 Final logo designed bySaul Bass; still used bySouthwestern Bell | |
| Industry | Telecommunications |
|---|---|
| Founded | 1877; 148 years ago (1877) |
| Founder | Alexander Graham Bell |
| Defunct | January 8, 1984; 41 years ago (1984-01-08) |
| Fate | Breakup of the Bell System |
| Successors | Regional Bell Operating Companies AT&T Corporation |
| Headquarters | New York,, U.S. |
Number of employees | +1,000,000 |
| Parent | Bell Telephone Company (1877–1885) AT&T (1885–1983) |
TheBell System was a system oftelecommunication companies, led by theBell Telephone Company and later byAT&T, that dominated the telephone services industry in North America for over 100 years from its creation in 1877 untilits antitrust breakup in 1983. The system of companies was often colloquially calledMa Bell (as in "Mother Bell"), as it held avertical monopoly over telecommunication products and services in most areas of the United States and Canada. At the time of thebreakup of the Bell System in the early 1980s, it had assets of $150 billion (equivalent to $450 billion in 2024) and employed over one million people.
Beginning in the 1910s, American antitrust regulators had been observing and accusing the Bell System of abusing its monopoly power, and had brought legal action multiple times over the decades. In 1974 theAntitrust Division of theU.S. Department of Justice brought a lawsuit against Bell claiming violations of theSherman Act. In 1982, anticipating that it could not win, AT&T agreed to a Justice Department-mandatedconsent decree that settled the lawsuit and ordered it to break itself up into seven "Regional Bell Operating Companies" (known as "The Baby Bells"). This ended the existence of the conglomerate in 1984. The Baby Bells became independent companies and several of them are large corporations today.
In 1877, the American Bell Telephone Company, named afterAlexander Graham Bell, opened the first telephone exchange inNew Haven, Connecticut. Within a few yearslocal exchange companies were established in every major city in the United States. Use of theBell System name initially referred to those early telephonefranchises and eventually comprised all telephone companies owned byAmerican Telephone & Telegraph, referred to internally asassociated companies,regional holding companies, or laterBell operating companies (BOCs).
In 1899, American Telephone & Telegraph (AT&T) acquired the assets of its parent, the American Bell Telephone Company. American Bell had created AT&T to provide long-distance calls between New York and Chicago and beyond. AT&T became the parent of American Bell Telephone Company, and thus the head of the Bell System, because regulatory and tax rules were leaner in New York than in Boston, where American Bell was headquartered. Later, the Bell System and its moniker "Ma Bell" became a term that referred generally to all AT&T companies, of which there were five major divisions:
In 1913, the federal government challenged the Bell System's growingmonopoly over the phone system under AT&T ownership in ananti-trust suit, leading to theKingsbury Commitment. Under the commitment, AT&T escaped break-up or nationalization in exchange for divesting itself ofWestern Union and allowing non-competing independent telephone companies to interconnect with its long-distance network. After 1934, theFederal Communications Commission (FCC) assumed regulation of AT&T.
Proliferation of telephone service allowed the company to become the largest corporation in the world untilits dismantling by theUnited States Department of Justice in 1984, at which time the Bell System ceased to exist.[1]
Receiving a U.S.patent for the invention of thetelephone on March 7, 1876, Alexander Graham Bell formed the Bell Telephone Company in 1877, which in 1885 became AT&T.[2][3][4]
When Bell's original patent expired 15 years later in 1894, the telephone market opened to competition and 6,000 new telephone companies started while the Bell Telephone company took a significant financial downturn.[2][4]
On April 30, 1907,Theodore Newton Vail returned as President of AT&T.[2][4] Vail believed in the superiority of one national telephone system and AT&T adopted the sloganOne Policy, One System, Universal Service.[2][5] This became the company's philosophy for the next 70 years.[4] Under Vail, AT&T began acquiring many of the smaller telephone companies including theWestern Union Telegraph Company.[2][4]
In response to the threat ofantitrust action from government, AT&T entered into an out-of-court agreement, known as theKingsbury Commitment with the Department of Justice in 1913.[2][5] AT&T committed to sell its $30 million in Western Union capital stock, allow competitors to interconnect with its long-distance telephone network, and not acquire other independent companies without permission from theInterstate Commerce Commission.[2][4][6]
The Bell trademark was used from 1921 through 1969 by both the AT&T corporation and the regional operating corporations to co-brand themselves under a single Bell System trademark. For each regional operating company, its name was placed where "name of associated company" appears in this template version of the trademark.
Bell system telephones and related equipment were made byWestern Electric, a wholly owned subsidiary of AT&T Co. Member telephone companies paid a fixed fraction of their revenues as a license fee toBell Labs.
As a result of thisvertical monopoly, the Bell System effectively owned most telephone service in the United States by 1940, from local and long-distance service to the telephones. This allowed Bell to prohibit its customers from connecting equipment not made or sold by Bell to the system without paying fees. For example, if a customer desired a style of telephone not leased by the local Bell company, the customer was required to purchase the instrument at cost, furnish it to the telephone company for rewiring, pay a service charge, and a monthly lease fee for using it.
In 1949, theUnited States Department of Justice alleged in anantitrustlawsuit that AT&T and the Bell System operating companies were using their near-monopoly in telecommunications to attempt to establish unfair advantage in related technologies. The outcome wasa 1956consent decree limiting AT&T to 85% of the United States' national telephone network and certain government contracts, and from continuing to hold interests inCanada and theCaribbean. The Bell System's Canadian operations included theBell Canada regional operating company and theNorthern Electric manufacturing subsidiary of the Bell System'sWestern Electric equipment manufacturer. Western Electric divested Northern Electric in 1956, but AT&T did not divest itself of Bell Canada until 1975.ITT Inc., then known asInternational Telephone & Telegraph Co., purchased the Bell System's Caribbean regional operating companies.
The consent decree also forced Bell to make all of its patentsroyalty-free. This led to substantial increases in innovation, in particular in the electronics and computer sectors.[7]Steven Weber'sThe Success of Open Source characterizes the consent decree as important in fostering the open source movement.[8]
The Bell System also owned various Caribbean regional operating companies, as well as 54% of Japan'sNEC and a post-World War II reconstruction relationship withstate-ownedNippon Telegraph and Telephone (NTT) before the 1956 boundaries were emplaced. Before 1956, the Bell System's reach was truly gargantuan. Even during the period from 1956 to 1984, the Bell System's dominant reach into all forms of communications was pervasive within the United States and influential in telecommunication standardization throughout the industrialized world.
The 1984Bell System divestiture brought an end to the affiliation branded as the Bell System. It resulted from another antitrust lawsuit filed by the U.S. Department of Justice in 1974, alleging illegal practices by the Bell System companies to stiflecompetition in the telecommunications industry. The parties settled the lawsuit on January 8, 1982, superseding the former restrictions that AT&T and the DOJ had agreed upon in 1956.
Before the 1956 break-up, the Bell System included the companies listed below, plus those listed in the pre-1984 section. Northern Electric and the Caribbean regional operating companies were considered part of the Bell System proper before the break-up. Nippon Electric was considered a more distant affiliate of Western Electric, and through its own research and development adapted the designs of Western Electric's North American telecommunications equipment for use in Japan, which to this day gives much of Japan's telephone equipment and network a closer resemblance to North AmericanANSI andiconectiv standards than to European-originatedITU-T standards. Before the 1956 break-up, Northern Electric was focused on manufacturing, without significant telecommunication-equipment research & development of its own. The operation of Japan's NTT during thepost-World War II occupation was considered an administrative adjunct to the North American Bell System.
Immediately before the 1984 break-up, the Bell System had the followingcorporate structure:
American Telephone and Telegraph Company, the parentholding company andlong-distance carrier
Local operating companies:
Partly owned local operating companies:
Other subsidiaries:
On January 1, 1984, the former components of the Bell System were structured into the followingRegional Bell Operating Companies (RBOCs), which became known as Baby Bells.
After 1984, multiple mergers occurred of the operating companies and between them, so that some components of the former Bell System are now owned by companies independent of the historic Bell System, including foreign telecommunications firms. The structure of the companies today[when?] is as follows.
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The following telephone companies are considered independent of theBaby Bells:
The following companies were divested after 1984 fromAT&T Corp. or theBaby Bells and do not provide telephone service.
Beginning in 1991, theBaby Bells began to consolidate operations or rename theirBell Operating Companies according to the parent company name, such as "Bell Atlantic – Delaware, Inc." or "U S WEST Communications, Inc.", to unify their corporate images.
The Bell System service marks, including the circled-bell logo, especially as redesigned bySaul Bass in 1969, and the words Bell System in text, were used before January 1, 1984, when theAT&T divestiture of its regional operating companies took effect. The word markBell, the logo, and other related trademarks, are held by each of the remaining Bell companies, namely AT&T,Verizon,Lumen Technologies, andAltafiber.[9] International rights to the marks, except forCanada, are held by a joint venture of these companies,Bell IP Holdings.[citation needed]
Of the various resulting 1984 spinoffs, onlyBellSouth actively used and promoted the Bell name and logo during its entire history, from the 1984 break-up to its reunion with the new AT&T in 2006. Similarly, cessation of using either the Bell name or logo occurred for many of the other companies more than a decade after the 1984 break-up as part of an acquisition-related rebranding. The others have only used the marks on rare occasions to maintain their trademark rights, even less now that they have adopted names conceived long after divestiture. Examples include Verizon, which still used the Bell logo on its trucks and payphones until it updated its own logo in 2015, and Qwest, formerlyUS West, which licenses theNorthwestern Bell andMountain Bell names to Unical Enterprises, who makes telephones under the Northwestern Bell name.[citation needed]
In 1984, each regional Bell operating company was assigned a set list of names it was allowed to use in combination with the Bell marks. By 2022, all these Bell System names had disappeared from the United States business landscape. Cincinnati Bell was the last to use the name, until 2022 when it rebranded toAltafiber, though it still has Cincinnati Bell as its corporate name.Southwestern Bell used both the Bell name and the circled-bell trademark until SBC opted for all of its companies to do business under the "SBC" name in 2002.Bell Atlantic used the Bell name and circled-bell trademark until renaming itself Verizon in 2000.Pacific Bell continued operating in California under that name (or the shortened "PacBell" nickname) until SBC purchased it.[citation needed]
In Canada,Bell Canada (divested from AT&T in 1975) continues to use the Bell name. For the decades thatNortel was named Northern Telecom, its research and development arm was Bell Northern Research. Bell Canada and its holding-company parent,Bell Canada Enterprises, still use the Bell name. They used variations of the circled-bell logo until 1977, which until 1976 strongly resembled the 1921 to 1939 Bell System trademark shown above.[citation needed]
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