of a 1974 United States Department of Justice antitrust suit against AT&T on January 8, 1982, under which AT&T ("Ma Bell") agreed to divest its local exchange service operating companies, in return for a chance to go into the computer business (see AT&T Computer Systems). Although the Department of Defense did not want AT&T to be broken, 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, although it lost some market share in the ensuing years to competitors MCI and Sprint Corporation.
- "There are two giant entities at work in our country, and they both have an amazing influence on our daily lives . . . one has given us radar, sonar, stereo, teletype, the transistor, hearing aids, artificial larynxes, talking movies, and the telephone. The other has given us the Civil War, the Spanish American War, the First World War, the Second World War, the Korean War, the Vietnam War, double-digit inflation, double digit unemployment, the Great Depression, the gasoline crisis, and the Watergate fiasco. Guess which one is now trying to tell the other one how to run its business?" -- a sign that hung in many Bell facilities in 1983.
After its own attempt to penetrate the computer marketplace failed, in 1991, AT&T absorbed NCR Corporation (National Cash Register), hoping to capitalize on the burgeoning personal computer and UNIX networked server markets, but was unable to extract lasting financial or technological gains from the merger. After deregulation of the U.S. telecom industry via the Telecommunications Act of 1996, NCR was divested again. At the same time, AT&T's equipment manufacturing operations and the renowned Bell Laboratories were spun off into Lucent Technologies. The industry as a whole had many other reorganizations since the 1990s, both due to deregulation and because of technological advances reducing demand and pricing power in telecommunications.
In 1997, AT&T hired former IBM executive Michael Armstrong as its chief executive officer. Armstrong's vision was to change AT&T from a long-distance carrier into a global "telecommunications supermarket", eyeing Internet services for the booming dot-com industry.
Armstrong's most prominent strategy was buying significant cable television assets. After acquiring John Malone's TCI and Media One (gaining through the latter a 25% share of Time Warner Cable), AT&T was the largest provider of cable television in the United States. It intended 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, but the wager was costly, substantially increasing the company's debt.
In 1998, AT&T announced a US$1 billion alliance with BT to offer global voice over IP (VoIP) services, sparking rumors of a potential merger [2]. But the parties fought for control of the project and could not even agree on the alliance's name. By mid-2001, customers were being directed to sign contracts with the parent companies, and Concert, as the venture was eventually known, was scrapped in October that year.
In 1999 AT&T acquired the Olivetti & Oracle Research Lab, from Olivetti and Oracle Corporation. In 2002 it closed down the research part of the lab.
With long-distance rates falling and the market for telecommunications services overall weakening, AT&T could not sustain the debt it had incurred in these ventures. Moreover, the cost of upgrading TCI's equipment to handle two-way communications proved far higher than pre-merger estimates. AT&T undertook a major reorganization in October 2000, moving its mobile phone and broadband units into separate companies, to allow each unit to raise capital independently.
On July 9, 2001 it spun off AT&T Wireless Corp. in what was then the world's largest initial public offering (IPO). Later that year it spun off AT&T Broadband and Liberty Media, which comprised its cable TV assets. AT&T Broadband was subsequently acquired by Comcast in 2002, and AT&T Wireless merged with Cingular Wireless in 2004.
In 2004, the U.S. government eliminated equal access regulations that allowed long-distance phone companies to access the networks owned by the regional Bell carriers at reasonable rates. This ultimately caused AT&T to move away from the residential telephone business--declaring in the process that it would no longer market residential telephone service. Instead, its residential focus shifted to offering a voice service over a broadband Internet connection called AT&T CallVantage.
On January 31, 2005, SBC Communications announced that it would buy AT&T for more than $16 billion. AT&T stockholders, meeting in Denver, approved the merger on June 30, 2005. The merger is expected to be completed by the end of 2005, barring any regulatory difficulties. The U.S. Department of Justice cleared the merger on October 27, 2005, and the U.S. Federal Communications Commission approved the merger on October, 31, 2005. On October 27, 2005, SBC announced that the name of the merged company will be AT&T, Inc. A new logo and stock ticker symbol will be released when the merger is closed. SBC itself was formed out of one of the "Baby Bells" that was formed as a result of the antitrust lawsuit.
Current organization
As of September 2005, AT&T's directors include CEO and Board Chairman David Dorman, President and COO William Hannigan, Vice Chairman and CFO Thomas Horton, CTO and CIO Hossein Eslambolchi, and President and CEO of AT&T Consumer John Polumbo.
Divisions
A division of AT&T, the Lucky Dog Phone Company provides a pay-as-you-go long distance phone service for in-state, state-to-state, and international calls with charges added to the caller's regular monthly phone bill. Under the name 10-10-345, Lucky Dog sponsored the #45 Winston Cup car driven by Rich Bickle in 1999.
Nicknames
AT&T was also known as "Ma Bell" and affectionately called "Mother" by phone phreaks. Spinoffs like the Regional Bell Operating Companies or RBOCs were often called "Baby Bells".
The AT&T Globe Symbol, the corporate logo designed by Saul Bass in 1983, has been nicknamed the Death Star in reference to Star Wars. This name was also given to the titanic former Bell Labs facility in Holmdel, New Jersey, now owned by Lucent.
Competitors
See also
External links
- AT&T corporate website
- The Bell System Memorial - comprehensive company and technical history website run by David Massey
- July 2005 IEEE Article
- Yahoo! – AT&T Corp. Company Profile
- Unnatural Monopoly: Critical Moments in the Development of the Bell System Monopoly by Adam D. Thierer
Business ratings
- BuyBlue rating on political contributions; labor and human rights; environment; corporate and social responsibility; employment equality; and industry practicescy:AT&T
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