2. • AT&T Corp., originally the American Telephone and
Telegraph Company, is the subsidiary of AT&T that
provides voice, video, data, and Internet
telecommunications and professional services
to businesses, consumers, and government
agencies. During its long history, AT&T was at
times the world's largest telephone company, the
world's largest cable television operator, and a
regulated monopoly.
3. •History of AT & T
The AT&T Corp., formerly known as the American Telephone and Telegraph
Corporation, is as old as the telephone itself.
AT&T can indirectly trace its origin back to the original Bell Telephone Company
founded by Alexander Graham Bell after his invention of the telephone. One of that
company's subsidiaries was American Telephone and Telegraph Company (AT&T),
established in 1885, which acquired the Bell Company on December 31, 1899 for legal
reasons, leaving AT&T as the main company. AT&T established a network of
subsidiaries in the United States that held a government-authorized phone
service monopoly, formalized with the Kingsbury Commitment, throughout most of the
twentieth century. This monopoly was known as the Bell System, and during this
period, AT&T was also known by the nickname Ma Bell. For periods of time, the former
AT&T was the world's largest phone company.
4. •Monopoly
• Alexander Graham Bell patented the telephone in 1876, and formed Bell
Telephone which licensed local telephone exchanges in major US
cities. AT&T was formed in 1885 to connect the local Bell companies. Their logo
read "The Bell System: AT&T and Associated Companies."The network grew
rapidly with the slogan "one system, one policy, universal service." In 1913
AT&T agreed to become a regulated monopoly. Their monopoly would be
allowed, but they had to connect competing local companies and let the Federal
Communication Commission (FCC) approve their prices and policies.
• 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.
• Further they lobbied to block other companies from expanding or adding their
own personal structure. All competitors had to pay AT&T a usage fee to
connect long distance calls. By subverting the traditional landlines, satellites
allowed competition to convert calls more efficient and avoid the long line
connections.
5. •Erosion of "a natural monopoly”
• 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. United
States ruling allowed a third-party device to be attached to rented
telephones owned by AT&T. This was followed by the
1968Carterfone decision that allowed third-party equipment to be
connected to 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.
6. •The Breakup of the Belly System
• The breakup of the Bell System was mandated on January 8, 1982, by an
agreed consent decree providing that AT&T Corporation would, as had been
initially proposed by AT&T, relinquish control of the Bell Operating
Companies that had provided local telephone service in the United States up
until that point. This effectively took the monopoly that was the Bell System,
and split it into entirely separate companies which would continue to
provide telephone service. AT&T would continue to be a provider of long
distance service, while the now independent Regional Bell Operating
Companies (RBOCs) would provide local service, and would no longer be directly
supplied with equipment from AT&T subsidiary Western Electric.
• From 1984 until 1996 AT&T was an integrated telecommunications
services and equipment company, succeeding in a newly competitive
environment.
7. •Post break-up restructuring
• On January 1, 1984, a court forced AT&T to give up its 22 local Bell companies,
establishing sevenRegional Bell Operating Companies (RBOC). A few local
companies that were not wholly-owned subsidiaries of AT&T remained
independent, but the RBOCs were very powerful and covered the US.Since that
time, mergers have reduced the number of RBOCs to four: Verizon (originally
Bell Atlantic and Nynex), Qwest (Qwest Communications International took over
US West), BellSouth and SBC (originally Southwestern Bell and Pacific Telesys).
The AT&T logo has evolved to reflect changing market conditions.
• AT&T also spun off their equipment manufacturing and research operations.
They became a long distance carrier with a new logo.AT&T had competition
in long distance from companies like MCI and Sprint, but the RBOCs could
only offer local service.
• The Telecommunications Act of 1996 required RBOCs to allow competitors
access to their local lines at regulated wholesale rates. In return, RBOCs
could offer long distance service if they demonstrated there was local
competition in their market.
8. •The new AT &T
• On September 20, 1995, AT&T announced that it was restructuring into three
separate publicly traded companies: a systems and equipment company (which
became Lucent Technologies,) a computer company (NCR) and a
communications services company (which would remain AT&T.) It was the
largest voluntary break-up in the history of American business. Lucent became
independent on September 30, 1996. NCR followed on January 1, 1997.
Employees generally followed their work. While the Bell Laboratories name went
to Lucent Technologies, those researchers who supported the communications
services business stayed with AT&T as the staff of the new AT&T Labs.
• The new AT&T began evolving from a long distance company to an integrated
voice and data communications company, as an ever increasing percentage of
the traffic on its network was data, and to a lesser extent video, rather than
voice. AT&T worked to reenter the local telephone service business, as
envisioned by the Telecommunications Act of 1996. AT&T realized that as a
result of this new law, the stand-alone long distance business was likely to
decline. The company successfully launched an Internet service, AT&T
WorldNet® Service , while selling operations, such as AT&T Submarine Systems
and Skynet Satellite Services, that no longer were a strategic fit.
9. • Over the next four years, AT&T took many actions to succeed in the changing
environment. The company invested over $35 billion in acquisitions and
upgrades to its infrastructure both to manage ever-increasing volumes of
internet protocol and other data traffic, and to establish direct local connections
to business customers. AT&T acquired a leading provider of local telephone
service to business customers (TCG.) It acquired a leading provider of global
data networking services (IBM Global Network.) It merged with two large cable
companies, (TCI and MediaOne.) Operating as AT&T Broadband, the unit
became the largest cable company in the United States.
• By mid-2000, AT&T had three rapidly evolving networks- data, broadband, and
wireless, and four separate businesses-cable, wireless, business, and consumer.
And in 2000, the volume of data traffic for the first time exceeded the volume of
voice traffic on the AT&T network.
• In October 2000, AT&T announced that it would restructure over the next two
years into a family of separate publicly held companies: AT&T Wireless, AT&T
Broadband, and AT&T. In this way, each business could best obtain the capital
structure needed to fund its growth. AT&T Wireless became an independent
company on July 9, 2001. On December 9, 2001, AT&T and the cable-operator
Comcast reached a definitive agreement to merge AT&T Broadband with
Comcast. The businesses completed their merger on November 18, 2002, and
began combined operations as the Comcast Corporation.
10. • With the completion of the restructuring, David W. Dorman succeeded C.
Michael Armstrong as Chairman and Chief Executive Officer of AT&T in
November 2002.
• As Dorman assumed leadership of AT&T, the global telecommunications
industry entered an era of unprecedented chaos and instability – marked by
oversupply, fraud, a complicated regulatory environment and nonstop pricing
pressures. Combined, these forces led to an industry meltdown in which
numerous bankruptcies, defaults and business failures occurred; investors lost
billions and countless workers in the communications sector lost their jobs.
To address the dynamic environment, Dorman led an aggressive strategic
transformation to fundamentally reshape AT&T – to evolve from a consumer-oriented
voice company to an enterprise-focused networking company. The redesigned AT&T
became a global IP networking provider dedicated to delivering powerful networks,
applications and capabilities to business and government customers. Concurrently,
AT&T introduced a breakthrough alternative to traditional services – VoIP, or Voice
over Internet Protocol – for consumers and small businesses.
11. • In January 2005, the most profound aspect of AT&T's ongoing transformation
was announced: the pending $16 billion merger with SBC Communications to
create the industry’s premier communications and networking company.
Through this deal, the people of AT&T have the opportunity to build the defining
entity in global communications for the 21st century – a company capable of
delivering advanced networking technologies and a full suite of integrated
communications services throughout America and around the world.
