Hostname: page-component-78c5997874-m6dg7 Total loading time: 0 Render date: 2024-11-08T11:29:03.948Z Has data issue: false hasContentIssue false
  • English
  • Français

System Building at the Margin: The Problem of Public Choice in the Telephone Industry

Published online by Cambridge University Press:  03 March 2009

Kenneth Lipartito
Kenneth Lipartito
Affiliation:
Assistant Professor of History, University of Houston, Houston, TX 77204.
Get access Rights & Permissions [Opens in a new window]

Extract

This article considers whether natural monopoly conditions or AT'T's market power was responsible for the formation of a single, standardized network in the United States telephone industry. It shows that AT&T was able to move the industry towards a single system under its management through a strategy of competition and compromise with competitors. The article also examines the impact of AT's actions on state regulators, concluding that public officials, lacking necessary knowledge and authority to set policy, ended up supporting AT's position in the industry.

Type
Articles
Information
The Journal of Economic History , Volume 49 , Issue 2 , June 1989 , pp. 323 - 336
Copyright
Copyright © The Economic History Association 1989

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

1 Brooks, John, Telephone (New York, 1975);Google ScholarLangdale, John V., “The Growth of Long Distance Telephony in the Bell System, 1875–1907,” Journal of Historical Geography, 4 (04. 1978), pp. 145–59.CrossRefGoogle Scholar

2 For an overview of this era, see Garnet, Robert, The Telephone Enterprise: The Evolution of the Bell System's Horizontal Structure (Baltimore, 1985).Google Scholar

3 Brock, Gerald W., The Telecommunications Industry: The Dynamics of Market Structure (Cambridge, MA, 1981), pp. 110–14, 124.Google Scholar

4 Garnet, The Telephone Enterprise, pp. 66–73, 78–80, 88–89. Langdale, “The Growth of Long Distance Telephony,” p. 150.Google Scholar

5 Bornholz, Robert and Evans, David S., “The Early History of Competition in the Telephone Industry,” in Evans, David S., ed., Breaking Up Bell: Essays on Industrial Organization and Regulation (New York, 1983), p. 20.Google Scholar

6 Fisher, Claude, “The Revolution in Rural Telephony,” Journal of Social History, 21 (Fall 1987), pp. 5–26.Google Scholar

7 Fisher, “The Revolution in Rural Telephony,” p. 8.Google Scholar Mutual companies charged from $3 to $18 per year for service at a time when city exchanges in the farm belt charged $36 to $48 per year. For information on exchange rates, see United States Bureau, of the Census, Telephones and Telegraphs and Municipal Electric Fire-Alarm and Police Patrol Signaling Systems, 1912 (Washington, DC, 1915).Google Scholar

8 Bureau of the Census, Telephones and Telegraphs, 1912, PP. 15–16, table 5.Google Scholar

9 Fisher, “The Revolution in Rural Telephony,” p. 8.Google Scholar

10 American Telephone and Telegraph Company Historical Archives (hereafter ATT) Box 1348, Sub-Licensing, Advantages to Operating Companies, 1903, Hall-Fish, 31 July 1903.Google Scholar

11 Hoge, James B., “National Inter-State Telephone Association,” The Telephone Magazine (July, 1905).Google Scholar

12 ATT Box 1163, North Carolina Interstate Telephone Company, 1900, Map of Lines.Google Scholar

13 Bureau of the Census, Telephones and Telegraphs. 1912, P. 31, table 19.Google Scholar

14 Southern Bell auditor Hoxsey, J. B. noted that most toll calls in the South traveled less than 15 miles. Southern Bell Telephone Company, Secretary's Office, Pickernell—Summary of Hoxsey Report to Hall, 21 March 1908.Google Scholar

15 Bornholz and Evans, “The Early History of Competition in the Telephone Industry,” p. 18.Google Scholar

16 Ibid., pp. 30–33. See also Gabel, Richard, “The Early Competitive Era in Telephone Communications, 1893–1920,” Law and Contemporary Problems, 34 (Spring 1969), pp. 340–69.Google Scholar

17 ATT Box 1372, Rural Telephone Service, 1905–06, Hayes Report. ATT Box 1357, Chicago Telephone Company, Operating Organization, Memo, 1909, Carty-Thayer, 1 March 1909.Google Scholar

18 Garnet, The Telephone Enterprise, pp. 128–46.Google Scholar

19 The number of exchanges in the highly competitive South and Midwest fell by 45 percent, and the average number of subscribers per exchange rose almost five-fold between 1902 and 1912, changes due in part at least to the aggressive policy of acquisition and the closing of marginal operations in towns with more than one company.Google Scholar

20 Lipartito, Kenneth, The Bell Sysem and Regional Business: The Telephone in the South, 1877–1920 (Baltimore, forthcoming), chap. 6.Google Scholar

21 Brooks, Telephone, pp. 108–9. Also, Bornholz and Evans. “The Early History of Competition in the Telephone Industry,” pp. 11–12.Google Scholar

22 Brooks, Telephone, pp. 102–7.Google Scholar

23 ATT General Manager's Letterbooks (hereafter GMLB) 631, Sharp-French, 26 August 1901.Google Scholar

24 Ibid.

25 ATT Box 1340, North Carolina Independents, Sub-License Agreement with Asheville Telephone, 16 July 1903. See also ATI Box 1263, Sub-License Contracts. 1898“ “Technology's Retreat: The Decline of Rural Telephony in the United States, 1920–1940,” Social Science History, 11 (Fall 1987), pp. 295–327.Google Scholar

27 Bureau of the Census, Telephones and Telegraphs, 1912, p. 35, table 24.Google Scholar United States Bureau of the Census, Historical Statistics From Colonial Times to 1970 (Washington, DC, 1975), vol. 2, p. 783.Google Scholar

28 This section is taken from Lipartito, The Bell System and Regional Business, chap. 8.Google Scholar

29 Illinois Public Utility Commission Cases, Docket 4462, 4 May 1914; Docket 4235, 1916. See also ATT Box 25, Interstate Telephone and Telegraph Company Acquired by Chicago and Central Union Telephone Company, 1917–1918.Google Scholar

30 Illinois Public Utility Commission Cases, Docket 7966, 18 June 1918.Google Scholar

31 Georgia Railroad Commission, Annual Report, 1914, p. 14.Google Scholar

32 Bureau of the Census, Telephones and Telegraphs. 1912, p. 15, table 5. Today over 90 percent of the public has telephone service.Google Scholar

33 Temin, Peter, The Fall of the Bell System (New York, 1987), pp. 336–66.CrossRefGoogle Scholar