Once, there was a company with a monopoly so entrenched, a technological advantage so large, a place in the economy so vital, that the government felt that it needed to step in to protect consumers. Actually, it was more than once; ever since Henry Lloyd started raking muck and talking about exactly how the Vanderbilts operated, making moves against the largest and most competition-free companies in the country had been a pursuit of the federal government depending on the political climate; the Sherman Antitrust Act wasn’t only for hassling unions. And so it was that, in addition to railroads and oil companies, the Federal Trade Commision has occasionaly seen fit to investigate information technology. U.S. vs. Microsoft gave Larry Lessig a platform, David Boies a new career, and the world quality entertainment, but it produced little else. The antitrust case launched against IBM in 1972 was such a notorious debacle that many claimed that antitrust was dead. But against the technological juggernaut of the American Telegraph & Telephone company, the FTC drew blood, spurred innovation, saved money for tens of millions of Americans, and crippled one of America’s most storied companies. As a boy growing up in Scotland, Alexander Graham Bell first became interested in sound while trying to communicate with his deaf mother. He followed in von Kempelen‘s footsteps, building a speaking automaton with artificial larynx, lips, and tongue. And before he was thirty, with his mechanically adept partner Thomas Watson, Bell hit upon sending voices down the wires. Watson and Bell had been trying to create a "harmonic telegraph", increasing the bandwidth of existing telegraph wires by transmitting multiple messages simultaneously via sounds at different pitches. Another inventor, Elisha Gray, was working on a similar invention, but Bell and Watson got their first, and Bell’s father-in-law filed the most valuable patent application in American history. Patent 174,465 was issued in March 1876, and though years of lawsuits broke out, the patent held; Alexander Graham Bell and Thomas Watson became rich men and Elisha Gray was relegated to a corner of history as one of the fathers of electronic music.
With its patent — which it enforced aggressively — AT&T controlled the early years of telephone business; running telephone lines is a natural monopoly. AT&T’s broad control over telephone devices and its network of wires and switching stations was a license to print money, although state utility regulation, which guaranteed profits in exchange for control over AT&T’s pricing, placed limits on the companies behavior. Their network was the biggest in the world; Bell Labs was the source of UNIX, of information theory (the creation of AT&T employee Claude Shannon); and the thing that eventually laid Ma Bell low: the transistor. The transistor was perhaps the most important discovery of the twentieth century after penicillin, but it set off a technological revolution that AT&T and its thousands of miles of wire couldn’t contain. A 1949 consent degree involving AT&T subsidiary Western Electric, which forbade Western Electric from manufacturing equipment other than for AT&T’s own use and ordered the company to license patents to outside entities for reasonable fees; in the 1960s, as microchip companies began to be formed in what is today called Silicon Valley, a few upstart companies began to exploit the legal framework in which AT&T operated. In the 1970s, the bands of phone enthusiasts who had been stealthily exploring the depths of the phone infrastructure started discovering computers. And in the 1980s, having aggrevated Congress once too often, AT&T was split asunder, with smaller "Baby Bells" inheriting local lines.
But the transistor had marched on; AT&T’s competitors had discovered that all the fabulous miles of wire, the tens of millions of lines of computer code, was becoming obsolete. Phone phreaks might be enthusiastic about the days of acoustical coupling; collectors might trade antique phone books; people might write nostalgically about the days of exchange names or switchboard girls, but younger companies were dropping in automated equipment by the metric ton. Cable television companies built their own networks. Baby Bells discovered that having the last mile of phone lines was worth much more than being able to criss-cross the country. Internet-based transmission slowly began reducing the cost (and profits) of making a call. AT&T was becoming obsolete. And then it all fell apart at once; stock market observers expect the company to be bought out any day. The ultimate widows and orphans stock is worth less now than it was twenty years ago when the Sherman Anti-Trust Act did its work. The cycle of layoffs seems unbreakable. Once, AT&T was a colossus; one day soon, the only signs left of it in popular culture will be a memorable logo, Superman’s changing booth, and the plot device from a Doris Day movie. Future generations may wonder what they’ve lost, but it’s worth remembering: nobody actually likes the phone company, and it could have been worse.