AT&T Inc. NYSE: T, based in San Antonio, Texas, is the largest provider of both local and long distance telephone services and wireless service (through its Cingular joint venture with BellSouth) in the United States. The modern company was formed by SBC Communications' purchase of its former parent company, AT&T Corp., in 2005. As a part of the merger, SBC shed its name and took on the iconic AT&T moniker (originally American Telephone and Telegraph) and the famed T stock-trading symbol (for "Telephone").
AT&T Corp. provide voice, video, data, and Internet telecommunications and professional services to businesses, consumers, and government agencies. During its long history, AT&T had at times been the world's largest telephone company, the world's largest cable television operator, and a regulated monopoly. At its peak, it employed one million people and its revenue was roughly $300 billion annually in today's dollars.
At the time of the merger with SBC, AT&T was headquartered in Bedminster, New Jersey.
The formation of the Bell Telephone Company superseded an agreement between Alexander Graham Bell and his financiers, principal among them Gardiner G. Hubbard and Thomas Sanders. Renamed the National Bell Telephone Company in March 1877, it became the American Bell Telephone Company in March 1880. By 1881, it had bought a controlling interest in the Western Electric Company from Western Union. Only three years earlier, Western Union had turned down Gardiner Hubbard's offer to sell it all rights to the telephone for $100,000.
In 1880, the management of American Bell, created what would become AT&T Long Lines. The project was the first of its kind to create nationwide long-distance network with a commercially viable cost-structure. This project was formally incorporated into a separate company christened American Telephone and Telegraph Company on March 3, 1885. Starting from New York the network reached Chicago, Illinois in 1892.
Bell's patent on the telephone expired in 1894, but the company's much larger customer base made its service much more valuable than alternatives and substantial growth continued.
On December 30, 1899, the American Telephone and Telegraph Company bought the assets of American Bell--this was because Massachusetts corporate laws were very restrictive and limited capitalization to ten million dollars, forestalling the growth of American Bell itself.
National long distance service reached San Francisco in 1915. Transatlantic services started in 1927 using two-way radio, but the first trans-Atlantic telephone cable did not arrive until 1956, with TAT-1.
In 1907, AT&T president Theodore Vail proposed that a formal monopoly would be more efficient. The federal government accepted this principle, initially in the Kingsbury Commitment of 1913.
For most of the 20th century, AT&T subsidiary AT&T Long Lines thus enjoyed a near-total monopoly on long distance telephone service in the United States. AT&T also controlled 22 Bell Operating Companies which provided local telephone service to most of the United States. While there were many "independent telephone companies", General Telephone being the most significant, the Bell System was far larger than all the others, and widely considered a monopoly itself.
During the early 1920s, AT&T bought Lee De Forest's patents on the "audion", the first triode vacuum tube, which let them enter the radio business. Thanks to the pressures of World War I, AT&T and RCA owned all useful patents on vacuum tubes. RCA staked a position in wireless communication; AT&T pursued the use of tubes in telephone amplifiers. Some patent allies and partners in RCA were angered when the two companies' research on tubes began to overlap; there were many patent disputes.
AT&T, RCA, and their patent allies and partners finally settled their disputes in 1926 by compromise. AT&T decided to focus on the telephone business as a communications common carrier, and sold its broadcasting subsidiary Broadcasting Corporation of America to RCA. The assets included station WEAF, which for some time had broadcast from AT&T headquarters in New York City. In return, RCA signed a service agreement with AT&T, ensuring any radio network RCA started would have transmission connections provided by AT&T. Both companies agreed to cross-license patents, ending that aspect of the dispute. RCA, GE, and Westinghouse were now free to combine their assets to form the National Broadcasting Company, or NBC network.
In 1925, AT&T created a new unit called Bell Telephone Laboratories, commonly known as Bell Labs. This research and development unit proved highly successful, pioneering, among other things, radio astronomy, the transistor, the photovoltaic cell, the Unix operating system, and the C programming language. However, its parent company did not always capitalize on these achievements. In 1949 the Justice Department filed an antitrust suit aimed at forcing the divestiture of Western Electric, which was settled seven years later by AT&T's agreement to confine its products and services to common carrier telecommunications and license its patents to "all interested parties". A key effect of this was to ban AT&T from selling computers despite its key role in electronics research and development.
Public utility commissions in all state and local jurisdictions regulated the Bell System and all the other telephone companies. The Federal Communications Commission (FCC) regulated all service across state lines. These commissions controlled the rates that companies could charge, and the specific services and equipment they could offer. Nonetheless, technological innovation continued. For example, AT&T commissioned the first experimental communications satellite, Telstar I in 1962.
Erosion of natural monopoly
For many years, AT&T had been permitted to retain its monopoly status under the assumption that it was a natural monopoly. The rise of cheap microwave communications equipment in the 1970s opened a window of opportunity for competitors--no longer was the acquisition of expensive rights-of-way necessary for the construction of a long-distance telephone network. In light of this, the FCC permitted MCI (Microwave Communications, Inc) to sell communication services to large-businesses. This technical-economic argument against the necessity of AT&T's monopoly position would hold for a mere fifteen years until the beginning of the fiber-optics revolution sounded the end of microwave-based long distance.
Break up, spinoffs and restructuring
The rest of the telephone monopoly lasted until final settlement of a 1974 United States Department of Justice antitrust suit against AT&T on January 8, 1982, under which AT&T ("Ma Bell") agreed to divest its local exchange service operating companies, in return for a chance to go into the computer business (see AT&T Computer Systems). Although the Department of Defense did not want AT&T to be broken, effective January 1, 1984, AT&T's local operations were split into seven independent Regional Bell Operating Companies known as "Baby Bells". AT&T, reduced in value by about 70%, continued to run all its long distance services, although it lost some market share in the ensuing years to competitors MCI and Sprint Corporation.
A sign that hung in many Bell facilities in 1983 read: "There are two giant entities at work in our country, and they both have an amazing influence on our daily lives . . . one has given us radar, sonar, stereo, teletype, the transistor, hearing aids, artificial larynxes, talking movies, and the telephone. The other has given us the Civil War, the Spanish American War, the First World War, the Second World War, the Korean War, the Vietnam War, double-digit inflation, double digit unemployment, the Great Depression, the gasoline crisis, and the Watergate fiasco. Guess which one is now trying to tell the other one how to run its business?"
After its own attempt to penetrate the computer marketplace failed, in 1991, AT&T absorbed NCR Corporation (National Cash Register), hoping to capitalize on the burgeoning personal computer and UNIX networked server markets, but was unable to extract lasting financial or technological gains from the merger. After deregulation of the U.S. telecom industry via the Telecommunications Act of 1996, NCR was divested again. At the same time, AT&T's equipment manufacturing operations and the renowned Bell Laboratories were spun off into Lucent Technologies. The industry as a whole had many other reorganizations since the 1990s, both due to deregulation and because of technological advances reducing demand and pricing power in telecommunications.
In 1997, AT&T hired former IBM executive Michael Armstrong as its chief executive officer. Armstrong's vision was to change AT&T from a long-distance carrier into a global "telecommunications supermarket", eyeing Internet services for the booming dot-com industry.
Armstrong's most prominent strategy was buying significant cable television assets. After acquiring John Malone's TCI and Media One (gaining through the latter a 25% share of Time Warner Cable), AT&T was the largest provider of cable television in the United States. It intended to use these assets to bridge the so-called "last mile" and break the Regional Bell Companies' access-monopoly of the consumer household for data and telephony services, but the wager was costly, substantially increasing the company's debt.
In 1998, AT&T announced a US$1 billion alliance with BT to offer global voice over IP (VoIP) services, sparking rumors of a potential merger . But the parties fought for control of the project and could not even agree on the alliance's name. By mid-2001, customers were being directed to sign contracts with the parent companies, and Concert, as the venture was eventually known, was scrapped in October that year.
In 1999 AT&T acquired the Olivetti & Oracle Research Lab, from Olivetti and Oracle Corporation. In 2002 it closed down the research part of the lab.
With long-distance rates falling and the market for telecommunications services overall weakening, AT&T could not sustain the debt it had incurred in these ventures. Moreover, the cost of upgrading TCI's equipment to handle two-way communications proved far higher than pre-merger estimates. AT&T undertook a major reorganization in October 2000, moving its mobile phone and broadband units into separate companies, to allow each unit to raise capital independently.
On July 9, 2001 it spun off AT&T Wireless Corp. in what was then the world's largest initial public offering (IPO). Later that year it spun off AT&T Broadband and Liberty Media, which comprised its cable TV assets. AT&T Broadband was subsequently acquired by Comcast in 2002, and AT&T Wireless merged with Cingular Wireless in 2004.
In 2004, the U.S. government eliminated equal access regulations that allowed long-distance phone companies to access the networks owned by the regional Bell carriers at fixed rates. This ultimately caused AT&T to move away from the residential telephone business--declaring in the process that it would no longer market residential telephone service. Instead, its residential focus shifted to offering a voice service over a broadband Internet connection called AT&T CallVantage.
A division of AT&T, the Lucky Dog Phone Company provides a pay-as-you-go long distance phone service for in-state, state-to-state, and international calls with charges added to the caller's regular monthly phone bill. Under the name 10-10-345, Lucky Dog sponsored the #45 Winston Cup car driven by Rich Bickle in 1999.
Southwestern Bell Fredom Phone products are not produced by AT&T but are produced under license by Conair.
AT&T was also known as "Ma Bell" and affectionately called "Mother" by phone phreaks. Spinoffs like the Regional Bell Operating Companies or RBOCs were often called "Baby Bells".
The AT&T Globe Symbol, the corporate logo designed by Saul Bass in 1983, has been nicknamed the Death Star in reference to Star Wars. This name was also given to the titanic Bell Labs facility in Holmdel, New Jersey, now owned by Lucent.
Southwestern Bell Corporation was one of the seven original Regional Bell Operating Companies, or "Baby Bells." The company — a holding company for Southwestern Bell Telephone Company — was a result of U.S. antitrust action against AT&T in 1983. AT&T had adopted the name Southwestern Bell for its local operations in Texas, Oklahoma, Missouri, Kansas, and Arkansas in April 1920. The Telecommunications Act of 1996 allowed Southwestern Bell to become a national telephone provider, and it subsequently bought fellow Baby Bells Pacific Telesis and Ameritech, as well as independent Bell System franchise SNET.
In 1995, Southwestern Bell changed its name to SBC Communications, Inc and sucsequently adopted the now well-known SBC logo. The company stated that "SBC" no longer stood for anything. SBC then proceeded to acquire fellow Baby Bell Pacific Telesis and former independent Bell System franchise SNET(Southern New England Telephone). The FCC then blocked SBCs further expansion for fear of a monopoly. SBC told the FCC that it would allow competitors access to local markets where it had had a monopoly if the FCC would allow them to acquire Ameritech. The FCC later fined SBC Communications $6 million for failure to comply with agreements made in order to secure approval of the merger.
In May 1998, SBC and Ameritech, the Regional Bell operating company serving Illinois, Indiana, Michigan, Ohio, and Wisconsin, announced merger plans. After making several organizational changes (such as the sale of Ameritech Wireless to GTE) to satisfy state and Federal regulators, the two merged on October 8, 1999.
At the time of the AT&T merger, SBC provided local telephone service in 13 states (Arkansas, California, Connecticut, Illinois, Indiana, Kansas, Michigan, Missouri, Nevada, Ohio, Oklahoma, Texas, Wisconsin) and long distance service to 10 million customers, and owned 60% of mobile phone provider Cingular. Cingular acquired AT&T Wireless in 2004, making Cingular the largest mobile phone service in the United States, with over 50 million subscribers. (Fellow Baby Bell BellSouth owns the other 40% of Cingular.) The company was also a large American Internet Service Provider, and the largest DSL provider in the US, with more than 5.1 million DSL lines in late 2005.
The company formerly traded on the NYSE as "SBC".
Creation of AT&T, Inc.
On January 31, 2005, SBC announced that it would purchase AT&T for more than $16 billion. The announcement came almost 8 years after SBC and AT&T called off their first merger talks and nearly a year after merger talks between AT&T and BellSouth fell apart. AT&T stockholders, meeting in Denver, approved the merger on June 30, 2005. The U.S. Department of Justice cleared the merger on October 27, 2005, and the Federal Communications Commission approved it on October 31, 2005. The merger was finalized on November 18, 2005. SBC announced that the name of the merged company will be AT&T, Inc., and it adopted an updated logo. The merger means that BellSouth is the last "Baby Bell" to retain its original name (the other six "Baby Bells" have all merged with other companies and thus received new names). The merger is ironic in the fact that one of the "Baby Bells" grew to the strength to buy out "Ma Bell" AT&T. A further irony is that the government, which mandated the breakup of the original monopoly AT&T in the first place, gave the go-ahead to allow AT&T to reconstitute much of itself in this merger.
On December 1, 2005 the combined company began trading under the historic "T" stock ticker symbol on the NYSE.
Bell Operating Companies
Of the 24 Bell Operating Companies in which AT&T owned or held a minority interest prior to 1984, nine are now a part of the "new" AT&T:
Wisconsin Bell (f/k/a Wisconsin Telephone)
Pacific Bell (f/k/a Pacific Telephone & Telegraph)
Nevada Bell (f/k/a Bell Telephone Company of Nevada)
Southern New England Telephone—Now wholly owned, AT&T held only a minority interest before 1984.
Corporate GovernanceAT&T's current board mainly consists of members of SBC's board of directors.
Edward E. Whitacre Jr. - Chairman and Chief Executive Officer
Gilbert F. Amelio
August A. Busch III
Martin K. Eby, Jr.
James A. Henderson
Charles F. Knight
Lynn M. Martin
John B. McCoy
Mary S. Metz
S. Donley Ritchey
Joyce M. Roche
Laura D. Tyson
Patricia P. Upton
Places/Events named after SBC/AT&T
Jones SBC Stadium - Lubbock, Texas
SBC Red River Rivalry - Dallas, Texas
Note: These places are subject to name changes now that SBC has changed its name to AT&T.
AT&T Park - San Francisco, California (formerly Pacific Bell Park, SBC Park)
AT&T Bricktown Ballpark - Oklahoma City, Oklahoma (formerly Southwestern Bell Bricktown Ballpark, SBC Bricktown Ballpark)
AT&T Center - San Antonio, Texas
AT&T Cotton Bowl Classic - played in Dallas, Texas, at the Cotton Bowl stadium.
Sprint Nextel Corporation
Equant (France Télécom)