They provided service to the majority of the people living in the United States, and the center of the Bell System network was once the largest computer in the world. Bell System was known for providing the highest-quality telephone parts in the United States, but that ended in The telephone components were then manufactured by foreign companies for Western Electric , a leading telephone company.
Watson, come here, I want to see you," he could already envision a great national telephone system. As he wrote to his father that evening, "I feel that I have at last found the solution of a great problem, and the day is coming when telegraph wires will be laid on to houses just like water or gas is, and friends will converse with each other without leaving homes.
On February 27, , the first business venture had begun before the invention with an agreement among Thomas Sanders, Gardiner G. Hubbard, and Bell. Measure content performance. Develop and improve products. List of Partners vendors. Charges were filed against the firm under the Sherman Antitrust Act in the s. In , the company's local telephone service was broken up into seven Baby Bells as part of the agreement.
The firm reached agreements with the U. That limited the company's ability to use bundling to spread its monopoly to other industries. The parent company held on to its long-distance service and was allowed to move into computers and other industries.
They claimed these phones could degrade the quality of the network. The Baby Bells controlled the direct connections to consumers after the breakup, and they dropped these restrictions. There was soon a thriving market for selling phones to consumers. Phone prices dropped, quality increased, and renting phones faded away. The Baby Bells allowed consumers to choose among long-distance carriers. As competition and technology progressed, long-distance charges fell.
By , many Americans no longer paid per-minute long-distance fees for calls within the country. However, per-minute charges were still common for calling foreign countries and smartphone plans. The strongest criticism of the breakup is that it may have delayed high-speed internet for many consumers. In the early days of the internet, speeds were kept low by the need to use the local phone lines of the Baby Bells. As monopolies within their service areas, the Baby Bells were often slow to upgrade their lines.
Many of the Baby Bells delayed too long, leaving much of the data service market to cable providers and wireless services. Another criticism of the breakup is that it was simply unnecessary. The fact that many of the Baby Bells were later reintegrated into a single company also supports the view that the breakup was unnecessary. For one thing, where would it have found the revenues to continue subsidizing residential service? And how could it have elevated residential rates to reflect their true cost when these matters are controlled by state public utility commissions?
The company was in a no-win situation, and Bell officials were glumly aware of it. Well, a number of forces moved against her in the end: competitors, critics, the FCC, the Justice Department and federal courts. But she really passed on because her method of management—the bureaucratic management that is useful for public institutions—is ill-suited for competitive battles.
There are lots of hungry competitors out there who want a piece of the action, and there will be dramatic shootouts in pricing, services and technology. People who hail the new competition in the telecommunications field should not be too critical of Ma Bell in her era of monopoly. Her performance and service were marvelous compared with the performance and service of government-owned telephone systems elsewhere. If the choice is only between a government-owned, government-operated enterprise and a private, profit-seeking enterprise regulated and controlled by government, the Bell System record seems to say that the latter is better.
The mistake, which both the public and Bell accepted, was in believing that anybody should be granted a business monopoly enforceable by law. In short order, however, the needs of the customers, merger, or improved technology would have overcome this problem. The railroads, for example, once had a monopoly on fast overland transport; this was quickly bypassed by the trucking industry in the s. The 22 Bell operating companies, which will continue to be regulated under the umbrellas of the seven holding companies, may have trouble maintaining their position when new methods of bypassing them are marketed.
But its protected, captive market is gone. Ma Bell was a grand old lady in her day. Theodore N. Vail, Views on Public Questions, A privately published collection of writings and speeches.
Alvin von Auw, p. A private business is doomed if its operation brings losses only and no way can be found to remedy this situation. Its unprofitability is the proof of the fact that the consumers disallow it. There is, with private enterprise, no means of defying this verdict of the public and of keeping on. The manager of a plant involving a loss may explain and excuse the failure. But such apologies are of no avail; they cannot prevent the final abandonment of the unsuccessful project.
It is different with a public enterprise. Here the appearance of a deficit is not considered a proof of failure. The manager is not responsible for it. It is the aim of his boss, the government, to sell at such a low price that a loss becomes unavoidable.
Melvin D. Barger is a retired corporate public relations representative and writer who lives in Toledo, Ohio. He has been a contributor to The Freeman since Please, enable JavaScript and reload the page to enjoy our modern features. This work is licensed under a Creative Commons Attribution 4.
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