AT&T (Attack Machines)

**AT&T** is, together with Cable & Wireless, one of the two most influential teleocmmunications companies in the Attack Machines timeline.

## History

The formation of the Bell Telephone Company superseded an agreement between Alexander Graham Bell and his financiers, principal among them Gardiner Greene Hubbard and Thomas Sanders.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 ($2.81 million in 2009 dollars).

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 a nationwide long-distance network with a commercially viable cost-structure. This project was formally incorporated into a separate company named American Telephone and Telegraph Company on March 3, 1885. Starting from New York, the network reached Chicago in 1892.

Bell's patent on the telephone expired in 1893, 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 (which limited market capitalization to ten million dollars, preventing the direct growth of American Bell itself) were more restrictive than those of New York, where AT&T was headquartered. With this transfer of assets, AT&T became the parent of the Bell System.

National long-distance service reached San Francisco with the First transcontinental telephone call in 1915. This connection used a system of lines with loading coils and the Audion vacuum tube repeater first tested between New York and Philadelphia in 1913. Transatlantic services started in 1927 using two-way radio, but the first trans-Atlantic telephone, achieved in 1956 OTL, was had its long-term plans cut short by the Purge.

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. One of the three terms of the agreement forbade AT&T from acquiring any more independent phone companies without the approval of the Interstate Commerce Commission.

G.W. Brock says in The Telecommunications Industry: The Dynamics Of Market Structure, "[The] 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 that increased its effective control of the telephone system market, while selling its less-desirable and 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, which reduced the incentive of these companies to build competing long-distance lines.

In 1913, after vacuum-tube inventor Lee de Forest began to suffer financial difficulties, AT&T bought De Forest's vacuum-tube patents for the bargain price of $50,000 ($1.37 million in 2009 dollars). In particular, AT&T acquired ownership of the 'Audion', the first triode (three-element) vacuum tube, which greatly amplified telephone signals. The patent increased AT&T's control over the manufacture and distribution of long-distance telephone services and allowed the Bell System to build the United States' first coast-to-coast telephone line. 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, and there were many patent disputes.

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 telecommunications 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 areas would not have to pay high prices, and the 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 telephone service was a "natural monopoly," meaning that one firm could better serve the public than two or more. Eventually, AT&T's market share amounted to what most would regard as a monopolistic share.

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 Company 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.