TELECOM Digest OnLine - Sorted: Re: We've Come So Far ...

Re: We've Come So Far ...

Lisa Hancock (
Mon, 25 Jun 2007 08:41:55 -0700

On Jun 21, 10:42 pm, John Mayson <> wrote:

> I know my parents, grandparents,
> aunts, and uncles all hated The Phone Company.

I don't know where they lived, but big utlity companies had an image
problem, many people distrusted them and felt their rates were too
high. In the 1930s there was great distrust of the electric power

Utility rates _did_ run high in many places because the companies
tended toward very heavy duty construction so as to provide reliable
service and accomodate peak demand. Many people took that reliability
for granted. Some utility buildings were examples of fine
architecture which of course the customers paid for.

In some towns, the utilities were locally or govt owned and service
quality there wasn't as good. Some (not all) "independent" local
telephone companies weren't very good; those people certainly
appreciated Bell System service when they could get it.

> I do understand that AT&T took us from having effectively zero telephone
> infrastructure to having service in virtually every nook and cranny of our
> very large nation, and making it one of the most reliable systems of any
> kind anywhere in the world.

In electro-mechanical days, that didn't come cheap. The engineering
necessary to tie it all together was impressive.

> Yes, but what drove the PC industry to give us better computers at lower
> prices? Competition. If IBM had been granted a de facto monopoly over
> the computer industry where you could only lease IBM equipment, couldn't
> modify it, couldn't run non-IBM software, and have to rely on IBM for all
> repair service, do you think we'd be where we are today with computing?

While competition certainly helped lower component prices, it was also
the _invention_ of super-micro electronics. For example, there was
always brisk competition in TVs and stereos, but the same revolution
in computers allowed home electronics to drop radically in price while
at the same time grow enormously in capabiltiy. In other words, a TV
set or radio didn't change much between 1970 and 1980 but was
radically improved between 1980 and 1990.

Likewise, the innards of the telephone company were quite different in
1980 than they were in 1970 due to technical improvements.

Let's also remember the Bell System--while a monopoly--made advances
in technology to reduce costs from day one. They didn't _have_ to
make the huge investment in Bell Labs, but they did. They kept coming
up with new inventions that reduced the cost of telephone service.

As to IBM, let's remember that IBM _did_ have a de facto monopoly in
punched-card tabulating equipment, but continued to make improvements
to that line. In the 1960s, IBM had a very powerful market position
in mainframe computers but continually invested in improvements.

> Did telephone service become cheaper before or after 1/1/1984?

Someone else answered that question well. Local service is much more
expensive, long distance service is cheaper.

> I do know with the introduction of
> competitive cellular plans in the mid to late 90's and the further
> deregulation of the telephone industry dropped prices considerably. None
> of that would have been possible if we still had pre-1984 Ma Bell.

Bell's ongoing history of improvements and price reductions would
certainly have continued. Remember, nothing is frozen, and the Bell
System would've changed some policies (such as extension rentals) to
reflect changing economics.

> Was it cheap? When I read what phone service cost back then and
> translate into today's dollars, it was outrageously expensive. It's
> no wonder people relied on letters.

Local telephone service, even in today's dollars, was very cheap.
Long distance was more expensive than today. But this is technology.
What did a color television set with remote control cost back then in
today's dollars?

But remember that long distance rates were continually being reduced
over time as new technology came on line.

> But did that meet people's needs? I can see maybe a poor pensioner who
> only made a couple of calls on Sunday. But even then a family of any size
> used the phone too often to make the dirt cheap plan worthwhile.

The overriding goal of the Bell System and the government was to see
that that poor pensioner or poor folk (city or rural) would have an
affordable telephone. So the very basic "entry fee" to get telephone
service was very cheap. If you were a business a single line was
pretty inexpensive too.

As to "meeting people's needs", again this is an issue of technology
availability of the era. Did a fuzzy B&W TV set with tubes that need
regular servicing meet people needs? Did a slide rule meet people's
calculating needs? Did a mainframe with 64K memory meet a large
corporation's needs?

When I was a kid my sister and I would fight over what to watch on TV.
We had the three networks. Having only one TV set did not meet our
family's "needs". But the technology was such at the time this is
what we can afford. Later on sets came down in price enough they we
got a second set. Now people have TVs in their car and on their

It was the same with telephone service. If you needed more of it you
did pay more. Telephone service used to cost more just as TV sets
used to cost more.

> Also, what about companies that didn't additional support? Why should
> they pay for a service they do not need?

That is true. I suspect the "bundled" offerings would've changed even
without divesture. IBM once bundled its service but dropped it.

> Again though, would equipment costs have dropped without competition? I
> don't think they would.

Given that equipment costs had dropped before, there's no reason to
suggest they wouldn't have continued to drop. At any rate,
independent of divesture was the fact that customers could own their
own gear. That was in place and had nothing to do with the breakup.

> It absolutely baffled me that four years after the break-up, my fellow
> AT&T employees were still in denial about what had happened.

The Bell System had its own culture. The unified service/supply
business model was their way and had been quite successful, as you
said, in providing telephone service to every nook and cranny when
before there was none. The service quality was generally quite good.

It used to be in the U.S. that a white collar person could work for a
large corporation for life. You did your job and they took care of
you. Many had multiple generations at work. A lot of the things
offered are now taken for granted (or no longer offered). We don't
have that esprit de corps in so many of our endeavors anymore. I
think we lost something valuable in our society. Others, who may be
making a ton of money from that social change, will see it

Given that culture, it is understandable how the employees felt.

As mentioned, we were working with Bell to build a data network at the
time of divesture. We saw changes at that time and they were _not_
for the better. We were very concerned about the future. The
experiences we had were typical of business at that time.

> I was hired to write programs ... They were doing a lot of tasks by

Well, they did hire you, didn't they? Obviously they were looking
toward computerization.

> My last job at AT&T was part of a project to reconcile circuit
> information versus billing records. It had been such a manual
> process we had customers out there who had been getting service for
> free while others, believe it or not, were being billed (and they
> were paying) for circuits that didn't exist.

Let me point out that TODAY my cable TV carrier frequently fails to
charge people for premium services or charges people for services they
aren't getting. You're talking about a business practice 25 years ago
as a citation of inefficiency, but here it is going on to this day.

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