AT&T

Definition

AT&T, or American Telephone and Telegraph Company, is a telecommunications conglomerate that has played a significant role in the development of the telephone industry in the United States. Founded in 1885, AT&T became the dominant provider of telephone services and held a monopoly on long-distance communication until it was subjected to antitrust legislation in the 20th century, which aimed to promote competition and regulate monopolistic practices in business.

5 Must Know Facts For Your Next Test

1. AT&T was originally created as the long-distance division of Alexander Graham Bell's Bell Telephone Company, which revolutionized communication with the invention of the telephone.
2. In 1913, AT&T entered into an agreement known as the Kingsbury Commitment, which allowed it to maintain its monopoly on long-distance services while agreeing to provide local service through independent companies.
3. The company's monopoly came to an end with the landmark antitrust case United States v. AT&T in 1982, leading to the breakup of the Bell System into several regional companies.
4. After the breakup, AT&T shifted its focus from providing local telephone service to becoming a major player in telecommunications technology and innovation.
5. In the years since its breakup, AT&T has expanded into various sectors, including wireless communications, broadband services, and media through acquisitions like DirecTV and Time Warner.

Review Questions

• How did AT&T's monopoly influence the development of telecommunications in the United States?
  • AT&T's monopoly significantly shaped telecommunications by standardizing technology and expanding telephone networks across the country. By controlling long-distance communication, AT&T facilitated widespread access to telephones and communication services, leading to increased connectivity. However, this monopoly also stifled competition and innovation until antitrust regulations intervened, ultimately promoting a more competitive market.
• Discuss the impact of antitrust legislation on AT&T and the telecommunications industry as a whole.
  • Antitrust legislation fundamentally changed AT&T's operations by breaking up its monopoly in 1982, which resulted in the creation of several independent regional companies. This breakup fostered increased competition within the telecommunications industry, leading to lower prices and improved services for consumers. The shift opened doors for new technologies and service providers, reshaping how communication services were delivered.
• Evaluate the long-term effects of AT&T's breakup on its business strategies and market presence in today's telecommunications landscape.
  • The breakup of AT&T had lasting effects on its business strategies, prompting a shift towards diversification and innovation in telecommunications. In response to increased competition from various providers, AT&T focused on acquiring companies and expanding its service offerings beyond traditional telephony. Today, AT&T is not only a leader in wireless communication but also competes in broadband and media sectors, reflecting a dynamic adaptation to an evolving market while still facing challenges from emerging competitors.

Related terms

Monopoly: A market structure where a single company or entity has exclusive control over a commodity or service, limiting competition.

Antitrust Laws: Legislation enacted to promote competition and prevent monopolistic practices by regulating the behavior of businesses.

Bell System: A system of companies led by AT&T that provided telephone services in the United States from the late 19th century until its breakup in 1984.