() is the largest provider of both local and long distance telephone services, wireless service, and
DSL internet access in the United States. The current company, which is based in
San Antonio ,
Texas , was formed in 2005 by
SBC Communications ' purchase of its former parent company, AT&T Corp. As a part of the merger, SBC shed its name and took on the iconic AT&T moniker (originally ''American Telephone and Telegraph'') and the famed '''T''' stock-trading symbol (for "Telephone").
AT&T Corp. provides voice, video, data, and
Internet telecommunications and professional services to
Business es,
Consumer s, 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 a regulated
Monopoly . At its peak, it employed one million people and its revenue was roughly $300 billion annually in today's dollars (for comparison,
Exxon 's 2005 annual revenue was $371 billion).
At the time of the merger with SBC, AT&T was headquartered in
Bedminster, New Jersey .
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Bell Telephone Company superseded an agreement between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 1877, 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.
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 nationwide long-distance network with a commercially viable cost-structure. This project was formally incorporated into a separate company christened American Telephone and Telegraph Company on
March 3 ,
1885 . Starting from
New York the network reached
Chicago, Illinois in 1892.
Bell's
Patent on the telephone expired in 1894, but the company's much larger customer base made its service much more valuable than alternatives and substantial growth continued.
On
December 30 ,
1899 , the American Telephone and Telegraph Company bought the assets of American Bell--this was because Massachusetts corporate laws were very restrictive and limited capitalization to ten million dollars, forestalling the growth of American Bell itself.
National long distance service reached
San Francisco in 1915. Transatlantic services started in 1927 using two-way
Radio , but the first
Trans-Atlantic Telephone Cable did not arrive until 1956, with
TAT-1 .
As a result of a combination of regulatory actions by government and actions by AT&T, the firm eventually gained what most regard as
Monopoly status. In 1907, AT&T president
Theodore Vail made it known that he was pursuing a goal of "One Policy, One System, Universal Service." AT&T began purchasing competitors, which attracted the attention of
Antitrust regulators. To avoid antitrust action, in a deal with the government, Vail agreed to the
Kingsbury Commitment of 1913. The terms of the agreement allowed AT&T to purchase independent phone companies as long as it sold just as many. G.W. Brock says in ''Telephone:The First Hundred Years'', "This provision allowed Bell and the independents to exchange telephones in order to give each other geographical monopolies. So long as only one company served a given geographical area there was little reason to expect price competition to take place." AT&T focused on purchasing companies within specific geographic areas while selling its other previously acquired companies to independent buyers. Also included in the Kingsbury Commitment was the requirement that AT&T allow competitors to connect through its phone lines. Economists point out that this reduced the incentive of these companies to build competing long-distance lines.
Around 1917, the idea that everyone in the country should have phone service and that the government should promote that began being discussed in government. AT&T agreed, saying in a 1917 annual report: "A combination of like activities under proper control and regulation, the service to the public would be better, more progressive, efficient, and economical than competitive systems." In 1918 the federal government nationalized the entire telecommmunications industry, with national security as the stated intent. Rates were regulated so that customers in large cities would pay higher rates to subsidize those in more remote areas. Vail was appointed to manage the telephone system with AT&T being paid a percentage of the telephone revenues. AT&T profited well from the nationalization arrangement which ended a year later. States then began regulating rates so that those in rural area would not have to pay high prices, and competition was highly regulated or prohibited in local markets. Also, potential competitors were forbidden from installing new lines to compete, with state governments wishing to avoid "duplication." The claim was that telephoning was a "
Natural Monopoly ," meaning that one firm can better serve the public than two or more. Eventually, AT&T's market share amounted to a what most regard as monopoly.
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 known as
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.
Public Utility commissions in all state and local
Jurisdiction s 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 experimental communications
Satellite ,
Telstar I in 1962.
For many years, AT&T had been permitted to retain its monopoly status under the assumption that it was a
Natural Monopoly . The first erosion to this monopoly occurred in 1956 where the
Hush-a-Phone V. FCC ruling allowed a third-party device to be attached to rented telephones owned by AT&T. This was followed by the 1968
Carterphone Decision that allowed third-party equipment to be connected the AT&T telephone network. The rise of cheap microwave communications equipment in the 1960s and 1970s opened a window of opportunity for competitors--no longer was the acquisition of expensive rights-of-way necessary for the construction of a long-distance telephone network. In light of this, the FCC permitted
MCI (Microwave Communications, Inc) to sell communication services to large businesses. This technical-economic argument against the necessity of AT&T's monopoly position would hold for a mere fifteen years until the beginning of the fiber-optics revolution sounded the end of microwave-based long distance.
The rest of the telephone monopoly lasted until final settlement of a 1974
United States Department Of Justice Antitrust Suit Against AT&T on
January 8 ,
1982 , under which AT&T ("Ma Bell") 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 up, 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 through
AT&T Communications (the new name of AT&T Long Lines), although it lost some market share in the ensuing years to competitors
MCI and
Sprint Corporation .
A sign that hung in many Bell facilities in 1983 read:
''"There are two giant entities at work in our country, and they both have an amazing influence on our daily lives . . . one has given us radar, sonar, stereo, teletype, the transistor, hearing aids, artificial larynxes, talking movies, and the telephone. The other has given us the Civil War, the Spanish American War, the First World War, the Second World War, the Korean War, the Vietnam War, double-digit inflation, double digit unemployment, the Great Depression, the gasoline crisis, and the Watergate fiasco. Guess which one is now trying to tell the other one how to run its business?"''
Western Electric was fully absorbed into AT&T as
AT&T Technologies , and was divided into several units focused on specific customer groups, such as
AT&T Network Systems and
AT&T Consumer Products .
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, the majority of AT&T Technologies and the renowned
Bell Laboratories was spun off as
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
C 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 , 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.
Also in
1999 , AT&T paid US$5 billion to purchase IBM's Global Network business, which became AT&T Global Network Services, LLC. As part of the purchase agreement, IBM granted AT&T a five-year, US$5-billion contract to handle much of IBM's networking needs, and AT&T outsourced some of its applications processing and data management work to IBM. IBM also committed to billing and installation for AT&T's long-distance customers in a 10-year deal valued at US$4 billion; and assumed management of AT&T's data processing centers.
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 in 2002, and AT&T Wireless merged with
Cingular Wireless LLC in 2004.
In 2004, the U.S. government eliminated equal access regulations that allowed long-distance phone companies to access the networks owned by the regional Bell carriers at fixed rates. This ultimately caused AT&T to move away from the residential telephone business--declaring in the process that it would no longer market residential telephone service. Instead, its residential focus shifted to offering a voice service over a broadband Internet connection called AT&T CallVantage.
A division of AT&T, the provides a pay-as-you-go
Long Distance phone service for in-state, state-to-state, and international calls with charges added to the caller's regular monthly phone bill. Under the name '''10-10-345''', Lucky Dog sponsored the #45
Winston Cup car driven by
Rich Bickle in 1999.
AT&T was also known as "" and affectionately called "Mother" by phone
Phreak s. Spinoffs like the
Regional Bell Operating Companies or ''RBOC''s 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 Bell Labs facility in
Holmdel, New Jersey , now owned by Lucent.
, headquartered in
St. Louis , Missouri, was one of the seven original
Regional Bell Operating Companies , or "Baby Bells." The company — a holding company for
Southwestern Bell Telephone Company — was a result of U.S.
Antitrust action against AT&T in 1983. AT&T had adopted the name Southwestern Bell for its local operations in
Texas ,
Oklahoma ,
Missouri ,
Kansas , and
Arkansas in April 1920.
In 1993 Southwestern Bell Corp. moved its headquarters to
San Antonio, Texas and, during its annual meeting of stockholders in 1995, the company announced that its name would be changed to ''SBC Communications, Inc''. The name change was an effort to reinforce the company's national and global reach and the company not only stated that "SBC" wasn't an acronym for Southwestern Bell Corporation, but that it did not stand for anything at all.
SBC then proceeded (as permitted by the
Telecommunications Act Of 1996 ) to acquire fellow baby bell
Pacific Telesis , the Regional Bell operating company serving
Nevada and
California , in 1997 and the former independent Bell System franchise
SNET (Southern New England Telephone).
SBC then announced plans to acquire
Ameritech , the
Regional Bell Operating Company serving
Illinois ,
Indiana ,
Michigan ,
Ohio , and
Wisconsin ,, and told the FCC that it would allow competitors access to local markets where it had had a monopoly if the FCC would allow them to acquire Ameritech. The FCC agreed and in May 1998, SBC and Ameritech announced the merger would move forward. After making several organizational changes (such as the sale of
Ameritech Wireless to
GTE ) to satisfy state and Federal regulators, the two merged on
October 8 ,
1999 . The FCC later fined SBC Communications $6 million for failure to comply with agreements made in order to secure approval of the merger.
At the time of SBC's purchase of AT&T in 2005, SBC provided local telephone service in 13 states (
Arkansas ,
California ,
Connecticut ,
Illinois ,
Indiana ,
Kansas ,
Michigan ,
Missouri ,
Nevada ,
Ohio ,
Oklahoma ,
Texas ,
Wisconsin ), provided long distance service to 10 million customers and owned 60% of
Mobile Phone provider
Cingular Wireless , the largest mobile phone service provider in the United States.
BellSouth , in a joint venture with AT&T Inc., owns the remaining 40% of Cingular Wireless. The company was also an
Internet Service Provider and the largest
DSL provider in the US, with more than 5.1 million DSL subscribers as of late 2005.
The company was formerly traded on the
NYSE as "SBC" until shortly after its purchase of AT&T Corp. was completed in November of 2005. The company was renamed AT&T Inc. and began trading on the NYSE under the symbol "T" on December 1, 2005.
On
January 31 ,
2005 , SBC announced that it would purchase AT&T for more than $16 billion. The announcement came almost 8 years after SBC and AT&T called off their first merger talks and nearly a year after initial merger talks between AT&T and
BellSouth fell apart. AT&T stockholders, meeting in Denver, approved the merger on
June 30 ,
2005 . The
U.S. Department Of Justice cleared the merger on
October 27 ,
2005 , and the
Federal Communications Commission approved it on
October 31 ,
2005 . The merger was finalized on
November 18 2005 . SBC announced that the name of the merged company will be AT&T, Inc., and it adopted an updated logo. The merger is ironic in the fact that one of the "Baby Bells" grew to the strength to buy out "Ma Bell" AT&T. A further irony is that the government, which mandated the breakup of the original monopoly AT&T in the first place, gave the go-ahead to allow AT&T to reconstitute much of itself in this merger.
On
December 1 ,
2005 the combined company began trading under the historic "T" stock ticker symbol on the
NYSE .
On Sunday
March 5 ,
2006 AT&T announced it would be purchasing BellSouth for $67 billion (or 1.325 shares of AT&T for each share of BellSouth). The new combined company would retain the name AT&T. [http://www.marketwatch.com/News/Story/Story.aspx?guid={6E4D6E93-004F-4938-9692-B2704970428B}&siteid=mktw&dist= When completed, this deal will consolidate ownership of Cingular Wireless, currently a joint venture between BellSouth and AT&T. Subsequent to completion of the merger, wireless services would be offered under the AT&T name.
Of the 24
Bell Operating Companies which AT&T owned or in which it held a minority interest prior to the 1984 federally mandated split of the company, 11 will be a part of the new AT&T Inc. upon the completion of their proposed acquisition of BellSouth announced on
March 5 ,
2006 :
AT&T's current board mainly consists of members of SBC's board of directors.
In 2005, the
Electronic Frontier Foundation lodged a
Class Action lawsuit which alleged that AT&T had allowed agents of the
National Security Agency to monitor phone and internet communications of AT&T customers without warrants. If true, this would violate American law. In April 2006 a retired former AT&T technician, Mark Klein, lodged an affadavit supporting this allegation
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