The Telephone And Its Corporation Essay

This essay has a total of 3977 words and 21 pages.

The Telephone And Its Corporation

The phone is easily one of man's most important, useful and taken for granted inventions.
The telephone has outgrown the ridicule with which it first received, now in most places
taken for granted, it is a part of many people's daily lives. It marvelously extended the
ways man converses that it is now an indispensable help to whoever would live the
convenient life. All disadvantage of being deaf and mute to any persons, which was
universal before the advent of the telephone, has now happily been overcome. Before I tell
of the history of how the telephone was constructed and put in to place I will tell of the
past of communications.

Ever since the ability of language and written language the most popular form of
communication was done through a letter. Others were as documented in 1200 BC in Homer's
Illiad were signal fires. Carrier pigeons were used in the Olympic games to send messages
from 700 BC to 300 AD. In 1791 the Chappe brothers created the Semaphore system; they were
two teens in France who wanted to be able to contact each other from their different
school campuses. This system consisted of a pole with movable arms, which the positions
took the place of letters of the alphabet. Two years later this idea had caught on and was
being used in France, Italy, Russia, and Germany. Two semaphore systems were built in the
U.S. in Boston and on Martha's Vineyard; soon Congress was asked to fund a project for a
semaphore system running from New York City to New Orleans. Samuel Morse told Congress
that not to fund the project because he was developing the electric telegraph. Soon Samuel
Morse developed his electric telegraph he demonstrated it in 1844 it caught on and by 1851
51 telegraph companies were in operation. And it continued to grow to 2250 telegraph
offices nationwide. In 1876 Alexander Graham Bell patented the telephone.

Alexander Graham Bell was born on March 3, 1847 in Edinburgh. He grew up deeply involved
in the study of speech due to his father and grandfathers work. He was also a talented
musician able to play by ear from a very early age, and, had he not been more interested
in what his father was doing to help people speak, he might have ended up as a
professional musician. He and his two brothers built a model human skull and filled it
with a good enough reproduction of the human vocal apparatus, which worked with a bellows,
so it would be able to say, "Ma-ma." Alexander became a Professor and taught visible
speech he was greatly appreciated for this. Soon he went to work for Thomas Sanders a
successful leather merchant from Salem who had a five-year old deaf son. Sanders also
became a friend and admirer of Bell and his work. At his time at the Sanders house he was
able to do his experiments in the basement until it became a tad bothersome to Sanders and
told him to find a new place to experiment. So Alexander moved his lab to Charles
Williams' electrical shop in Boston and employed Thomas Watson together they worked for
weeks to figure out this enigma. Finally after tightly tying a copper string and plucking
it caused a distinct sound on both ends. He applied for a patent on February 14, 1876 3
hours before Elisha Gray filed a patent for a similar device. March 7, 1876 the patent was
issued three days later Alexander spoke the famous words after spilling acid on his pants
"Mr. Watson come here I want you!" In order to distribute this new technology to the world
and humanity a corporation needed to be created.

The business venture to start this new corporation began before the invention with an
agreement between Thomas Sanders, Gardiner G. Hubbard, and Bell dated February 27, 1875.
Formed as a basis for financing Bell's experiments, the agreement came to be called the
Bell Patent Association. The only tangible assets of this association were an early Bell
patent, "Improvements in Transmitters and Receivers for Electric Telegraph," his basic
telephone patent, No. 174,465, an "Improvement in Telegraphy" (March 7, 1876), and two
additional patents that followed. Publicity was needed Hubbard urged Bell to demonstrate
his new instrument as well as the further improvements Thomas Watson had produced at the
Philadelphia Centennial Exposition that summer. It was hot and muggy in Philadelphia and
not many people were attracted the complex scientific experiment setup. But Bell had seen
an old friend in the party it was Dom Pedro do Alcontara, the Emperor of Brazil, whom Bell
had met several weeks before at the School of the Deaf in Boston. The emperor was
delighted to see an old friend, for he stopped the entire judging group and lured them
over to Bell's exhibit just as the group was disbanding for the day. This was most
fortunate event since Bell planned on leaving to Boston to continue his work at the Deaf
school and no one could explain how the phone worked. The judges listened in amazement as
Bell recited all of Hamlet's soliloquy, and Dom Pedro exclaimed in wonder, "My God! It

Just before Mr. and Mrs. Bell left for Europe for their Honeymoon, on August 4, 1877, the
three members formed the Bell Telephone Company to look after the telephone's interests.
Thomas Watson was the only full time employee, who was paid $3.00 a day in wages, and,
While Bell sailed to Europe to promote his invention and work with the deaf, Watson stayed
at home. He was the first research and development arm of the Bell System-forerunner of
the vaunted Bell Telephone Laboratories. Bell Telephone Company worked hard leasing phones
but hopes dipped and Hubbard offered to sell all the Bell patents to William Orton,
president of Western Union Company, for just $100,000. This letter was sent to Hubbard in
response to the offer:

In 1876, Alexander Graham Bell and his financial backer, Gardiner G. Hubbard, offered
Bell's brand new patent (No. 174,465) to the Telegraph Company - the ancestor of Western
Union. The President of the Telegraph Company, Chauncey M. DePew, appointed a committee to
investigate the offer. The committee report has often been quoted. It reads in part:

"The Telephone purports to transmit the speaking voice over telegraph wires. We found that
the voice is very weak and indistinct, and grows even weaker when long wires are used
between the transmitter and receiver. Technically, we do not see that this device will be
ever capable of sending recognizable speech over a distance of several miles.

"Messer Hubbard and Bell want to install one of their "telephone devices" in every city.
The idea is idiotic on the face of it. Furthermore, why would any person want to use this
ungainly and impractical device when he can send a messenger to the telegraph office and
have a clear written message sent to any large city in the United States?

"The electricians of our company have developed all the significant improvements in the
telegraph art to date, and we see no reason why a group of outsiders, with extravagant and
impractical ideas, should be entertained, when they have not the slightest idea of the
true problems involved. Mr. G.G. Hubbard's fanciful predictions, while they sound rosy,
are based on wild-eyed imagination and lack of understanding of the technical and economic
facts of the situation, and a posture of ignoring the obvious limitations of his device,
which is hardly more than a toy....

"In view of these facts, we feel that Mr. G.G. Hubbard's request for $100,000 of the sale
of this patent is utterly unreasonable, since this device is inherently of no use to us.
We do not recommend its purchase."

Western Union in 1878 created their own telephone company after finding out the telephone
had uses such as eliminating the ticker tape machine. This company was called American
Telephone and Telegraph they bought Elisha Gray's patents and commissioned Thomas A.
Edison to get busy and invent some better telephones. Thomas Edison invented a telephone
transmitter that was far better than anything in use by the Bell Companies did. It was a
very good selling point for the American Speaking Telephone Company. So Bell Telephone
Company needed a man who could stop Western Union in their tracks. Theodore Newton Vail
was hired by Hubbard to serve as general manager, organizer and promoter. Vail took action
immediately and sent letters to the baby bells saying to keep fighting for customers and
that they had the original patents. Soon Vail attacked Western Union with Patent
Infringement suits and Western Union retreated. They sold all their phones in 55 cities
and stayed out of the telephone business indefinitely. Later American Telephone and
Telegraph was created once again to become a subsidiary that sold long distance service.
In 1899 AT&T took control and became the owner of the Bell Telephone Company. AT&T started
to mature and was constantly changing they way Americans talked.

After Jay Gould of Western Union died the company started to break apart so AT&T bought
Western Union. Ironically they took control of the company that years before refused to
buy their company. So AT&T became larger and larger then in 1912 entered Charles Mackay
who complained about anti-trust violations in fear that AT&T had become a monopoly. When
WWI came many people cried that the government should take over the communications and
AT&T couldn't stop it. This hurt AT&T but by the end of the war they were able to get out
of this most severe regulation. After the Great Depression AT&T was able to supply many
jobs to people as operators and maintenance workers. Changes had always affected AT&T some
good and bad.

The man responsible for the "dial telephone system" had a very good reason for getting rid
of all the operators who controlled what calls went out and in. Amon Strowger, the St.
Louis undertaker, became upset on finding that the wife of a competitor was a telephone
operator who made his line busy and transferred calls meant for him to her husband.
"Necessity is the mother of invention" so Strowger developed the dial telephone system to
get the operator out of the system. Many other inventions were tied to the telephone like
the fax machine, the early computer, calculator, hearing aids, modems and many other
valuable items of today. In the 1960's Bell Labs technologists had been growing
increasingly concerned about the limitations of the national numbering plan which had been
adopted earlier to make Direct Distance Dialing possible. In brief, the numbering plan
divided the United States and Canada into areas, each area equipped with a different
three-digit number which could be recognized by automatic switching equipment because the
second digit was either a one or a zero. When the numbering plan was first devised it
appeared that telephone numbers would go on forever, without any possible shortage
developing. But the American and Canadian populations began growing at such a rate that
the numbers would run out unless something was done. Since the area codes must have either
a one or a zero in the middle, they could not be added to without great expense in
changing the recognizing equipment. It looked as if something should be done about
individual telephone numbers. Further, others at Bell Labs had found that push-button
telephones, when introduced would be much easier to use if the numbers could appear all
alone on the buttons without being confused by the addition of letters. A group of very
vocal people hated it. They felt, they said, that they and everyone else were being
reduced to numbers, that computers were dehumanizing American life, that their heritage
was being destroyed and that the Bell System was behind the whole plot. On November 20,
1974, the Justice Department filed an antitrust suit against the Bell System charging
monopolization and conspiracy to monopolize the supply of telecommunications service and
equipment in America.

Thus began the divestiture of AT&T's benevolent domination in the telecommunications
market. In December 1981, after 2 years of attempts to rid ourselves of the antitrust case
and to get appropriate legislation, we started discussions with US. Assistant Attorney
General William F. Baxter about settling the lawsuit. The negotiations went quickly. Our
positions were clear, and we both knew that regardless of the result, we had to maintain a
strong and viable communications industry for the United States. On January 8, 1982, we
jointly announced that the Justice Department's lawsuit had been resolved through the Bell
System's agreement to divest itself of the local exchange portions of its 22 operating
telephone companies. The Justice Department agreed to dissolve the previous (1956) consent
decree and replace it with a new agreement, thereby freeing AT&T from restrictions on the
businesses and the markets it could enter. I had evaluated the situation in the following

A major duty of corporate management is to make certain the business conforms to public
policy. If not, in the long run, it will not survive. Public policy at that time, however
arrived at, was searching for a change.

The Bell System was perceived by some part of the public as too big, too powerful, or too pervasive.

The new public policy was intended to make competition in long-distance services the rule, not the exception.

Time was not in the Bell System's favor - opportunities would be missed and it was
impossible to plan for the future until legal, legislative, and regulatory problems were

To gain access to new markets and retain access to current markets, the Bell System would
have to agree to radical restructuring.

Acceptance of the Justice Department's major demand, the divestiture of local operations
via a relatively simple, broad decree, would leave AT&T free to reorganize on a business
basis as opposed to reorganization detailed by a court or a legislative body.

Of the three options-continuing litigation, agreeing to crippling legislation or an
injunctive decree, or accepting divestiture of our local telephone companies - the last
was the best course to follow for the public and the stockholders (14,15).

The Justice Department's goal was to separate the Bell System's competitive operations
from those that were in the realm of natural monopoly, that is, the local-exchange
businesses. This was a clean but painful procedure. To retain its vertical structure and
gain freedom to compete and follow its technology into new markets, AT&T would have to
give up its nationwide partnership of companies providing total, end-to-end communications
service. Only then could we lift the cloud of uncertainty that had hung over the business
for most of the past decade.

AT&T thus having agreed to divest three-fourths of its assets, the Bell System set about
the task of restructuring. Seven regional companies were organized to take over the local
exchange operations. A central services organization, later named Bell Communications
Research, or Bellcore, was created. Owned and operated by the regional companies, it would
provide technical and support services and coordination for national defense purposes. I
set four basic principles to guide the restructuring:

To the extent humanly possible, our service to all segments of the public win be provided
at the same high levels which have been the hallmark of the Bell System service.

The integrity of the investment of the 3,200,000 owners of the business will be preserved.

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