AT&T Corporation, an abbreviation of its former name, the American Telephone and Telegraph Company, was an American telecommunications company that provided voice, video, data, and Internet telecommunications and professional services to businesses, consumers, and government agencies.
During the Bell System, AT&T was at times the world's largest telecommunications company, the world's largest cable television operator, and a regulated monopoly. At its peak in the 1950s and 1960s, it employed one million people and its revenue ranged between US$3 billion in 1950 ($ in present-day terms) and $12 billion in 1966 ($ in present-day terms).
In 2005, AT&T was acquired by "Baby Bell" and former subsidiary SBC Communications for more than $16 billion ($ in present-day terms). SBC then changed its name to AT&T Inc., with AT&T Corporation continuing to exist as a long-distance calling subsidiary until its dissolution on May 1, 2024.
History
Origins
AT&T started with Bell Patent Association, a legal entity established in 1874 to protect the patent rights of Alexander Graham Bell after he invented the telephone system. Originally a verbal agreement, it was formalized in writing in 1875 as Bell Telephone Company.Bruce 1990, p. 291.Pizer 2009, pp. 120–124.Bruce 1990, p. 291
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 a nationwide long-distance network with a commercially viable cost-structure. The project was formally incorporated in New York as a separate company named American Telephone and Telegraph Company on March 3, 1885. Originating in New York City, its long-distance telephone network reached Chicago, Illinois, in 1892,Bruce 1990.Bruce 1990, p. 291 with its multitudes of local exchanges continuing to stretch further and further yearly, eventually creating a continent-wide telephone system. On December 30, 1899, the assets of American Bell were transferred into its subsidiary American Telephone and Telegraph Company (formerly AT&T Long Lines); this was because Massachusetts corporate laws were very restrictive, and limited capitalization to ten million dollars, forestalling American Bell's further growth. With this assets transfer at the very end of the 19th century, AT&T became the parent of both American Bell and the Bell System.Brooks 1976, p. 107.Bruce 1990, p. 291
On April 30, 1907, Theodore Newton Vail became president of AT&T. Vail believed in the superiority of one phone system and AT&T adopted the slogan "One Policy, One System, Universal Service." This would be the company's philosophy for the next 70 years.
Under Vail, AT&T began buying up many of the smaller telephone companies including Western Union telegraph. These actions brought unwanted attention from antitrust regulators. Anxious to avoid action from government antitrust suits, AT&T and the federal government entered into an agreement known as the Kingsbury Commitment. In the Kingsbury Commitment, AT&T and the government reached an agreement that allowed AT&T to continue operating as a telephone monopoly, subject to certain conditions, including divesting its interest in Western Union. While AT&T periodically faced scrutiny from regulators, this state of affairs continued until the company's breakup in 1984. Throughout most of the 20th century, AT&T held a semi-monopoly on phone service in the United States and Canada through a network of companies called the Bell System. At this time, the company was nicknamed Ma Bell.
Early radio development AT&T closely monitored new telephony technologies, although initially for private communication. In 1906, it sent observers to Reginald Fessenden's radiotelephone demonstration of his alternator transmitter."Experiments and Results in Wireless Telephony" by John Grant, The American Telephone Journal. Part I: January 26, 1907, pages 49–51; Part II: February 2, 1907, pages 68–70, 79–80. Fessenden hoped that AT&T would purchase his company and patents, but the phone company concluded that Fessenden's system was not sufficiently refined.
It was not until the development of vacuum-tube transmitters that radiotelephony became practical. AT&T purchased the commercial rights to Lee de Forest's vacuum-tube and radio patents.Father of Radio by Lee De Forest, 1950, pages 326-327. Although originally the company developed vacuum-tubes for distant land-line amplification, in 1915 the company conducted radiotelephony tests from station NAA in Arlington, Virginia, which established impressive new audio distance records, heard as far west as Hawaii,"Wireless Telephony Now From Washington to Honolulu", The Electrical Experimenter, November 1915, p. 321. and east to Paris, France, which was the first documented transmission of speech across the Atlantic Ocean."By Wireless 'Phone from Arlington to Paris", The Electrical Experimenter, December 1915, p. 393.
In 1919, the Radio Corporation of America (RCA) was formed, from the assets of the American subsidiary of the Marconi Company. A series of patent cross-licensing agreements were made, including, effective July 1, 1920, one between RCA's founders and AT&T, which granted AT&T exclusive rights within the United States for "Public Service Telephony"."Sec. 4. Why the Telephone Company Joined the Group", Big Business and Radio by Gleason L. Archer, 1939, pages 12-13. In 1920, a telephone link using radio transmissions was established between Avalon Island, California and the mainland, although this was later replaced by an underwater cable, because local amateurs began to amuse themselves by listening-in to private conversations."Commercial Radio Telefone at Avalon Santa Clara Island" by G. E. Hyde, Pacific Radio News, March 1921, pages 598, 638.
It was recognized that a potential use of unrestricted radio transmissions was broadcasting to a widespread audience. In a 1919 presentation at the Convention of the American Institute of Electrical Engineers, two company engineers noted the possibility for "the broadcasting of news, time and weather signals, and warning. In some cases one objection to radio-telephony would be an advantage in this class of service.""Radio Telephony" by E. B. Craft and E. H. Colpitts, Telephone Engineer, July 1919, page 37. The Westinghouse Electric and Manufacturing Company later purchased the successor company to Fessenden's early work. Employing vacuum-tube transmitters, it inaugurated well-financed radio broadcasting stations, starting in November 1920 with KDKA, located at its East Pittsburgh, Pennsylvania headquarters, and soon many additional stations began operating.
In December 1921, AT&T longline engineers John F. Bratney and Harley C. Lauderback prepared a memo reviewing AT&T's radio broadcasting options. They stated that commercial broadcasting was a significant opportunity, and proposed the nationwide establishment of 38 stations, linked together by long-distance telephone lines, that could be hired out (known, using telephone terminology, as "toll stations").Commercial Broadcasting Pioneer by William Peck Banning, 1946, pages 66-67.
Radio broadcasting in the United States dramatically expanded in 1922, with over 500 stations by the end of the year. Thus, AT&T ended up establishing only two stations: WBAY (later WEAF) in New York City, and WCAP in Washington, D.C., licensed to its Chesapeake and Potomac subsidiary. WEAF was the company's showcase station. Its primary competition was RCA's WJZ, also in New York City, although, based on AT&T's interpretation of the cross-licensing agreements, WJZ was prohibited from commercial operation. Moreover, WJZ's engineer-in-charge, Carl Dreher, later admitted that "WEAF... was better on the technical end than we were... Raymond Guy... sums it up in his reminiscences... 'AT&T did things with a more thorough knowledge of what they were doing... They just knew more about telephony than we did, as you might expect. They had the best telephone engineers in the world. The entire Bell Laboratories were at their disposal.'""Notes From the Music Box", Sarnoff: An American Success by Carl Dreher, 1977, page 76.
AT&T initially found that, instead of hiring WEAF, most potential broadcasters wanted to establish their own stations. According to AT&T's interpretation of the RCA cross-licensing agreements, its Western Electric subsidiary had the exclusive right to manufacture and sell radio transmitters, although most early stations had built their own. In 1924, with only about 50 of the more than 500 U.S. stations having Western Electric transmitters, AT&T started to move aggressively to enforce its patent rights, and began a court case charging infringement against WHN, a New York City-area station. Although company president H. B. Thayer issued a statement that "We have no desire for a monopoly of the air", this was met with widespread skepticism, as earlier sales contracts for Western Electric transmitters had included a clause prohibiting stations "to operate for hire"."Bell System Denies 'Monopoly of Air'", Washington (D.C.) Evening Star, March 7, 1924, page 35. This restriction on commercial programming was seen as a covert way to largely eliminate competition, as it was becoming apparent that for most stations there was no way to finance operations without selling airtime. In view of these concerns, Commerce secretary Herbert Hoover issued a statement that "neither will our public policy allow [radio broadcasting] to become monpolized"."No Monopoly in Broadcasting Says Secretary Hoover", Radio Dealer. April 1924, page 30.
Seeing no chance of prevailing against the AT&T suit, WHN reached an out-of-court settlement that set the standard for the radio broadcasting industry, which was reported as: "According to the stipulations of the settlement, the American Telephone and Telegraph Company released WHN from all liability for past infringement of its patents. WHN paid $2,000 for a personal, non-transferable license to do general telephonic broadcasting, including for toll or hire, for the entire term of the patents. If at any time the power of WHN should be increased, the American Telephone and Telegraph Company will grant a new license on similar terms and for a proportionally larger fee."" Letter from George E. Folk , General Patent Attorney of Bell Telephone dated August 1, 1924", Economics of the Radio Industry by Hiram L. Jome, 1925, footnote #2, page 215. The standard rate for a license to use AT&T's radio patents was based on a station's transmitter power, set at $4 per kilowatt, although non-commercial stations were only charged $1. Even this was too much for some stations, including KFAY in Medford, Oregon, which was unable to afford a license fee of $500,"Local and Personal", Medford Mail Tribune, June 27, 1924, page 2. as well as two Portland, Oregon stations, KGG and KFOH."2 Radio Stations Quit", Portland Oregonian, June 1, 1924, page 19. However, despite earlier concerns, the agreement allowed stations to begin commercial operation.
Meanwhile, AT&T engineers worked to develop a network of radio stations, linked by specially prepared long-distance telephone lines. The first permanent link, originating at WEAF, was established in the summer of 1923, to station WMAF in South Dartmouth, Massachusetts.History of Radio to 1926 by Gleason L. Archer, 1938, pages 313-315. As it expanded, this network became known as the "WEAF chain".
Broadcasting Company of America subsidiary