In 1876, Alexander Graham Bell was awarded for the patent of the telephone set. Mr. Bell was trying to figure out a way to communicate with his wife who was deaf by creating another form of communication by converting sound. Bell decided to mimic the communications of the telegraph by which coded messages were sent across a cable. Bell was trying to achieve the transmission of voice over the telegraph. Bell and his assistant Dr. Watson dealt with a lot of frustrations in trying to communicate by transmission of voice into electrical currents.

Mr. Bell got lucky one day when he spilled some acid onto his table. The acid acted as a catalyst to produce a battery effect. Without realizing what was occurring, he called out to Dr. Watson. Mr. Bell’s call for help traveled through the wire into another room where Dr. Watson heard it. Bell and Watson realized that if an electrical current was imposed upon a wire that their voices could be transmitted from one end of the wire to the other. The sound waves from their voices were converted to electricity from the transmitter and then converted back into sound for receiver. The two researchers had created a new industry. 

Who Really Invented the Telephone?? 

Something else was going on at the same time in another area elsewhere while Bell and Watson were working on their invention. At the same time, a German inventor named Dr. Elisha Gray was building a similar telecommunication device to Bell’s. Nobody knows who invented the telephone first, but Bell was the first to file with the U.S. Patent Office. Dr. Gray filed a lawsuit against Alexander Bell for stealing his idea but lost the case.           

All of this created the telecommunications industry, and the world has been growing smaller ever since. Many subsequent inventions have come along, among them the fax machine, computer, video equipment and many other terminals that have been developed specifically to connect to the telephone network.  

The First Telecommunications Companies            

After invention of the telephone, several groups of telephone companies were created. Nobody believed the telephone would become a household item and many said the telephone would only be for the wealthy.            

The first telephone company started was the American Speaking Telephone Company, funded by the Western Union Telegraph Company, using equipment developed by Tom Edison and Dr. Elisha Gray.  At the time, the transmitter and receiver used by American Speaking Telephone Company was superior to the equipment invented by Bell.  Edison assisted in the development of the telephone network with his knowledge of electricity and power distribution. While this was going on, The Bell Telephone Company was challenging the American Speaking Telephone Company on the basis of infringement on the patents of the telephone.           

The third telephone company to follow was The New England Telephone Company, which provided both telephones and network services. A problem existed among these three different telephone companies: They were incompatible with one another, so that customers of one company were unable to place calls to customers of another. 

The Regulatory Scene            

The telephone industry was awash in lawsuits and countersuits during the early stages of the telecom industry. Bell was trying to put the other companies out of business on claims of patent infringement. Eventually Bell became the dominant telecom carrier, although thousands of independent telecom carriers remained. The issue of not being able to interconnect to competing carriers remained, and many customers with small independent telecom carriers were unable to make phone calls to outside their own immediate area. Many of the smaller independent carriers eventually went out of business because AT&T wouldn’t let anyone interconnect to AT&T facilities.  AT&T then purchased these failing telephone companies and added them to their own network.           

One major competitor that AT&T was after was American Speaking Telephone Company.  AT&T started buying up shares of Western Union, the parent company of ASTC. Yielding at last to severe public pressure, however, AT&T finally agreed to sell its holding in Western Union, stop acquiring independent telephone companies unless authorized by the Interstate Commerce Commission, and allow independent telephone carriers to interconnect with AT&T.           

In 1921, Congress passed the Graham-Willis Act, establishing AT&T as a monopoly. The company began to insist that only AT&T products and services could interconnect with their network, theorizing that other products and services may harm the nation’s phone service.