AT&T Corporation can trace its root to the American Telephone and Telegraph Company. The original company was founded in 1885 by American Bell to create a network of long-distance communication nationwide with a commercially viable cost-structure. In 1899, the company in turn acquired the assets of American Bell in order to bypass Massachusetts corporate law that limited the capitalizations of corporations. By 1915, long distance telephone service reached San Francisco and transatlantic services began in 1927.
AT&T Corporation eventually became the dominant telephone company in the United States, holding a virtual monopoly over communication services for most of the 20th century. The corporation controls the communication lines, structuring its acquisitions of smaller companies, and selling off non essential smaller phone companies to bypass the monopoly laws of the time. The company even controlled the distribution of telephone units themselves, as they were leased to the customer while AT&T retained ownership of the hardware.
By 1982, the monopoly is considered ended when the U.S. Department of Justice successfully brought an antitrust suit against AT&T. The company agreed to split into smaller regional Bell Operating Companies for a chance to gain a foothold into the computer business.
Southwestern Bell Corporation was one of the “Baby Bell” as they were called after the split up. The corporation was transferred full ownership in 1984. By 1995, after several mergers and acquisitions, the company changed to SBC Communications. In 2005, SBC in turn purchased the AT&T Corporation and decided to change its name to AT&T Inc., its brand name, as well as its New York Stock Exchange ticker symbol to T that was used by AT&T.
As a result, by 2006, eleven out of the twenty two companies that were divested by the AT&T Corporation in 1984 have recombined by merger and acquisition to form the AT&T Inc. that we know today.
The Benefits of HindsightUnder the current market condition, the economy has just recovered from an extended recession. The pace of recovery is slow and may drag on for a couple years. The pace of technology marches on, however, and AT&T may want to take advantage of the slow employment market and low construction costs to build and extend its infrastructure
The iPhone adaptation has put AT&T at the forefront of the wireless data communication service providers. The implementation of 3G and 4G network allows the company to provide faster voice and data services over its competitors. Verizon is rumored to introduce its own version of the iPhone that is compatible with Verizon’s network. The feature sets may be limited at first, but AT&T needs to maintain a unique product to catch up to Verizon in the wireless communication market. Consumers will soon be able to purchase the iPad from Verizon stores, eliminating AT&T single source distribution relationship with Apple Inc. for the iPhone and iPad.
Similarly, it was a race to implement fiber optic lines to homes that both AT&T and Verizon are engaged in. AT&T has the U-verse subscription server, while Verizon market FIOS. Both combined Voice over IP, high speed internet, and subscription television into one package at a price better than buying each service separately. AT&T method of distribution gives it a slight advantage in the beginning.
The company opted to deploy fiber optic in main distribution nodes, while relying on copper lines to transmit services to the customer homes. Verizon chose to deploy fiber optic lines directly to the home, and had to replace all the copper lines. For this reason Verizon takes longer to deploy their network. However, over the long run, as consumer demands for data and bandwidth increase, AT&T network will be limited by the inherent speed offered by copper lines.
As a result, with Verizon playing catch-up to AT&T in the market of delivering high speed data to the customer, AT&T cannot afford to maintain its current pace of deploying new products. With the economy on the verge of turning around, there are potentials for more business and the economic conditions improve. Now is a good time to invest intoinfrastructure and labor as both are still cheap, reeling from economic impacts.