Bell System

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"Bell Telephone" redirects here. For other uses, see Bell Telephone (disambiguation). "Ma Bell" redirects here. Not to be confused with Ma Belle (disambiguation).
Bell System
Bell Telephone Company (1877–1885)
AT&T (1885–1983)

The Bell System was a system of

vertical monopoly over telecommunication products and services in most areas of the United States and Canada. At the time of the breakup of the Bell System
in the early 1980s, it had assets of $150 billion (equivalent to $440 billion in 2023) and employed over one million people.

Beginning in the 1910s, American antitrust regulators had been observing and accusing the Bell System of abusing its monopoly power, and had brought legal action multiple times over the decades. In 1974 the

Regional Bell Operating Companies
" (known as "The Baby Bells"). This ended the existence of the conglomerate in 1984. The Baby Bells became independent companies and several of them are large corporations today.

History

Further information: History of AT&T
Logo used from 1889 to 1900

In 1877, the American Bell Telephone Company, named after

American Telephone & Telegraph
, referred to internally as associated companies, regional holding companies, or later Bell operating companies (BOCs).

In 1899, American Telephone & Telegraph (AT&T) acquired the assets of its parent, the American Bell Telephone Company. American Bell had created AT&T to provide long-distance calls between New York and Chicago and beyond. AT&T became the parent of American Bell Telephone Company, and thus the head of the Bell System, because regulatory and tax rules were leaner in New York than in Boston, where American Bell was headquartered. Later, the Bell System and its moniker "Ma Bell" became a term that referred generally to all AT&T companies, of which there were five major divisions:

In 1913, the federal government challenged the Bell System's growing

anti-trust suit, leading to the Kingsbury Commitment. Under the commitment, AT&T escaped break-up or nationalization in exchange for divesting itself of Western Union and allowing non-competing independent telephone companies to interconnect with its long-distance network. After 1934, the Federal Communications Commission
(FCC) assumed regulation of AT&T.

Proliferation of telephone service allowed the company to become the largest corporation in the world until

its dismantling by the United States Department of Justice in 1984, at which time the Bell System ceased to exist.[1]

Formation under Bell patent

1912 Bell System advertisement promoting its slogan for universal service

Receiving a U.S. patent for the invention of the telephone on March 7, 1876, Alexander Graham Bell formed the Bell Telephone Company in 1877, which in 1885 became AT&T.[2][3][4]

When Bell's original patent expired 15 years later in 1894, the telephone market opened to competition and 6,000 new telephone companies started while the Bell Telephone company took a significant financial downturn.[2][4]

On April 30, 1907, Theodore Newton Vail returned as President of AT&T.[2][4] Vail believed in the superiority of one national telephone system and AT&T adopted the slogan One Policy, One System, Universal Service.[2][5] This became the company's philosophy for the next 70 years.[4] Under Vail, AT&T began acquiring many of the smaller telephone companies including the Western Union Telegraph Company.[2][4]

Kingsbury Commitment

In response to the threat of

antitrust action from government, AT&T entered into an out-of-court agreement, known as the Kingsbury Commitment with the Department of Justice in 1913.[2][5] AT&T committed to sell its $30 million in Western Union capital stock, allow competitors to interconnect with its long-distance telephone network, and not acquire other independent companies without permission from the Interstate Commerce Commission.[2][4][6]

Logo style of Bell System affiliated companies from 1921 to 1939
195 Broadway, AT&T headquarters for most of the 20th century
The Spirit of Communication as used on the Bell System's directories in the 1930s and 1940s

Nationwide monopoly

The Bell trademark was used from 1921 through 1969 by both the AT&T corporation and the regional operating corporations to co-brand themselves under a single Bell System trademark. For each regional operating company, its name was placed where "name of associated company" appears in this template version of the trademark.

Bell system telephones and related equipment were made by Western Electric, a wholly owned subsidiary of AT&T Co. Member telephone companies paid a fixed fraction of their revenues as a license fee to Bell Labs.

As a result of this

vertical monopoly
, the Bell System effectively owned most telephone service in the United States by 1940, from local and long-distance service to the telephones. This allowed Bell to prohibit its customers from connecting equipment not made or sold by Bell to the system without paying fees. For example, if a customer desired a style of telephone not leased by the local Bell company, the customer was required to purchase the instrument at cost, furnish it to the telephone company for rewiring, pay a service charge, and a monthly lease fee for using it.

In 1949, the

Northern Electric manufacturing subsidiary of the Bell System's Western Electric equipment manufacturer. Western Electric divested Northern Electric in 1956, but AT&T did not divest itself of Bell Canada until 1975. ITT Inc.
, then known as International Telephone & Telegraph Co., purchased the Bell System's Caribbean regional operating companies.

The consent decree also forced Bell to make all of its patents royalty-free. This led to substantial increases in innovation, in particular in the electronics and computer sectors.[7] Steven Weber's The Success of Open Source characterizes the consent decree as important in fostering the open source movement.[8]

The Bell System also owned various Caribbean regional operating companies, as well as 54% of Japan's

NEC and a post-World War II reconstruction relationship with state-owned Nippon Telegraph and Telephone
(NTT) before the 1956 boundaries were emplaced. Before 1956, the Bell System's reach was truly gargantuan. Even during the period from 1956 to 1984, the Bell System's dominant reach into all forms of communications was pervasive within the United States and influential in telecommunication standardization throughout the industrialized world.

The 1984

Bell System divestiture brought an end to the affiliation branded as the Bell System. It resulted from another antitrust lawsuit filed by the U.S. Department of Justice in 1974, alleging illegal practices by the Bell System companies to stifle competition
in the telecommunications industry. The parties settled the lawsuit on January 8, 1982, superseding the former restrictions that AT&T and the DOJ had agreed upon in 1956.

Subsidiaries

Pre-1956 international holdings

Before the 1956 break-up, the Bell System included the companies listed below, plus those listed in the pre-1984 section. Northern Electric and the Caribbean regional operating companies were considered part of the Bell System proper before the break-up. Nippon Electric was considered a more distant affiliate of Western Electric, and through its own research and development adapted the designs of Western Electric's North American telecommunications equipment for use in Japan, which to this day gives much of Japan's telephone equipment and network a closer resemblance to North American ANSI and iconectiv standards than to European-originated ITU-T standards. Before the 1956 break-up, Northern Electric was focused on manufacturing, without significant telecommunication-equipment research & development of its own. The operation of Japan's NTT during the post-World War II occupation was considered an administrative adjunct to the North American Bell System.

  • Nortel Networks Corporation, formerly Northern Telecom, an equipment-manufacturing company
    • Northern Electric, a former telecommunications equipment-manufacturing subsidiary of Western Electric
    • Dominion Electric, a former recording equipment-manufacturing company
  • Various former
    ITT
  • NEC
    , an equipment-manufacturing company in Japan
    • Nippon Electric, a former telecommunications equipment-manufacturing company 54% owned by Western Electric
  • NTT, a telecommunications company in Japan that was administered by AT&T as part of General Douglas MacArthur's post-WWII reconstruction
Manhole cover with Bell System logo

Pre-1984 breakup

Further information: Breakup of the Bell System

Immediately before the 1984 break-up, the Bell System had the following corporate structure:

A Bell Telephone System telecommunications pedestal

1984

On January 1, 1984, the former components of the Bell System were structured into the following Regional Bell Operating Companies (RBOCs), which became known as Baby Bells.

Today

After 1984, multiple mergers occurred of the operating companies and between them, so that some components of the former Bell System are now owned by companies independent of the historic Bell System, including foreign telecommunications firms. The structure of the companies today[when?] is as follows.

Remaining "Regional Bell Operating Companies"

Other "Bell Operating Companies"
Cincinnati Bell's alternative logo retained the iconic Bell logo until 2016

The following telephone companies are considered independent of the

Baby Bells
:

  • Cincinnati Bell, Inc.
    , an independent LEC holding company
    • Cincinnati Bell Telephone Company LLC, a LEC of which AT&T owned 27.8% before 1984 and thus was left separate in the 1984 break-up
  • Consolidated Communications Holdings, Inc., an independent LEC holding company
  • Frontier Communications Corporation, an independent LEC holding company
    • Verizon
      and sold to Frontier in 2010
    • Frontier West Virginia, Inc., a regional LEC, formerly C&P Telephone of West Virginia
    • The Southern New England Telephone Company
      , a regional LEC that AT&T owned 16.8% of before 1984 and thus was left separate by the 1984 break-up (subsequently acquired by SBC and then sold to Frontier by the new AT&T after the SBC-AT&T merger)
Other "Bell System" companies

The following companies were divested after 1984 from

Baby Bells
and do not provide telephone service.

  • Nokia Corporation
    in 2016
    • Western Electric Company, Incorporated, a former telecommunications and recording equipment-manufacturing company that ceased to have that name as of the 1984 break-up
      • Alcatel-Lucent Bell, a subsidiary of Alcatel-Lucent that was founded in
        ITT
        and Alcatel
    • Bell Telephone Laboratories, Inc., the former AT&T-corporate research unit known as Bell Labs: also spun-off to Lucent Technologies, became
      Nokia Bell Labs
      in 2016
  • Avaya, Inc., an equipment manufacturing company spun-off from Lucent in 2000
  • LSI Corporation, a holding company
    • Agere Systems, incorporated in 2000, the former Micro Electronics subsidiary of Lucent; was then spun-off in 2002 and acquired by LSI in 2007
  • Systimax Solutions, the
    AT&T Network Systems, was spun-off from Avaya in 2002 and became part of CommScope
  • iconectiv, formerly known as Telcordia and Bell Communications Research (Bellcore)

Beginning in 1991, the

Bell Operating Companies
according to the parent company name, such as "Bell Atlantic – Delaware, Inc." or "U S WEST Communications, Inc.", to unify their corporate images.

Present-day usage of the Bell name

Verizon payphone
with the Bell logo, 2008

The Bell System service marks, including the circled-bell logo, especially as redesigned by

CenturyLink, and Altafiber.[9] International rights to the marks, except for Canada, are held by a joint venture of these companies, Bell IP Holdings.[citation needed
]

Of the various resulting 1984 spinoffs, only

Mountain Bell names to Unical Enterprises, who makes telephones under the Northwestern Bell name.[citation needed
]

In 1984, each regional Bell operating company was assigned a set list of names it was allowed to use in combination with the Bell marks. By 2022, all these Bell System names had disappeared from the United States business landscape. Cincinnati Bell was the last to use the name, until 2022 when it rebranded to Altafiber, though it still has Cincinnati Bell as its corporate name. Southwestern Bell used both the Bell name and the circled-bell trademark until SBC opted for all of its companies to do business under the "SBC" name in 2002. Bell Atlantic used the Bell name and circled-bell trademark until renaming itself Verizon in 2000. Pacific Bell continued operating in California under that name (or the shortened "PacBell" nickname) until SBC purchased it.[citation needed]

In Canada,

Bell Canada Enterprises, still use the Bell name. They used variations of the circled-bell logo until 1977, which until 1976 strongly resembled the 1921 to 1939 Bell System trademark shown above.[citation needed
]

See also

References

  1. ^ "AT&T History: The Bell System". AT&T Corporation. Archived from the original on September 6, 2008. Retrieved 2008-12-22.
  2. ^ a b c d e f g "Unnatural Monopoly: Critical Moments". Cato Institute. Archived from the original on 10 September 2008. Retrieved 2008-09-17.
  3. ^ "Bell's Telephone". Franklin Institute. Archived from the original on 12 September 2008. Retrieved 2008-09-17.
  4. ^ a b c d e f "AT&T Milestones in AT&T History". AT&T. Archived from the original on 28 September 2008. Retrieved 2008-09-17.
  5. ^ a b "AT&T History: The Bell System". AT&T. Archived from the original on 3 October 2008. Retrieved 2008-09-17.
  6. ISBN 978-0-06-010540-2
    .
  7. S2CID 229080411
    .
  8. ^ Weber, Steven (2004). "The Success of Open Source". Harvard University Press. Retrieved 2021-01-04.
  9. ^ USPTO record for trademark serial no. 73727728 (example "Bell" registration originally held by Pacific Telesis): "Registration is nationwide, but is subject to the condition that registrant shall use the mark only in conjunction with one or more of the following modifiers; "Nevada Bell", "Pacific Bell", "Pacific Telephone", "Pacific Telesis", or "PacTel". Use of a modifier shall be considered to be in conjunction with the mark if it is used in sufficient proximity to the mark such that a reasonable observer would normally view the mark and the modifier in a single visual impression and would recognize that both the mark and the modifier are used by registrant. Registrant's right to exclusive use of the mark is subject to the rights of the [other RBOCs], to which concurrent registrations in the mark have also been issued, to use the mark in conjunction with one or more of the modifiers specified in those registrations[...]"

External links

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