A Multidisciplinary Approach
Chapter 7: American Telephone and Telegraph Company
7. 7.1 American Telephone and Telegraph Company BACKGROUND: THE BELL SYSTEM Since its foundation in 1885, the American Telephone and Telegraph Company (AT&T Corporation) had been owned by the American Bell Telephone Company, also called Bell System. Right from the start, AT&T had been an active player. It tried to strengthen its market position particularly by taking over smaller independent telephone companies. Other links in the chain also attracted AT&T’s interest. An important takeover was that of Western Electric Manufacturing Company by Bell System in 1882. Western Electric manufactured telegraph and telephone equipment and components.1 The takeover of Western Electric brought AT&T an important trump card, which it managed to play smartly. AT&T forbade its subscribers to use their own equipment. Instead, they were forced to rent telephones and, if necessary, other peripherals from AT&T, which, in turn, only offered products manufactured by Western Electric. Many phones made by Western Electric carried the following disclaimer permanently moulded into their housings: ‘Bell System property. Not for sale’. Telephones were also labelled with a sticker marking the Bell Operating Company that owned the telephone. AT&T leased out the phones at a fixed rate per month. In this way, AT&T collected an amount in rent many times higher than the production costs, while the advantage for AT&T increased the longer the rental agreement lasted. The prohibition to use phones of producers other than Western Electric had to be taken seriously. AT&T had inspectors...
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