TELECOM Digest OnLine - Sorted: Bell System Competition: Private Telephone Networks

Bell System Competition: Private Telephone Networks

Lisa Hancock (
21 Oct 2004 21:16:47 -0700

It is often said that the old Bell System was a strict monopoly on
telephone service. That wasn't 100% true. Many large organizations
had their own internal telephone systems that were not Bell supplied --
those companies chose to lease/buy their systems from someone else
rather than Bell. AFAIK, those systems were internal only and could
not connect to the outside Bell network, but their internal network
could be quite large.

In an old Bell Telephone employees magazine, they had an article about
that. They had a picture of a businessman with two phones on his desk
and the story described how that arrangement was costing the Bell
System lost business. They wanted employees upon seeing that to
encourage the customer to go 100% Bell.

I wonder what the actual cost differentials were between self-
ownership and self-maintenance (which included capitalization)
vs. leasing from Bell. I also wonder how much effort and thought Bell
gave to that competition -- did they ever consider lowering their
rates or selling equipment for such large installations?

In small offices, there was competition between privately purchased
intercoms between boss and staff vs. key systems with intercom lines.
In old movies the Boss always had an intercom box on his desk in which
he buzzed in staff, but I've never seen that. Most big key systems
I've seen had dial intercoms or push button signal buzzers.

I presume large organizations had their own because it was cheaper to
own and maintain their system than lease it from Bell, and having
outside connectivity wasn't important. Indeed, sometimes companies
did NOT want outside connections for internal phones to avoid
employees wasting time on the phone on personal calls.

In such facilities, offices that had contact with the public would
have double phones, but most locations would have only an internal

Private networks were easy to spot since, esp in later years, the
private phone would be an AE 40 with a numeric-only dial with the
silvery bands compared to a Bell 500 set.

The installations I'm aware of tended to phase out in the 1980s
because the equipment/wiring got old and tougher to maintain. I
suspect Bell Centrex rates for multiple locations became more
attractive at the same time.

I also know some large installations, such as large hospitals, that
were 100% Bell. At least one Bell employee (sometimes more) was
assigned to the property full time to handle repairs and changes.
Despite the advantage of outside connectivity, some phones were
restricted and not allowed outside connections. Indeed, it was quite
common on many Bell PBX systems to restrict stations to making
internal calls only, and receiving calls were screened by the operator
based on company policy. Pay phones were liberally provided for
employees to make their personal calls. (I remember office buildings
having a few pay phones on every floor plus a big bank in the lobby,
factories had pay phone near restrooms; that's no more).

Some large network examples:

City transportation company: A large dial system connecting
all subway-el stations, offices, shops, and key street locations.

City govt: A large dial system connecting police and fire stations
and streetside call boxes and other affiliates (ie hospitals). For
example, a hospital emerg room had a city PAX phone.

Schools: Internally connecting classrooms with the school offices.

Large factory plants: connecting various shops and offices.

Railroads: These were very large networks, connecting stations,
headquarters, shops, offices and wayside stations. These was
particularly important since otherwise toll charges would be incurred.
Railroads had their own signal depts, so they could easily maintain a
phone system. Wayside phones were often local battery (crank), and
many remained in service through the 1980s. Railroads also had
internal Teletype networks.

Additional observations/comments welcome.

[public replies, please]

[TELECOM Digest Editor's Note: When I was growing up, the Standard
Oil Company refinery in Whiting, Indiana had an independent
network like that, called 'Stanotel'. Stanotel went everywhere in
the USA that Standard Oil went and the thing I thought was odd was
that although it was fully automatic (a PAX type thing, using the
Automatic Electric type phones you mentioned), when one dialed a
'9' to get an outside line in Whiting, because Whiting was still a
manual exchange (it would not be dialable as 219-659 for several
more years), after you dialed '9' for an outside line, you then
had to sit there and wait for the Whiting operator and pass her the
number you wanted to call. Then after Whiting cut to dial, as
219-659 soon thereafter Stanotel was changed over to Illinois Bell
centrex as 219-484, while retaining all the features of the old
Stanotel network. PAT]

Post Followup Article Use your browser's quoting feature to quote article into reply
Go to Next message: Marcel Riley: "Partners Wanted"
Go to Previous message: Monty Solomon: "EPIC Alert 11.20"
Next in thread: Jim Haynes: "Re: Bell System Competition: Private Telephone Networks"
May be reply: Jim Haynes: "Re: Bell System Competition: Private Telephone Networks"
May be reply: Julian Thomas: "Re: Bell System Competition: Private Telephone Networks"
TELECOM Digest: Home Page