Your article neglects to mention the tremendous negative impact the Bell System statutory monopoly had on consumer-side innovation, as well as the explosion of progress that took place after that monopoly was broken up.
Ma Bell Suppressed Innovation for Thirty Grueling Years
AT&T suppressed technology just like a lot of modern technology companies. It owned the network effects and would not offer an API or interoperability. Of course, back then, antitrust was a real thing.
AT&T was also the Comcast of its day and loathed for its poor public service. The comedian Lily Tomlin had a whole shtick as a telephone operator based on "We don't care. We don't have to. We're the phone company." As a spoiler, the Phone Company was the big villain in the movie The President's Analyst.
"Ma Bell acted like a monopoly: it froze out any competition and it was terrible. Therefore, we should gut Net Neutrality and allow monopolies to freeze out any competition."
Jimmy Maher wrote a fascinating and readable history of long-distance communication tech on The Digital Antiquarian a couple years ago. If you enjoyed this article, you would probably enjoy it:
The parts about installing the first transatlantic cables in the mid-19th century were particularly fascinating, but the whole series is full of interesting stories.
My brother in law worked for AT&T for 40 years until 2002. He once told me that the network was so huge that not a single person knew how to the whole thing worked.
I'd be interested in a sidebar on the retail billing challenges in ATT's early years. This is a world with no credit cards; no credit checks; limited checking accounts. How did the company get paid on a regular basis for its services (and cut off non-paying users).
I would be interested to see one of these deep dives into cell phones and smart phones. Smart phones in particular went from unknown to ubiquitous in less than 20 years, which is an insane rate of growth compared to these earlier technologies from the 20th century.
My father, Ed Block, was AT&T’s Executive Vice President of Communications when the Bell System was split up. The Reagan administration had decided to continue to pursue a monopoly case that had been started years earlier, and Judge Harold Greene seemed hostile to AT&T's defense. According to my father, AT&T’s CEO Charlie Brown came to him and shared a few thoughts: "If we lose the case, I don't know what business this company will be in for the next 20 years. I can't run the company if I can't take a long view of the business. We need a workable breakup plan to take to the Justice Department and Judge Greene."
Charlie Brown, Howard Trienens (head of AT&T's legal department), my father and a few others devised the plan to break up AT&T. Before the trial ended, AT&T submitted it to the government, and the rest is history. Technically, AT&T did not lose the case. Charlie Brown and his team saw the writing on the wall and devised a solution in the best interests of customers, employees, shareholders, and the country. (Golden parachutes for management were not a thing back then.)
An interesting question is what could have been done better?
It's not clear to me that even if you could have simply mandated interconnection and a good charging system that would be as good. If you own the whole network developing tech that utilizes that network or connecting new customers is more valuable to you than if you own only a tiny sliver.
For instance, one approach might be something like what we do with the electrical grid and leave Bell owning the. AT&T might required to sell access to their network under RAND terms but what about competing backbone carriers??
This feels like an interesting economics/market design PhD thesis.
I worked at MCI, in Ryebrook NY, for 4 yrs, after university and before graduate school…my dad and his brothers grew up w/ Bill McGowan and his brother the Monsignor, I used to hear about their collective tomfoolery in Catholic school, as alter boys in the parish and throughout their shared years in College
My dad was a Bell salesman for some years in the 70's/80s then worked for some of those "Baby Bells" after they broke up. Thanks for the article, makes me feel closer to him to know some of the history.
I remember dials being installed in the phones. I also remember inexpensive [in today's terms] home rates subsidized by the LD and office equipment rates [home owners vote regulators thought it was OK] Post "carter phone" Bell was getting its cherries picked. the bell break-up was a federal end run around 50 state regulators. allowing bell to compete.
Have you read Richard John's Network Nation? Highly recommend for the political economy side.
Your article neglects to mention the tremendous negative impact the Bell System statutory monopoly had on consumer-side innovation, as well as the explosion of progress that took place after that monopoly was broken up.
Ma Bell Suppressed Innovation for Thirty Grueling Years
https://fee.org/articles/ma-bell-suppressed-innovation-for-thirty-grueling-years/
AT&T suppressed technology just like a lot of modern technology companies. It owned the network effects and would not offer an API or interoperability. Of course, back then, antitrust was a real thing.
AT&T was also the Comcast of its day and loathed for its poor public service. The comedian Lily Tomlin had a whole shtick as a telephone operator based on "We don't care. We don't have to. We're the phone company." As a spoiler, the Phone Company was the big villain in the movie The President's Analyst.
"Ma Bell acted like a monopoly: it froze out any competition and it was terrible. Therefore, we should gut Net Neutrality and allow monopolies to freeze out any competition."
Jimmy Maher wrote a fascinating and readable history of long-distance communication tech on The Digital Antiquarian a couple years ago. If you enjoyed this article, you would probably enjoy it:
https://www.filfre.net/2022/01/a-web-around-the-world-part-1-signals-down-a-wire/
The parts about installing the first transatlantic cables in the mid-19th century were particularly fascinating, but the whole series is full of interesting stories.
Nice history lesson. But could have put more emphasis on the transformative importance of Bell Labs. One of the most important institutions in history
My brother in law worked for AT&T for 40 years until 2002. He once told me that the network was so huge that not a single person knew how to the whole thing worked.
I'd be interested in a sidebar on the retail billing challenges in ATT's early years. This is a world with no credit cards; no credit checks; limited checking accounts. How did the company get paid on a regular basis for its services (and cut off non-paying users).
I would be interested to see one of these deep dives into cell phones and smart phones. Smart phones in particular went from unknown to ubiquitous in less than 20 years, which is an insane rate of growth compared to these earlier technologies from the 20th century.
There's quite a bit of this in a history of Bell Labs, The Idea Factory.
https://www.penguinrandomhouse.com/books/303275/the-idea-factory-by-jon-gertner/
My father, Ed Block, was AT&T’s Executive Vice President of Communications when the Bell System was split up. The Reagan administration had decided to continue to pursue a monopoly case that had been started years earlier, and Judge Harold Greene seemed hostile to AT&T's defense. According to my father, AT&T’s CEO Charlie Brown came to him and shared a few thoughts: "If we lose the case, I don't know what business this company will be in for the next 20 years. I can't run the company if I can't take a long view of the business. We need a workable breakup plan to take to the Justice Department and Judge Greene."
Charlie Brown, Howard Trienens (head of AT&T's legal department), my father and a few others devised the plan to break up AT&T. Before the trial ended, AT&T submitted it to the government, and the rest is history. Technically, AT&T did not lose the case. Charlie Brown and his team saw the writing on the wall and devised a solution in the best interests of customers, employees, shareholders, and the country. (Golden parachutes for management were not a thing back then.)
Great read, thanks.
An interesting question is what could have been done better?
It's not clear to me that even if you could have simply mandated interconnection and a good charging system that would be as good. If you own the whole network developing tech that utilizes that network or connecting new customers is more valuable to you than if you own only a tiny sliver.
For instance, one approach might be something like what we do with the electrical grid and leave Bell owning the. AT&T might required to sell access to their network under RAND terms but what about competing backbone carriers??
This feels like an interesting economics/market design PhD thesis.
Absolutely fantastic! ☎️🙏
Thanks for that summary. Wish I could’ve used it years ago when I was struggling to teach history and economics to high school kids.
I worked at MCI, in Ryebrook NY, for 4 yrs, after university and before graduate school…my dad and his brothers grew up w/ Bill McGowan and his brother the Monsignor, I used to hear about their collective tomfoolery in Catholic school, as alter boys in the parish and throughout their shared years in College
> When Bell filed his telephone patent on February 14th, 1876, he beat competitor Elisha Gray to the patent office by just a few hours.
Why isn't this evidence that the invention was obvious and the patent improperly granted?
My dad was a Bell salesman for some years in the 70's/80s then worked for some of those "Baby Bells" after they broke up. Thanks for the article, makes me feel closer to him to know some of the history.
I remember dials being installed in the phones. I also remember inexpensive [in today's terms] home rates subsidized by the LD and office equipment rates [home owners vote regulators thought it was OK] Post "carter phone" Bell was getting its cherries picked. the bell break-up was a federal end run around 50 state regulators. allowing bell to compete.