馃攳
How AT&T Doubled In Size After A Government Breakup - YouTube
Channel: Tech Insider
[0]
- [Narrator] Have you
ever heard of Ma Bell?
[2]
- [Operator] Long distance.
[3]
- [Narrator] It's a more affectionate term
[5]
for the Bell System.
[6]
It was the dominant
telephone provider in the US
[8]
for most of the 20th century.
[10]
You may know Bell by another name,
[13]
American Telephone and Telegraph,
[15]
or AT&T for short.
[17]
AT&T was actually broken up
by the government in 1984.
[21]
In fact, it was broken up into
eight different companies.
[25]
Today, almost all those companies
[27]
are once again part of AT&T.
[29]
And the company is more than
twice the size it was before
[32]
with a massive cellular network
and satellite cable company.
[36]
So how did this happen?
[38]
- Ma Bell, the beloved
monopoly mid 20th century,
[42]
was a fixture
[44]
in many million American households.
[49]
- [Narrator] That's Richard R John.
[51]
He's a History and
Communications Professor
[52]
at Columbia Journalism School.
[54]
And he literally wrote the book
[56]
on American telephone history.
[57]
- The Bell System itself, the concept,
[59]
was popularized by Bell
public relation agents
[64]
after an antitrust suit in 1913.
[67]
- [Narrator] Yep, the 1984
breakup was not the first
[69]
or second time regulators came after AT&T.
[73]
The first originated with a 1907 complaint
[76]
alleging antitrust practices.
[78]
Worried the case could
heat up the movement
[80]
for government ownership of
the telephone and telegraph,
[82]
Bell settled the case in 1913.
[84]
The company made two big concessions.
[87]
One, it divested itself of
telegraph company, Western Union,
[91]
which it had bought in 1907.
[93]
And two, it agreed to not
actively pursue buying rivals
[96]
in local markets.
[98]
This created boundaries across the country
[99]
for markets to be served
by Bell and its rivals.
[102]
The terms of the settlement
[103]
would dominate the
American telephone system
[105]
for the next 70 years.
[107]
- The independents get a really good deal.
[109]
And what Bell gets in return
[112]
is a blunting of the call
for government ownership
[115]
of the whole telecommunications
infrastructure.
[119]
And that was a live issue in 1913, 1914.
[125]
- [Narrator] So Bell
got to keep being Bell
[127]
for the next few decades.
[129]
But guess what?
[130]
Another antitrust suit
was launched in 1949
[133]
looking to break the vertical link
[135]
between Bell's telephone service
[136]
and its manufacturing
arm, Western Electric,
[139]
which leased telephones to customers
[141]
to use with its phone service.
[143]
- In '56, a consent decree is negotiated.
[149]
The Bell System does not
give up Western Electric.
[152]
The Justice Department forces AT&T
[156]
to get out of the computer business.
[160]
AT&T could have gone into
the computer business.
[163]
But in order to keep them from going
[165]
into the computer business, guess what?
[167]
They had to open up their vault, okay,
[171]
because the business, telephone,
and telegraph business
[173]
in the United States is built around
[175]
the control of intellectual
property, patents.
[179]
And you know what the
jewel of the crown is
[181]
in their vault?
[182]
A transistor.
[183]
- [Narrator] Bell had so
much faith in the telephone
[186]
it gave up a bunch of
inventions to keep it,
[188]
including the one that led
to the computer business
[191]
as we know it today.
[192]
But Bell got to keep
its telephone business,
[194]
including Western Electric.
[196]
- This is a cold war.
[197]
Had Western Electric not
been as closely involved
[200]
with the government,
[201]
with Sandia and with nuclear weaponry,
[207]
the outcome might have been different.
[209]
- [Narrator] Bell continued to dominate
[210]
the telephone industry
for the next 20 years
[212]
reaching 90% of US households by 1969.
[216]
In 1974, the Justice Department filed
[218]
an antitrust suit against the company.
[220]
Eight years later, in 1982,
[223]
a consent decree ends the antitrust suit.
[225]
This is it.
[227]
After almost 100 years, one
of the most dominant forces
[231]
in American technology and communications
[233]
is told by the government,
"You're too big."
[236]
But how do you break up one of the biggest
[238]
and oldest companies in the country?
[242]
- Internally, what they wanna do
[243]
is to keep their vertically-integrated
corporation together.
[250]
There's three elements.
[252]
There's the long-distance, or long lines,
[255]
the manufacturing,
[258]
Western Electric.
[259]
And you keep the R&D, which was Bell Labs.
[262]
An awful lot of smart people said,
[264]
"Well of course that's
what you need to do,
[265]
"because that's the
nature of the technology.
[268]
"You're gonna be innovative.
[269]
"You're gonna produce these new things.
[271]
"And long-distance is the
core of your network."
[275]
Okay, lots of smart people said that.
[279]
And they were dead-wrong.
[281]
- [Narrator] Bell gives
up the operating companies
[283]
providing local phone service.
[284]
They're known as the Regional
Bell Operating Companies,
[287]
or RBOCs.
[288]
But AT&T didn't realize
that a lot of their money
[291]
came from these operating companies.
[294]
- Because I think their
books were always configured
[296]
to meet the needs of the
state regulatory commissions.
[301]
Smart people make dumb mistakes.
[304]
And that's what happened
at AT&T after '84.
[307]
Within five years, they
voluntarily trivest.
[310]
Bell Labs, because there's
little teeny bit of Bell Labs
[313]
still around, but a lot
of that becomes Lucent's
[315]
and, I think, Western
Electric goes to Lucent.
[316]
And before long,
[318]
Lucent gets out of
[319]
the telephone equipment
manufacturing business.
[323]
- [Narrator] Now it's the 90s,
[324]
and AT&T is not the
powerhouse it used to be.
[327]
But some of it's RBOCs have been thriving.
[328]
In 1996, ARBOCs NYNEX
and Bell Atlantic merge
[333]
to become one company.
[334]
You know it today as Verizon.
[336]
In 1995, Southwestern Bell rebrands itself
[339]
as SBC Communications.
[341]
They buy out Pacific Telesis
in 1997 and Ameritech in 1999.
[347]
15 years after the breakup,
[349]
only four of the seven RBOCs remain.
[351]
- So Southwestern Bell
has a different ethos.
[354]
And at some point, their
management realizes
[357]
that they can become the
Big Kahuna, in a way.
[360]
They can take over AT&T,
[363]
which they buy
[365]
in January 2005
[368]
for $16 billion, and the FCC approves it
[372]
by the end of the year.
[373]
So they take over the corporation.
[375]
They've got the brand,
so they just rename it.
[378]
- [Narrator] The AT&T you know today
[380]
is technically a totally different company
[383]
than the one that was broken up.
[384]
It's, instead, an operating company that,
[388]
like a little engine that could,
[389]
bought up other operating companies
[392]
and was gradually in a position
to take over AT&T itself.
[397]
And they buy BellSouth in 2006.
[400]
- [Narrator] The new AT&T
tried buying T-Mobile in 2011,
[404]
but was denied by the
Obama administration.
[407]
They do, however, purchase
cable provider, DirecTV in 2015.
[411]
They're currently trying
to purchase Time Warner
[413]
for $85 billion,
[415]
but it's unclear if the deal
will be allowed to go through.
[418]
- If it doesn't go through,
[420]
that will be a remarkable moment,
[422]
because we've then shifted
[424]
from a regulatory regime in which,
[427]
since the 1980s, we've very
rarely blocked vertical mergers.
[433]
That's to say, businesses
that are operating
[436]
in different markets coming together.
[440]
- [Narrator] No one really
knows what will happen
[443]
to the company in the future,
[444]
if it will be allowed to
merge with Time Warner,
[446]
if it'll try to merge
with other companies,
[448]
or if it will try something else.
[450]
No matter what, the
company has come a long way
[453]
from a devise Alexander
Graham Bell created
[455]
to help the deaf.
[457]
(dramatic orchestral music)
Most Recent Videos:
You can go back to the homepage right here: Homepage