Speaker 1: Get in touch with technology with text stuff from how
Speaker 1: stuff Works dot com. Hay, then everyone, and welcome to
Speaker 1: tech Stuff. I'm Johnson Strickland and I'm learn And today
Speaker 1: we're going to look at a company that has been
Speaker 1: around for a really long time, very influential, so long
Speaker 1: in fact that we are probably going to do this
Speaker 1: in three parts. It's gonna be yes, A T and T,
Speaker 1: the American Telegraph and Telephone Company. Yep. Uh So A
Speaker 1: T and T has a very long history, and it
Speaker 1: first starts off with a couple of earlier companies. Now
Speaker 1: this is not something that's, you know, unusual. We've had
Speaker 1: other discussions about other companies that you know, you have
Speaker 1: to start with, like a like Seed Company and parents
Speaker 1: general General Electric. You know, you have to go back
Speaker 1: way before General Electric to really talk about the company.
Speaker 1: So in this case, we have to talk about a man,
Speaker 1: a man who has been credited officially and through other
Speaker 1: sources as the inventor of the telephone. Although, as we
Speaker 1: all know, when it comes to inventions, it's a lot true,
Speaker 1: it's very tricky to narrow it down to a single person,
Speaker 1: and it takes a research society to make a technology
Speaker 1: and turns out that there are a lot of people
Speaker 1: who are working on things all at the same time,
Speaker 1: and sometimes it's just the person who gets the first.
Speaker 1: In the case of Alexander Graham Bell, uh, not that
Speaker 1: he didn't work very hard and make great contributions. It's
Speaker 1: just that there were other people doing the same sort
Speaker 1: of stuff. Right. So in February, on February eighteen seventy six,
Speaker 1: that is when he filed this first pattern yep to
Speaker 1: a way to electronically transmit speech by quote causing electrical
Speaker 1: undulations similar informed to the vibrations of the air accompanying
Speaker 1: the said vocal or other sounds substantially as set forth
Speaker 1: end quote. Now, Uh, it's interesting he had already written
Speaker 1: the patent out earlier in January of that year, but
Speaker 1: there was a peculiar all you're sort of legal loophole
Speaker 1: that he had to leap through in order for him
Speaker 1: to get this patent recognized in not just the United States,
Speaker 1: but also the United Kingdom. See, the UK had a
Speaker 1: rule that stated if you wanted to patent something in
Speaker 1: the UK, it could not first have been patented anywhere else.
Speaker 1: So Graham Bell writes up this patent. He wants to
Speaker 1: get patented. He's ready to submit it, except that he
Speaker 1: first has to get over to the UK. And uh, guys,
Speaker 1: who don't know if you're familiar with us. In eighteen
Speaker 1: seventy six, there were very few options on how to
Speaker 1: get from say the United States to England that didn't
Speaker 1: involve a really long journey, right. It was basically swimming
Speaker 1: a horse right across that action. Yep, you just hitch
Speaker 1: a team of horses to a boat and say giddy up.
Speaker 1: I mean, we didn't really research that part, so we
Speaker 1: might be a little inaccurate. Make sure you tweet us
Speaker 1: and let us know. But no, no, I mean, you know,
Speaker 1: because the telecommunications were not a thing at this point,
Speaker 1: because he hadn't patented it yet, all right, So it
Speaker 1: was it was taken a while, and so, as it
Speaker 1: turned out, that very same day, another electrician began the
Speaker 1: filing process. I don't think actually file what he what
Speaker 1: he did. We're talking about Elisha Gray and Elishah Gray
Speaker 1: or or we'll just call him Gray because first of all,
Speaker 1: I assume it's Elisha. I did not look up at
Speaker 1: the pronunciation of his first name. But Mr Gray had
Speaker 1: submitted a preliminary application for a similar apparatus. It was
Speaker 1: also called a caveat. That was the technical name for
Speaker 1: the preliminary application. He submitted a caveat for consideration for
Speaker 1: a patent the very same day that Graham Bell posted
Speaker 1: it filed his patent, or technically Bell's lawyer filed the
Speaker 1: patn right here in the United States we're talking about, yes, exactly.
Speaker 1: So Gray applied for a pattern with a very similar idea,
Speaker 1: and the story goes and I don't know the truth
Speaker 1: of this, And in fact, I have proposed to Lauren,
Speaker 1: not romantically, I mean an episode title. I proposed to
Speaker 1: her that we actually cover the content the topic of
Speaker 1: Alexander Graham Bell and Elishah Gray, because the story about
Speaker 1: who got that patent is really interesting and I think
Speaker 1: could merit its own episode at any rate. Uh, the
Speaker 1: story is that Bell's lawyer got a look at Gray's application,
Speaker 1: which included an element that was not in Bell's work.
Speaker 1: But then when the patent was filed, there was a
Speaker 1: little scrawl in the margin that covered the same idea.
Speaker 1: So the story is that Bell's lawyer or perhaps Bell himself.
Speaker 1: It all depends upon the account you read lifted an
Speaker 1: idea directly from Gray's work in order to essentially beat
Speaker 1: him complete. So Bell's patent application goes in ahead of Gray's,
Speaker 1: and so Bell is at least initially awarded the patent.
Speaker 1: Although it was not uncontested. There was actually quite a
Speaker 1: vigorous battle in the legal system of that was gone
Speaker 1: a few years. And so moving ahead on in that
Speaker 1: same year March tenth, eighteen seventy six. Remember he's already
Speaker 1: filed the patent, but it was only on March tenth,
Speaker 1: eighteen seventy six that we had the famous message from
Speaker 1: Alexander Graham Bell to his assistant Thomas Watson. Mr Watson
Speaker 1: being in another room in the same building. Yeah, and
Speaker 1: and he heard it over this device what would what
Speaker 1: would become the telephone, And the message, of course was
Speaker 1: Mr Watson, come here, I want you. And it turns
Speaker 1: out that uh, corey to the story, Alexander Graham Bell
Speaker 1: had accidentally spilled some acid and needed Thomas Watson to
Speaker 1: come over and help him clean it up before it
Speaker 1: did any damage to the surroundings. So not only was
Speaker 1: March tenth, eighteen seventy six the first phone call, it
Speaker 1: was the first emergency phone call. So, yeah, that's a
Speaker 1: fun little little side note about this, and we are
Speaker 1: leading up to the company, but we have to lay
Speaker 1: this groundwork. Yeah, and I find all of this pretty
Speaker 1: fascinating overall. So, so on October eighth of that year,
Speaker 1: eighteen seventy six, they had the first two way telephone
Speaker 1: call between Watson and Bell. Now, before it was a
Speaker 1: one way thing. You could have a transmitter and receiver essentially.
Speaker 1: Now there was one on either side. You could actually
Speaker 1: have this communication. And this is where Bell introduced his
Speaker 1: idea of what the perfect telephone salutation was, Hoy hoy, hoy,
Speaker 1: which is what Mr Burns says when he picks up
Speaker 1: the phone on on The Simpsons. That's delightful. Yeah, Alexander
Speaker 1: Gham Bell and everyone involved in phone companies hated the
Speaker 1: word hello. They did, and we've got some notes about
Speaker 1: that in just a little bit. There was there was
Speaker 1: a very serious and an intense contention about this. It
Speaker 1: was important with a capital I. But so in eight
Speaker 1: Bell was getting financial backing from the fathers of two
Speaker 1: of his students at Boston University, Thomas Sanders and Um
Speaker 1: Gardner Hubbard, and wound up forming the Bell Telephone company right.
Speaker 1: In fact, that first he tried to sell the telephone
Speaker 1: patents to a rival company called Western Union. You may
Speaker 1: have heard of that company. At the time, it was
Speaker 1: the largest corporation in the world. And he offered to
Speaker 1: sell it to them for the princely sum of one
Speaker 1: d thousand dollars and Western Union told him to take
Speaker 1: a long walk off a short pier. Yeah, they didn't
Speaker 1: at that particular point in time understand what this whole
Speaker 1: telephone thing was about. They were like, that's a toy.
Speaker 1: We don't get it right. If you wanted to send
Speaker 1: a message to someone, why would you go through all
Speaker 1: this bother when you could just telegraph it to them.
Speaker 1: We've got perfectly good telegraph lines and swimming horses, why
Speaker 1: exactly so, So they they poo pooed the idea, and
Speaker 1: that's when Bell decided to go the other route and
Speaker 1: form this company. And with that financial backing that Lauren
Speaker 1: talked about, the Bell Telephone Company came into being um
Speaker 1: and Uh. At first, it was a pretty modest affair
Speaker 1: in the early days. They were seven seventy eight telephones
Speaker 1: in existence period, and the company had a grand total
Speaker 1: of one employee, and that one employee was Thomas Watson,
Speaker 1: the former assistant to Alexander Graham Bell, and he was
Speaker 1: He was paid the salary of three dollars per day
Speaker 1: and also had one tenth interest in the company, which,
Speaker 1: as it turns out, would probably be worth a little
Speaker 1: bit more than his salary. Yeah. So Bell goes ahead
Speaker 1: with his company. Uh. Meanwhile, Gray, who had done some
Speaker 1: work for Western Union and had founded a company called
Speaker 1: Western Electric that was acquired by Western Union, began to
Speaker 1: compete against Bell, and uh it got pretty nasty. Bell
Speaker 1: started to look into how he wanted to well, really
Speaker 1: the company was looking into how they wanted to form
Speaker 1: the business, and they took a que off the Morse
Speaker 1: Company Telegraph Company and went with a franchise model. The
Speaker 1: idea being that they would they would license out technology
Speaker 1: and telephones and things of that nature to companies that
Speaker 1: wanted to oversee the administrative efforts of handling this kind
Speaker 1: of local, regionalized phone system. And so Bell would end
Speaker 1: up getting a company. Bell would end up getting a
Speaker 1: portion of that revenue, uh, in return for the fact
Speaker 1: that they're licensing the technology to this other company. All right, right,
Speaker 1: Because until Bell's patents would expire, the company was the
Speaker 1: exclusive manufacturer and provider of telephones. Um those those patents
Speaker 1: would expire in and that was a date that everyone
Speaker 1: in Bell was very, very anxious about. They were cognizant
Speaker 1: of it, they were anxious about it. There were other
Speaker 1: companies that did attempt to spring up despite this um
Speaker 1: this legal monopoly that the Bell system had because of
Speaker 1: the patents. Uh. But we'll talk about that in a
Speaker 1: second before we get too far into this, because there's
Speaker 1: a lot to talk about. Let's take a quick break
Speaker 1: to thank our sponsor. You've probably tried Hulu dot com. Now.
Speaker 1: With Hulu Plus, you can watch your favorite shows anytime, anywhere.
Speaker 1: Hulu Plus lets you watch thousands of hit TV shows
Speaker 1: in a selection of acclaimed movies on your television or
Speaker 1: on the go with your smartphone or tablet, and it
Speaker 1: all streams an HD for the best viewing experience. With
Speaker 1: Hulu Plus, you can watch your favorite current TV shows
Speaker 1: like Saturday Night Live, Community and Family Guy, and you
Speaker 1: can also check out exclusive content, including Hulu originals like
Speaker 1: The Awesome starring snl Seth Myers and Moon Boys starring
Speaker 1: Chris o'dwald from Bridesmaids. Hulu Plus also offers a great
Speaker 1: selection of acclaimed films for only seven dollars and cents
Speaker 1: a month. You can stream as many TV shows and
Speaker 1: movies as you want wherever you want. Right now, you
Speaker 1: can try Hulu Plus for free for two weeks when
Speaker 1: you go to Hulu plus dot com forward slash Tech.
Speaker 1: That's a special offer for our listeners. Make sure you
Speaker 1: use Hulu plus dot com forward slash tech so you
Speaker 1: get the extended free trial and they know that we
Speaker 1: sent you. Go to Hulu plus dot com forward slash Tech. Now. So,
Speaker 1: there are a ton of TV shows and movies that
Speaker 1: you can see on Hulu Plus. One of them is
Speaker 1: Bob's Burgers, which is a favorite of mine. I really
Speaker 1: enjoy the show. H John Benjamin plays the lead role
Speaker 1: of Bob, and uh, it's it's certainly one of those
Speaker 1: dysfunctional family shows with lots of absurd characters and events. Uh,
Speaker 1: you just gotta go see it. So go check that out. Okay,
Speaker 1: So we're now up to eighteen seventy eight. Now. In
Speaker 1: eight seventy eight, that's when we saw the first regional
Speaker 1: telephone company actually launched. Not this was one operated by
Speaker 1: Bell Telephone. Right. It was a franchise called New Haven
Speaker 1: District Telephone Company and UH in New Haven, Connecticut, and
Speaker 1: Bell and Western Union began to compete even more viciously.
Speaker 1: They were both launching franchises across the United States. Western
Speaker 1: Union began to use leverage by saying that they would
Speaker 1: not install any telegraph lines in any locations that were
Speaker 1: using Bell Systems. So any region that relied heavily upon
Speaker 1: telegraph services wouldn't do business with Bell because they were
Speaker 1: afraid that they did. They would never have any improvements
Speaker 1: or repair or maintenance of the telegraph systems or even
Speaker 1: operation of the telegraph system. So it's kind of you know,
Speaker 1: holding Bell Systems hostage thing, you don't you know, if
Speaker 1: you don't uh, you don't get to play in this
Speaker 1: game because I own this game. Um. Now. Western Union's
Speaker 1: telephones were based on the work of two inventors, one
Speaker 1: of them Elisha Gray and the other Thomas Edison. Yeah,
Speaker 1: so some big names here. And on September twelve, that's
Speaker 1: when Bell Telephone Company sued Western Union, which is a
Speaker 1: big story because Bell had a small fortune at his disposal.
Speaker 1: Western Union was the largest corporation in the world at
Speaker 1: that time. It worth more than forty one million dollars
Speaker 1: and had the backing of a certain powerful family in
Speaker 1: the United States, the Vanderbilts. And so it was a
Speaker 1: big deal that Bell would go up against this corporate giant.
Speaker 1: And that same year Gardner Hubbard, one of those financiers
Speaker 1: who backed the Bell system in the very early days,
Speaker 1: hired on a man named Theodore Newton Vale to act
Speaker 1: as general manager slash president of Bell Telephone. Right. Veil
Speaker 1: had previously worked for the US Postal Service and and
Speaker 1: he was very key in orchestrating this legal battle. Yeah,
Speaker 1: it's also interesting because Veil will play another important role
Speaker 1: a bit further down the line. Veil had kind of
Speaker 1: on again off again relationship with Bell Telephone. Not necessarily
Speaker 1: all by choice, no, no, but but he did help
Speaker 1: shape the company and absolutely and even as early as
Speaker 1: this he had this vision of building a national long
Speaker 1: distance telephone network UM and doing it before Bell's patents
Speaker 1: ran out, so which was hugely ambitious, incredibly ambitious, a
Speaker 1: little too ambitious, it may turn out to be. In
Speaker 1: eighteen eighty, Alexander Graham Bell decided to resign from the
Speaker 1: Bell Telephone Board of Directors UM, and the next year one,
Speaker 1: Thomas Watson would also resign. So at this point the
Speaker 1: two inventors who gave the company the very basic invention
Speaker 1: that it was all centered around had left the board
Speaker 1: of directors at that time, I believe was putting a
Speaker 1: lot of pressure on. They didn't really see the immediate
Speaker 1: monetary purpose of this whole nationwide network thing, and so
Speaker 1: they were they were really getting down people's throats about like,
Speaker 1: we kind of want to make money, we kind of
Speaker 1: put some money in, we kind of want a little
Speaker 1: bit back, and this digging your heels in. Yeah, this
Speaker 1: is a whole lot of us giving you money and
Speaker 1: not a whole lot of us getting anything back. Right. Yeah,
Speaker 1: there were there were many years when this company was
Speaker 1: operating in debt because they were setting this stuff up. Also,
Speaker 1: interesting little side note, Thomas Watson had a second career
Speaker 1: after his work with Telephone Systems. He would begin a
Speaker 1: career as a ship builder. He built ships loood for him. Yeah,
Speaker 1: it's kind of interesting. I just thought it was neat
Speaker 1: So eight two this is about when Western Union and
Speaker 1: Bell Systems settle this lawsuit that's this ongoing dispute that
Speaker 1: had been pretty much taking up all their time over
Speaker 1: the last couple of years, um because the patent infringement
Speaker 1: lawsuits were something that was just nasty on all parts. Well,
Speaker 1: in that settlement, Western Union ended up selling its telephone
Speaker 1: network to Bell, so that was a network that was
Speaker 1: what there was, Like, that's that's significant. So fifty five
Speaker 1: more cities go to Bell Systems. Bell in return promised
Speaker 1: Western Union of its telephone rental revenue. So Bell Telephone
Speaker 1: also acquired from Western Union the company Western Electric that
Speaker 1: was the one that was founded by Elishah Gray, and
Speaker 1: that became a T and T s manufacturing division. So
Speaker 1: here's just a little information about how the phone system
Speaker 1: used to work in the United States. It used to
Speaker 1: be that you would go to a store to get
Speaker 1: a phone, and you leased it. You didn't own that phone,
Speaker 1: so you actually that phone remained the property of the
Speaker 1: parent company, which at this time is Bell Systems and
Speaker 1: shortly will become a T and T. And so you
Speaker 1: would pay a leasing fee, and in turn, the company
Speaker 1: that you got it from was likely not directly a
Speaker 1: T and T. It was probably some regional office that
Speaker 1: also was leasing that same phone from a T and T.
Speaker 1: Certainly at this point it was Bell systems. But yeah,
Speaker 1: so Bell Systems leases out a phone to a regional office,
Speaker 1: the regional office leases the phone out to the customer,
Speaker 1: So you didn't you never actually owned that phone, which
Speaker 1: I think some people might find a little unusual today
Speaker 1: because they think, well, I bought this piece of electrical
Speaker 1: I mean, you turn off the service. Fine, I understand that,
Speaker 1: but that's my phone. Um yeah not back then, Nope,
Speaker 1: you were just renting it. Really, So Western Union gets
Speaker 1: out of the way. So Bell system effectively becomes a monopoly.
Speaker 1: And according to research, terms of telephone network, yeah, they're
Speaker 1: they're pretty much. There are other competing telephone networks, but
Speaker 1: they're all they're all technically illegal at this time because
Speaker 1: this is still exactly so. According to researcher John Brooks,
Speaker 1: Bell Telephone would have a level more than six hundred
Speaker 1: patent infringement lawsuits against other companies over the course of
Speaker 1: a decade, and they won every single one of them.
Speaker 1: Because anytime a company would come up, like there were
Speaker 1: companies that were trying to create telephone systems in rural
Speaker 1: areas that Bell just had not reach, and so they
Speaker 1: wanted to give people the benefit of this technology. Bell
Speaker 1: did not have either the ability or interest to go
Speaker 1: into that market. So they would go ahead and do
Speaker 1: it themselves, and then Bell would soothe them because they're
Speaker 1: you can't do that. We have the the exclusivity rights
Speaker 1: to this technology, um and you know, and there's like,
Speaker 1: we're gonna get there and just give us time. Meanwhile,
Speaker 1: everyone's like, but I wanted to call my buddy. There's
Speaker 1: no nothing to call them on other than sticking ahead
Speaker 1: out the window and shot, hey, Jeb, so I don't
Speaker 1: know why his name is Jeb short Jebediah. Five. That
Speaker 1: is when a T and T is officially formed as
Speaker 1: a subsidiary of Bell. Yeah, and this is the the
Speaker 1: formal implementation of VAL's vision of creating a long distance network.
Speaker 1: That's the main purpose of a T and T. So
Speaker 1: a T and T is all about building out a
Speaker 1: long distance network so that people can call each other
Speaker 1: across states and across countries. Right by the end of
Speaker 1: eighty five, the company would establish the very first long
Speaker 1: distance connection between New York and Philadelphia. It was capable
Speaker 1: of hand handling a huge one call at a time,
Speaker 1: one call capacity. So I can just imagine the circuits
Speaker 1: being busy over and over and thinking they need to
Speaker 1: just wrap this up. Those people in Philly are chatter boxes.
Speaker 1: Uh yeah, So that was but it was really more
Speaker 1: of a proof of concept obviously at that point, not
Speaker 1: necessarily something that was going to be terribly proud. Go
Speaker 1: we're talking a little bit about how expensive these phone
Speaker 1: calls were too, got a little little dear. Um. So
Speaker 1: that same year was when the state of Indiana passed
Speaker 1: a law restricting the price of telephone rental fees. So
Speaker 1: remember I was saying, you rent your telephone, both the
Speaker 1: regional offices do it and then the customers do it.
Speaker 1: But because Bell was the only game in town, they
Speaker 1: could pretty much dictate what those rental prices were gonna be.
Speaker 1: Uh this this lawsuit said well you need to cut
Speaker 1: back on those costs. So um Bell's response, the company's
Speaker 1: response was saying, well, you know, we have to have
Speaker 1: these prices because the service is expensive to to build out,
Speaker 1: to administer, to maintain. We cannot operate at a lower cost.
Speaker 1: We if we were to lower these this amount of money,
Speaker 1: we would not make a profit, we would lose money
Speaker 1: on the deal. We can't do it. So your phones
Speaker 1: are off, and they shut off the phones in Indiana. Yeah,
Speaker 1: no more calls. Yeah, sorry, and um, it would be
Speaker 1: a couple of years before they would come when service
Speaker 1: was restored for one corporation to have. Yeah. Some people
Speaker 1: said the A. T and T statement was that this
Speaker 1: was an example of quote the futility of public action
Speaker 1: and ignorance end quote, saying that you know, you guys
Speaker 1: were all upset and you told us that we had
Speaker 1: to do this thing, but you didn't understand that we
Speaker 1: were doing it because that's financially what we have to do.
Speaker 1: Other people said, no, A. T and T held the
Speaker 1: state hostage by saying you don't get phone calls until
Speaker 1: you play ball, which that's that's that's pretty awful. Yeah. Yeah,
Speaker 1: well with without actually looking at the financial books and
Speaker 1: knowing that the company did operate in debt for a while,
Speaker 1: it's hard to say, although you know at the time
Speaker 1: they were positing themselves as sort of a public service,
Speaker 1: that's right, akin to something like the post office, which
Speaker 1: would become much more their their message in a few years.
Speaker 1: So seven that was the first year that Theodore Vale
Speaker 1: resigned as president. Yep, that that was directly I think
Speaker 1: in due to his frustration with the board was saying earlier.
Speaker 1: And there was a dispute with some Boston financial backers
Speaker 1: as well, and all of that kind of fed into
Speaker 1: VAL's resignation. He just decided that that was not where
Speaker 1: he needed to be. So, uh that he leaves. Don't worry,
Speaker 1: He's part of the story is not over yet without him. Meanwhile,
Speaker 1: in eighteen eighty nine, the Bell system would adopt the
Speaker 1: first official Bell logo. Yeah what it looked like a bell? Yeah, okay,
Speaker 1: that makes sense alright. That was when the first long
Speaker 1: distance connection was established between New York and Chicago. And
Speaker 1: this was the real display of long distance. You know,
Speaker 1: New York to Philadelphia was impressive. New York to Chicago
Speaker 1: was a much greater distance. So this was marked by
Speaker 1: a ceremonial phone call. Grand Bell would make that one
Speaker 1: as well. Yep, Alexander Graham Bell's on the call. Uh,
Speaker 1: I did not see who he was calling. Maybe it
Speaker 1: was just you know, prank calls. And he was making
Speaker 1: prank calls to Chicago and ordering pizza and then saying
Speaker 1: our pizza is better than your pizza. I can only hope,
Speaker 1: I would really hope. So, I mean you think prank
Speaker 1: called pizza? It fits. So the after all, the very
Speaker 1: first call on a mobile phone was a prank call.
Speaker 1: But the capacity of this line was just like the
Speaker 1: one from Philadelphia, one at a time, and it cost
Speaker 1: nine dollars for the first five minutes, which you you
Speaker 1: did the math on us inflation, Yeah, I used in
Speaker 1: the inflation calculator. Now, normally I would use the Bureau
Speaker 1: of Labor Statistics calculator, which factors in the consumer price index,
Speaker 1: but that only goes back to so I used the
Speaker 1: inflation calculator. I honestly don't know where they pulled their
Speaker 1: their figures from. So, but based upon the inflation calculator,
Speaker 1: that nine dollars would translate into sixty dollars today. So
Speaker 1: sixty dollars for five minutes of a phone call. So
Speaker 1: if you think your cell phone bill is high, yeah,
Speaker 1: that's no talk about how I'm almost all the minutes. Well,
Speaker 1: those minutes are precious. Look how much they cost back
Speaker 1: in the eighties. Uh. So that was when those patents
Speaker 1: that we were talking about expired. Yeah, and uh the
Speaker 1: day it happened, the columns at Bell System trembled and
Speaker 1: there was a great whaling. Over the next ten years,
Speaker 1: six thousand independent telephone companies would open across the United States. Now,
Speaker 1: these were legal at this point because the patents no
Speaker 1: longer gained exclusivity rights to Bell Systems. So you had
Speaker 1: all these companies that suddenly could operate legally within the
Speaker 1: United States and offer a competing product or service. Rather,
Speaker 1: there are some problems here. So let's say, Lauren, that
Speaker 1: you and I both live in the same city back
Speaker 1: in eighteen four and it's a small city that Bell
Speaker 1: system really hasn't gotten into. But there's this regional company
Speaker 1: that has introduced a telephone system, and a second regional
Speaker 1: company that competes and also sets up a telephone system.
Speaker 1: You become a customer of one of those companies. I
Speaker 1: become the customer of the other company. And then one
Speaker 1: night you realize, Hey, I left my notes at work.
Speaker 1: I need you to grab them and bring them home. Uh,
Speaker 1: And you know, can you swing by my place? And
Speaker 1: you try and call me, but you can't because you're
Speaker 1: on one system and I'm on the other, and there's
Speaker 1: no interconnectivity. Right, And this was partially because you know,
Speaker 1: those those lines might literally not have been connected, and
Speaker 1: even if they were, you're talking to the way that
Speaker 1: telephones worked at the time, is is you would you
Speaker 1: would pick it up and you would get an operator,
Speaker 1: and you tell the operator where you want your call
Speaker 1: to go. The operator would manually switch you through, manually
Speaker 1: look at a system of switches and figure out the
Speaker 1: route to get your call to that house or that
Speaker 1: other phone, right or as long as the line wasn't engaged,
Speaker 1: they could try the line, but if it's not on
Speaker 1: their system, then you couldn't call them. So so there
Speaker 1: there were speaking of these these numbers of customers, there
Speaker 1: were some seven hundred thousand customers using these other services
Speaker 1: and about a million using Bell. Yeah. So so when
Speaker 1: you think about that six thousand companies and seven thousand
Speaker 1: customers and then one company in a million customers, that
Speaker 1: shows you that they were still they were still effectively
Speaker 1: a monopoly because there was no other single company that
Speaker 1: could compete with them. So while they weren't, by the
Speaker 1: letter of the law, a true monopoly as in the
Speaker 1: only game in town, effectively that's what they were. And
Speaker 1: one of the things that happened in eight was that, uh, well,
Speaker 1: the Pacific Telephone and Telegraph Company, which later became Pacific Telesis,
Speaker 1: opened the first exchange operated entirely in a language other
Speaker 1: than English within the United States, operated in Chinatown in
Speaker 1: San Francisco, and it was all in Chinese. All the
Speaker 1: customers spoke Chinese, and all the operators spoke Chinese. Eight
Speaker 1: that's when A. D n T acquired its former rival
Speaker 1: Western Union. And I sure probably some people said ha
Speaker 1: ha when it happened. So remember Western Union was the
Speaker 1: company that had they purchased those patents from Bell, this
Speaker 1: would be a totally different story. There would not have
Speaker 1: been an A T and T. But instead they had
Speaker 1: decided to fight against Bell and Bell Systems, And now
Speaker 1: they became a property of A T and T itself.
Speaker 1: Um So A T and T acquires the assets of
Speaker 1: the American Bell Telephone Company, which means that A. T
Speaker 1: and T, the subsidiary, now becomes the parent company. Yeah,
Speaker 1: so A T and T was now the big company.
Speaker 1: The student has become the teacher. So eight is when
Speaker 1: we can say the company of A. T and T
Speaker 1: really came into being. It was no longer a subsidiary
Speaker 1: or division. It was it was in charge. So by
Speaker 1: this time the company's size was pretty big. You know.
Speaker 1: Keep in mind when it was founded there was one employee.
Speaker 1: Now there were a million, three two thousand phones in
Speaker 1: the system and more than forty five thousand employees, And
Speaker 1: that same year, researchers independently developed a theory about something
Speaker 1: called loading coils. The loading coils are a part of
Speaker 1: technology that was very important in the early days of
Speaker 1: the telephone system. It actually would reduce the rate at
Speaker 1: which a traveling telephone signal would weaken, which made it
Speaker 1: possible to build longer phone lines and build out this
Speaker 1: long distance network. Right that that loss of signal is
Speaker 1: called attenuation, and it right, it's it's a loss of
Speaker 1: intensity of a signal as it travels through any medium, right. Yeah,
Speaker 1: So this was a huge help in getting around just
Speaker 1: a practical problem that existed with the technology. So several
Speaker 1: other advancements would be made later on. Yeah, and we'll
Speaker 1: talk a lot about those before we do. Let's take
Speaker 1: another quick break to thank our sponsor. Alright, So back
Speaker 1: to a T and T. In nineteen o four, we
Speaker 1: start seeing some states begin to pass laws requiring the
Speaker 1: interconnection between phone networks. And it's still a state by
Speaker 1: state case basis at this point, so it's not like, um,
Speaker 1: it's not like this is a national movement yet, but
Speaker 1: it's starting to kind of develop into that. And remember
Speaker 1: A T and T. There, they were taking a pretty
Speaker 1: nasty competitive approach. Nasty might be the wrong word, how
Speaker 1: about enthusiastic. Yeah, so, but technically this is what everyone
Speaker 1: had to do. Everyone was building out their networks and
Speaker 1: not connecting with other networks. A T and T had
Speaker 1: the most power here because they had the largest number
Speaker 1: of customers among any single telephone company. So by not
Speaker 1: playing ball by not allowing connectivity with these other networks.
Speaker 1: If you know that A T and T is the
Speaker 1: big telephone company and that the majority of the people
Speaker 1: you would want to get in touch with are going
Speaker 1: to be connected to that company, that's the company you
Speaker 1: go with, even if there's a regional company that ends
Speaker 1: up having a better deal for you financially. If no
Speaker 1: one you know is on that service, then you can't
Speaker 1: get a call from another service, right. So just imagine
Speaker 1: for you cell phone users out there that if you're
Speaker 1: an A T and T customer, you would be unable
Speaker 1: to call anyone using Verizon, Sprint, or T Mobile, And
Speaker 1: the same would be true for each of those companies.
Speaker 1: No one would be able to call anyone cross company.
Speaker 1: Then you see how how this becomes a problem. But
Speaker 1: this is still in the early days. So we get
Speaker 1: to nineteen o six, right, Yeah, it was around that
Speaker 1: time that the head of the Chicago Bell Exchange instituted
Speaker 1: coin operated telephones to prevent people from freeloading in in shops,
Speaker 1: you know, drug stores or something might have a telephone
Speaker 1: in them, and since it was still relatively expensive to
Speaker 1: place calls, this was a way they you know, it
Speaker 1: was a nickel perk, Hall and um. By by nineteen
Speaker 1: o six there were nearly forty thod coin operated telephones
Speaker 1: in Chicago. And now you don't see them hardly anywhere. Yeah.
Speaker 1: I love seeing them in movies these days. Once in
Speaker 1: a while, like maybe an airport or something, you might
Speaker 1: see some, but otherwise they're you know, they used to
Speaker 1: be everywhere. Heck, I remember where they were everywhere? Oh yeah, yeah,
Speaker 1: I remember that too. I'm not that young. No. Seven
Speaker 1: was big. That is the year that Theodore veil Um
Speaker 1: became president of A. T and T again again, well,
Speaker 1: he had technically been president of Bell I think, yeah,
Speaker 1: that's true. He was. He was president of Bell, and
Speaker 1: now he's president president of A T and So he
Speaker 1: was brought back on when the JP Morgan group had
Speaker 1: gained a majority control of A T and T and said,
Speaker 1: you know, this Veil guy, we like what he has
Speaker 1: to say. We're going to put him back on the
Speaker 1: top of the company. And J P. JP Morgan specially
Speaker 1: like because he was still alive at the time, and
Speaker 1: he specifically I'm possibly even called up Veil. I think
Speaker 1: Veil was in South America at the time doing stuff
Speaker 1: and you know, had been retired, and he convinced him
Speaker 1: to come out of retirement. Yep, and Veil again started
Speaker 1: to really laid down the vision of A T and
Speaker 1: T and started an ad campaign in nineteen o eight,
Speaker 1: and Veil would really be responsible yet again for setting
Speaker 1: the vision of A T and T. He's hat up
Speaker 1: a challenge to have a line, a single line stretching
Speaker 1: from New York to Standford, Cisco in the next seven years.
Speaker 1: It's pretty again ambitious, It's very ambitious considering the technology
Speaker 1: at the time. So night he starts to kind of
Speaker 1: spearhead and ad campaign that set the A T and
Speaker 1: T corporate policy. Yeah that this was this was the
Speaker 1: other really big important part of his vision and and
Speaker 1: it was connected to this a single line concept. Yeah,
Speaker 1: it was one policy, one system, universal service. The idea
Speaker 1: here being that in order to guarantee that you could
Speaker 1: that every person in America would have access to telephones,
Speaker 1: you had to essentially take this stance of we're the
Speaker 1: only game in town, because if there's none of this
Speaker 1: interconnectivity through different companies, that's the only option you have
Speaker 1: is you have to have someone come out and become
Speaker 1: the dominant player so that everyone has access to the
Speaker 1: phone and can call anyone else. He also Vail had
Speaker 1: this very kind of pro monopoly stance of competition is
Speaker 1: what turns consumers away from brands. It's this this kind
Speaker 1: of cutthroat thing that happens is bad publicity for everyone.
Speaker 1: So if you know, just it's kind of that Doctor
Speaker 1: Horrible sort of thing, like where the world is terrible
Speaker 1: place and I just need to rule it. Yeah, now,
Speaker 1: it's exactly that kind of approach. In fact, I had
Speaker 1: read several things about how the the telegraph companies had
Speaker 1: entered an era of competition and they all decided they
Speaker 1: did not like that very much, And so the telephone
Speaker 1: company was following the same route. They weren't so crazy
Speaker 1: about competition. And to be fair, this is a case
Speaker 1: where competition wasn't really helpful to the consumer simply because
Speaker 1: of that lack of interconnectivity. It wasn't that you know,
Speaker 1: the problem with is that without the competition, you don't
Speaker 1: have the benefit of the consumer being able to choose
Speaker 1: the right kind of plan or price or whatever. But
Speaker 1: on the downside is you know, if there's no interconnectivity,
Speaker 1: then it really gets you stuck. Yeah. And in these
Speaker 1: early days, that was the bigger issue. So, um nt
Speaker 1: some important, very important thing in the history of the
Speaker 1: phone industry happen. Well, phones were still new enough that
Speaker 1: we didn't really have phone etiquette. Yeah, And so Bell
Speaker 1: would publish a a little Bell Engineer magazine would would
Speaker 1: sponsor contest for the best essay about the proper telephone etiquette,
Speaker 1: and they published the best essay. Um. And this was
Speaker 1: kind of when the war on Hello began. So hello
Speaker 1: was being adopted as the salutation of choice by a
Speaker 1: lot of people, and phone executives and other people thought
Speaker 1: that this was a vulgar means of greeting someone on
Speaker 1: the phone. I have a quote from that winning essay.
Speaker 1: It is would you rush into an officer up to
Speaker 1: the door of a residence and blurred out, Hello, Hello,
Speaker 1: who am I talking to? No one should open conversations
Speaker 1: with phrases such as Mr Wood of curdson Son's wishes
Speaker 1: to talk with Mr White without any unnecessary and undignified hello's. Huh. Now.
Speaker 1: I remember hearing once upon a time an apocryphal tale
Speaker 1: that the telephone is what gave rise to the word hello,
Speaker 1: But in fact, the word hello pre dates the telephone
Speaker 1: by a few decades. I think the earliest written examples
Speaker 1: date from the eighteen thirties. However, I will say that
Speaker 1: the telephone gave rise to the popularity of the word hello.
Speaker 1: And obviously, you know, any any sensible civilized human being
Speaker 1: would use ahoyhoy uh. There's all kinds of other etiquette
Speaker 1: notes in these manuals that were coming out at the time.
Speaker 1: One from California instructed speakers to speak directly into the mouthpiece,
Speaker 1: keeping the mustache out of the opening. Yes, And that
Speaker 1: would come into play again in the late two thousand's,
Speaker 1: like the two thousand ten era, when hipsters would come
Speaker 1: back and the mustache got out of control again. Come on, guys, seriously,
Speaker 1: like candlebar mustaches are amazing. It's not anyone's one before.
Speaker 1: So what you're saying is that you had one before
Speaker 1: it was cool. Uh. Nineteen, A T and T becomes
Speaker 1: a government sanctioned monopoly as the result of an antitrust lawsuit,
Speaker 1: he said, ignoring her appointedly. It's documented in something that's
Speaker 1: called the Kingsbury Commitment. So at that time, A T
Speaker 1: and T divested self of controlling interest in Western Union,
Speaker 1: so you know, they had acquired it earlier. Now they
Speaker 1: divested their control of it and also allowed competing telephone
Speaker 1: services to connect to the A T and T long
Speaker 1: distance network. They had to do so with a fee.
Speaker 1: There was a toll fee every time they would connect
Speaker 1: to A T and T S line. So that's how
Speaker 1: A T and T could gain revenue through this this relationship,
Speaker 1: all right. JP Morgan was still a partial owner of
Speaker 1: A T and T at the time, and he was
Speaker 1: fighting with the lawmakers known as trustbusters who were trying
Speaker 1: to uh, trying to break up A T and T
Speaker 1: right up until he passed away in this year in
Speaker 1: nineteen and veiled it not continue to fight the way
Speaker 1: that Morgan really wanted to. He he chose to dominate
Speaker 1: through this kind of terrifically sneakily backhanded cooperation with these
Speaker 1: smaller independent companies, and because it meant that he still
Speaker 1: made money from them, a lot of money. Yeah. I mean,
Speaker 1: you know this, this worked out really well for everyone
Speaker 1: except the independence because you know, the the arrangement helps
Speaker 1: allow customers of different telephone companies connect with each other
Speaker 1: because it mandates that a T and T has to
Speaker 1: play with everyone's uh, everyone's network, So the network interconnectivity
Speaker 1: is now no longer a problem. But it gave a
Speaker 1: T and T permission to function like a national utility,
Speaker 1: and and it would dominate the telephone market until uh,
Speaker 1: and some would argue, well beyond well yeah, well it
Speaker 1: is certainly into the eighties two, you could argue, and
Speaker 1: so so right, So if independent companies wanted to use
Speaker 1: the widespread Bell system, they had to agree to use
Speaker 1: Bell's equipment, they had to adhere to their standards, and
Speaker 1: they had to again pay fees. So if you use
Speaker 1: of those wires. If you're thinking that this antitrust story
Speaker 1: sounds familiar, it will get increasingly familiar as this series
Speaker 1: goes on. Yes, one competitor wrote that that this entire
Speaker 1: ordeal was like trying to fight an octopus, which I
Speaker 1: just think is terrifically Like, I want that steampunk comic
Speaker 1: book about that. I'm moving on into nine fourteen we
Speaker 1: see another technological development, the three element vacuum tube, which
Speaker 1: was an amplifier that enabled the first transcontinental line to exist,
Speaker 1: which didn't exist yet, it hadn't been laid down yet,
Speaker 1: but this technology is what made it possible. All right.
Speaker 1: This is an important advancement because of that aforementioned attenuation.
Speaker 1: And you know, unless people could come up with a
Speaker 1: better material than copper to transmit a signal with, or
Speaker 1: or a way to ample amplify the signal, it just
Speaker 1: wasn't going to work. And dr lead to Forest created
Speaker 1: this audion uh, three element vacuum tube and it would
Speaker 1: be really big, and lots of other industries that enabled
Speaker 1: the development of radio, radar, television, and computers right up
Speaker 1: until transistors became a thing in the nine sixties. Yeah, yeah,
Speaker 1: you have to go all the way. Remember that the
Speaker 1: first transistor isn't even invented in the prototype stage until
Speaker 1: the late forties. So from this point until the late forties,
Speaker 1: just in the in the lab not not let alone
Speaker 1: out in the real world. This is this is the
Speaker 1: best the technology could offer us at the time, right, Yeah,
Speaker 1: I think nineteen sixties was a number that was incorrect.
Speaker 1: Listen to Jonathan Well. By the nineteen sixties it was
Speaker 1: certainly common, and the fifties it wasn't common because they
Speaker 1: still had they still had to refine the design. Certainly,
Speaker 1: the first transistor looks terrible. That's a very generous um.
Speaker 1: And and meanwhile, via eighteen ties manufacturing subsidiary that we
Speaker 1: have previously mentioned, Western Electric Company International affiliates were starting
Speaker 1: to sell equipment around Europe, South America and also in
Speaker 1: Japan and Australia. Yeah. Yeah, we could not call them yet,
Speaker 1: but that would that would change shortly, relatively speaking. January
Speaker 1: nineteen fifteen, that's when the first long distance call is
Speaker 1: between Alexander Graham Bell in New York and Thomas Watson
Speaker 1: all the way in San Francisco. Watson. So yeah, this
Speaker 1: was that promise about getting that that long distance connection
Speaker 1: all the way from coast to coast in the United States.
Speaker 1: It also had two other connections. On that one call,
Speaker 1: there was the President of the United States who was
Speaker 1: in Washington, d C and Thomas Vale, who at the
Speaker 1: time was in Jekyl Island, Georgia. I've been there as well,
Speaker 1: so yeah, it's kind of interesting. I think I've even
Speaker 1: seen a historic plaque that referenced this. But then again,
Speaker 1: I have a feeling that Jackyll Island must be the
Speaker 1: place where they make those historic plaques because they are everywhere.
Speaker 1: So the cost for those first three minutes of phone
Speaker 1: time on a typical long distance call between New York
Speaker 1: and San Francisco is twenty dollars and seventy cents in
Speaker 1: nineteen fifteen dollars. Now, in this one, I used the
Speaker 1: Bureau of Labor Statistics because that was late enough for
Speaker 1: me to do that. That's based on the Consumer Price Index,
Speaker 1: so that's the general price of goods and services in
Speaker 1: one year versus another year. So based on that, twenty
Speaker 1: dollars and seventy cents is about four hundred seventy nine dollars.
Speaker 1: So that's how much it would cost you for three
Speaker 1: minutes of phone time on a call between New York
Speaker 1: and San Francisco. Yikes. Wow. Uh So nineteen sixteen was
Speaker 1: the first year that they started testing phone service to Europe.
Speaker 1: It would not work for another little bit. Yeah, and
Speaker 1: so this phone service, you might think, oh, did they
Speaker 1: lay a really long cable. No, the early phone service
Speaker 1: that would become the Transatlantic Phone Service was based on
Speaker 1: radio waves, not on a physical cable. Nineteen seventeen, that's
Speaker 1: the beginning of the US involvement in World War One.
Speaker 1: Employees start to volunteer for service during World War One,
Speaker 1: and A T and T develops the first air to
Speaker 1: ground ground to air radio communications systems. And that was
Speaker 1: also in the U S. Government took control of a
Speaker 1: nation's telephone services. They would not give it back to
Speaker 1: its proprietary owners until nineteen nineteen. Yeah, it was considered
Speaker 1: a wartime resource. So getting to nineteen nineteen, that's when
Speaker 1: Bell System first dial telephones there they are released in Norfolk, Virginia.
Speaker 1: And so before this, like we said before, you would
Speaker 1: pick up a phone and you would speak to an
Speaker 1: operator who would make the physical switching to let you
Speaker 1: complete your call. The dialing, of course, is more what
Speaker 1: we're familiar with today, unless we've all just used the
Speaker 1: automated settings on our smartphones and don't even remember how
Speaker 1: to dial anymore. But in general, it's where you type
Speaker 1: in the series, or in this case, they were rotary phones.
Speaker 1: You would dial literally around the dial. Did you ever
Speaker 1: use a rotary phone? Okay, just checking. That was also
Speaker 1: the year that Vale retired for the second time. He
Speaker 1: would he would die the following year. So in nineteen
Speaker 1: twenty one, the United States government passed the Willis Graham Act,
Speaker 1: which removed antitrust restrictions to the telephone industry. So it's
Speaker 1: essentially saying open game for for A T and T,
Speaker 1: and would acquire over two hundred and seven thousand telephones
Speaker 1: worth of exchanges within the next six years after this
Speaker 1: was passed. It was really again to help facilitate that
Speaker 1: interconnected network of telephone systems, so this is continuing the
Speaker 1: work that was done back in nine um and it
Speaker 1: was also so that the United States wouldn't be played
Speaker 1: with hundreds of networks that had no inter connectivity. But
Speaker 1: it also meant that it gave A. T and T
Speaker 1: the ability to really submit itself as a monopoly in
Speaker 1: the United States. So nineteen twenty two was a big
Speaker 1: year for multiple reasons, and that's the year we're gonna
Speaker 1: end this first episode on A T and T launched
Speaker 1: the w E A F. Radio station in New York,
Speaker 1: which was the very first radio station to broadcast a commercial.
Speaker 1: It's also the very first radio station to broadcast to
Speaker 1: college football game Princeton beat University of Chicago. On August two,
Speaker 1: nineteen twenty two, Alexander Graham Bell died and on August fourth,
Speaker 1: nineteen twenty two, during Alexander Graham Bell's funeral, all telephone
Speaker 1: service was suspended for a full minute in memory of Bell.
Speaker 1: So you know you're important when an entire country's communication
Speaker 1: system shuts down in your Yeah. Yeah, so that's a
Speaker 1: pretty powerful stuff. Um. All right, Well that wraps up
Speaker 1: our first part on A T and T now, and
Speaker 1: we only got to nine two, so you see why
Speaker 1: we had to divide it up. But when we come
Speaker 1: back for the next episode, we'll talk more about how
Speaker 1: A T and T began to consolidate its power and
Speaker 1: some efforts on the part of the US government to
Speaker 1: maybe uh shake things up a little bit a couple
Speaker 1: of times as much as they could. Yeah, well, we'll
Speaker 1: get into that next time. So if you have any
Speaker 1: suggestions for topics you would like to hear more about,
Speaker 1: send us a message. Our email addresses tech stuff at
Speaker 1: Discovery dot com or drop us a line on our
Speaker 1: social media. You can find us on Facebook, Twitter, and
Speaker 1: Tumbler with the handle of text Stuff hs W and
Speaker 1: Lauren and I will tell to you again really soon,
Speaker 1: but not on the phone for more on this and
Speaker 1: thousands of other topics because it has staff works dot com. Yes,