TELECOM Digest OnLine - Sorted: Re: AT&T Inventions Fueled Tech Boom, And Its Own Fall

Re: AT&T Inventions Fueled Tech Boom, And Its Own Fall

Fred Goldstein (
Mon, 07 Feb 2005 22:37:21 -0500

On 7 Feb 2005 10:06:10 -0800 said,

> As a monopoly in electro-mechanical technology for the U.S., it made
> sense for AT&T have a strong staff for planning. This is what made
> the U.S. telephone network so reliable and robust compared to the rest
> of the world. Both internal and customer equipment were tested,
> re-test, field tested extensive before going out the door. AT&T had
> very few "Edsels" over its history.

> But with the coming of widespread electronics coupled with divesture
> coupled with customer owned equipment, this staff was simply no longer
> necessary.

The old AT&T had its share of Edsels. The 101ESS was notorious, for
one, and the 1964 Picturephone wasted what, a billion clams or so?
But as a monopoly, there were no Buicks and Chryslers to compete with
the Edsels.

> Some critics blame the mgmt of AT&T and IBM for allowing the companies
> to be top-heavy. I don't agree. At the time the people were hired,
> there was a need for their skills. At the time they were hired, they
> still had a to support a network antiquated by today's standards.

No, AT&T remained fat well after divestiture, and it was fat with
young blood as well as old. I was working in corporate telecom
functions in the 1980s and 1990s. When AT&T showed up for a meeting
-- for instance, to tell us about a new product or feature -- they
would not just send the person with the information, or two people the
way their competitors might. They'd send a small army! Usually one
person to give the talk, that person's boss to watch them carefully
and be sure they toed the line, and eight or nine others to line the
room and make sure there were no empty chairs. Most said nothing and
added no value.

It was the same at standards meetings in the late 1980s -- AT&T would send
scores of people, far more than anyone else. Most said nothing. Their
only purpose seemed to be that when the Working Groups needed "consensus"
to advance something (voting was only at Plenary), AT&T's own bodies looked
like a near-consensus just by their own nodding together. Lou hit the nail
on the head. It was a desperately mismanaged company.


>> ... It was an overbearing monopoly before its breakup ...

> No it was not. It's monopoly status did not result from anything
> AT&T did, but rather from edicts from the state and federal govts
> explicitly defining what AT&T could do. Note that AT&T was also
> forbidden to act in many other markets, including those it had once
> developed products (ie motion picture sound systems). AT&T was
> strictly limited in what it could do and what it could charge;
> people forget that there was much it could NOT do.

Let's get the history straight. I researched this for my new book,
"The Great Telecom Meltdown" (Artech House), which just came out.
(Pat, a review copy should be en route somewhere soon.) The monopoly
didn't just happen. AT&T had a total monopoly from 1876 to 1893
because of the (questionable) Bell patent (17 years). Then there was a
lot of competition, but AT&T bought Pupin's (questionable) patent on
the loading coil, giving them a monopoly on long distance. There were
however a lot of CLECs ("Independents", many then competing in Bell
areas) a hundred years ago. In 1912, the Kingsbury Commitment allowed
Independents to interconnect via Bell, but stopped Bell from buying up
most Independents. Competition waned, and by the time of the
Communications Act of 1934 it was dead, replaced by a
regulated-utility model that AT&T preferred. AT&T largely controlled
its regulators (as the Bells do now). Its telephone monopoly safe,
its Western Electric competed in many areas, such as motion picture
sound and broadcast transmitters. The Department of Justice brought
an antitrust suit (US vs. Western Electric) in 1949, and the 1956
Final Judgment limited WECo to supporting Bell. That was reopened
later and became the basis of Divestiture.

>> Not since its early days has it been much of an innovator.

> Most of our present day communication system owes itself to
> innovations AT&T continued to make until divesture, not only in
> technology, but also telecom administration.

AT&T's version of telecom administration is, perhaps a model for
Chinese industries that need to make inefficient use of surplus labor,
while maintaining a strong authoritarian hierarchy. Its main job
however was indeed to hold back innovation, partly because slow
deprecation led to lower rates, which were politically popular.

Fred R. Goldstein fgoldstein "at" ionary "dot" com

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