Genius on Hold Page #2

It's no secret that Bell

is the only telephone company

in America.

It was designed that way.

Bell Telephone began

in 1877,

with inventor

Alexander Graham Bell.

Bell succeeded

with his invention

and secured the patents

in 1876 and 1877.

The patents were

a contentious issue,

when many rivals

challenged Bell's right

to the invention.

During the 17 years

in which Bell

held the telephone patent,

he faced no less

than 600 lawsuits.

Once Bell's patent expired,

tens of thousands

of independent

telephone companies

sprung up across America.

Surprisingly

to the Bell system,

they were serving the areas

that Bell

had basically ignored.

So Bell started in Boston

and kind of slowly spread

from the Northeast

to the rest of the country.

And the independent movement

started in the Midwest,

or what, at the time,

they called the West,

places like Ohio, Indiana,

and Illinois,

and, ah, tried to spread

into the big cities.

And so, these companies

achieved astounding levels

of telephone penetration.

The telephone business

suddenly exploded,

but the thousands of new,

competing telephone companies

produced a new set of problems

for Bell.

They had, indeed,

underdeveloped the country,

so they entered a race

with the independents

to build out

the rest of the country.

That was

reasonably successfully,

and again, it was very good

for the consumer

because, ah, it spread

telephone service further

and further

into the country,

and deeper and deeper

into the cities.

And they lowered

their prices.

Uh, but the next thing

they did,

was they realized

that they were not going to

out-compete the independents

in most of these places.

As a young man,

Theodore Vail goes to work

for a telegraph company.

That decision

will change the course

of American history.

Vail meets a man

named Gardiner Hubbard,

Alexander Graham Bell's

father-in-law.

Hubbard hire Vail

to run his new company,

called

American Bell Telephone.

By 1907,

J.P. Morgan,

with London and

New York backers,

are in a state of panic.

Bell Telephone is suffering

from a poor public image,

low staff morale,

poor service,

and serious debt

and technological problems.

Vail had left the company

by this time,

but he is brought back.

Vail was very surprised

at how Bell

was basically losing

this struggle,

or, at least,

not assured of winning it.

So, Vail was brought back

in 1907,

um, by some of

the Morgan interests

who injected capital

into the AT&T,

and he, again, said

we need to rethink this whole

business of competition

in telephony.

We need to move towards

what he called

"One system, one policy,

universal service."

And by that, Vail meant

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