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AT&T

From Academic Kids

Template:Infobox Company

AT&T (formerly an abbreviation for American Telephone and Telegraph) Corporation Template:Nyse is an American telecommunications company. AT&T provides voice, video, data, and Internet telecommunications 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 sometimes a monopoly. As of early 2005, its fate may be absorption into SBC Communications (commonly called one of the "baby bells" that was spunoff originally from AT&T itself).

Contents

History

American Telephone and Telegraph Corporation was set up on March 3, 1885 to run United States's first long-distance telephone network. Starting from New York the network reached Chicago in 1892, and 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.

The formation of the Bell Telephone Company superseded an agreement between Alexander Graham Bell and his financiers, principal among them Gardiner G. Hubbard and Thomas Sanders.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 1879, 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.

Bell's patent on the telephone expired in 1894, but the company was successful in staving off competition through such tactics as harassment lawsuits and price undercutting. On December 30, 1899, the American Telephone and Telegraph Corporation bought the assets of American Bell, creating a de facto American telephone monopoly. It was known as the Bell System because Bell had gradually acquired all the companies that licensed its telephone equipment.

The telephone market was very competitive in the early 20th century. During this period, AT&T officials spread rumors that the company was not doing well; this caused nervous investors to sell stock in companies contracted to AT&T. AT&T would then buy the stock in these companies cheaply, and soon established itself nationwide as the primary provider of telephone service. 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 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.

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AT&T Corporate Logo, 1969-1983

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 commercial communications satellite, Telstar I in 1962. This and other new technologies convinced the FCC to introduce competition in some sectors, and by 1975 general long-distance services were competing.

The rest of the telephone monopoly lasted until final settlement of a 1974 U.S. Department of Justice antitrust suit against AT&T on January 8, 1982, under which AT&T 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.

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 ([1] (http://www.cnn.com/WORLD/europe/9807/26/bt.att/)). 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 Communications Corporation in 2002, and AT&T Wireless merged with Cingular Wireless in 2004.

In 2004, the U.S. government eliminated regulations that allowed long-distance phone companies to access the networks owned by the regional Bell carriers at relatively inexpensive rates. This ultimately caused AT&T to move away from the residential telephone business. 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. The merger is expected to be completed next year, barring any regulatory difficulties. The name of the merged company has not been decided, but it is expected that SBC will adopt the AT&T name in some form.

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.

AT&T Competitors

See also

External links

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