AT&T merger means bye-bye Bell

By Stephen Evans BBC North America business correspondent

For decades, AT&T was the US telephone industry

There's not much place for sentiment in business: bottom lines speak louder than chronicles of past glory.

But the takeover of AT&T, announced last week, may be the time to reflect on the history of a firm that was once as important to America as baseball.

The American Telephone and Telegraph Corporation was once the investment vehicle of choice for countless little old ladies with round spectacles.

It was known simply as "The Phone Company".

AT&T wired up a continent in a previous telecoms revolution. In 1939, 98% of all long-distance phone lines in the US were operated by AT&T.

Twenty years ago, it had a million employees, and was the largest company in the United States.

Now, it will survive only as part of SBC Communications - ironically one of the companies that was spun off from it in 1984 as a way of satisfying the Department of Justice's antitrust lawyers.

Ring my bell

It will still be, though, a part of history.

AT&T was the world's first telephone company, a direct descendant of the Bell Telephone Company, formed by Alexander Graham Bell in 1877.

Not just a gimmick, as Bell proved

Bell was a Scot who emigrated first to Canada with his parents and then to Boston where he was a professor of elocution at Boston University. At that time, electric communication existed, but as the telegraph.

Lines crossed continents and even the Atlantic Ocean, able to convey messages - but not direct speech.

The telegraph used an intermittent electrical current: the signal was either there or not so staccato Morse code signals could be transmitted.

Bell realised that speech needed continuous waves of signals so he developed a device that could transmit such patterns.

Calling the future

On 1 July, 1875, Bell managed to transmit voice sounds but not with enough clarity to be understood. It was enough, though, to persuade him to seek a patent.

Or rather, for his business partner Gardiner Hubbard to file a patent application on the morning of 14 February 1876.

In March, Bell tried out his device by talking to his assistant Thomas Watson who was out of earshot at the other end of the hall.

But Watson heard Bell say through the wires and microphone: "Mr Watson. Come here, I want you" - and an industry was born.

One of a kind

Bell and his financial backers created the Bell Telephone Company which issued its first stock to seven shareholders.

Vail insisted AT&T must dominate

For just over a century, AT&T, as Bell's company became, was the industry.

The company's president, Theodore Vail, wrote in 1907 that the telephone by the nature of its technology would operate most efficiently as a monopoly.

There would, he argued, be government regulation "provided it is independent, intelligent, considerate, thorough and just".

Seeing things

And so it stayed until 1984 when the market intervened and AT&T agreed with the Department of Justice to break itself up, releasing the local telephone companies, the Baby Bells to stand alone.

And stand alone they've done - and grown and thrived until one of them has come to dominate the parent.

Bell himself was not a brilliant businessman.

Instead, he was a visionary. While some contemporaries insisted the phone would only be a gimmick, he quickly grasped its communicative potential.

In his original patent application, he wrote: "It is conceivable that cables of telephone wires could be laid underground, or suspended overhead, communicating by branch wires with private dwellings, country houses, shops, manufactories... Such a plan, although impracticable at the present moment, will, I firmly believe, be the outcome."