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

Re: Bell System Competition: Private Telephone Networks
Fri, 22 Oct 2004 20:58:09 EDT

In a message dated 21 Oct 2004 21:16:47 -0700,
(Lisa Hancock) writes:

> 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.

One company with plants on the Gulf Coast figured it could save a
great deal of money by a private PBX, but chose to use Bell service
because of the Bell System's ability to restore service after a
hurricane. These adjacent plants were served by a 5-digit PBX and the
company maintained its own radar installations from the Sabine River
to Brownsville. This radar network was more extensive than the
Weather Bureau's at the time and the telco often consulted with the
company as to what it's radar showed when a hurricane was in the

> 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?

The Bell companies were heavily regulated and required to serve
all comers at uniform rates. There were anti-trust restrictions on
the sale of Western Electric equipment to other than telephone

> 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.

This was not universally true, in fact may not have been common at all
in later years, since independent manufactures, including A.E., made
phones similar or identical to W.E. phone.

What you describe was true, however, in many older Montgomery Ward
retail stores, complete with two telephones at counters, one the
A.E. set you describe, the other a Bell phone, not necessarily a 500

Newer stores had all Bell phones without the duplication.

> 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.

Railroads and pipeline companies were "right-of-way" companies and
could interconnect with Bell pretty much without restriction,
including such cases as using their own lines to extend to what
otherwise would have been FCO locations. Their PBXs usually had
incoming and outgoing Bell trunks that could dial and be dialed and
connected with the internal communications system, even for intercity

Wes Leatherock

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