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System Building at the Margin: The Problem of Public Choice in the Telephone Industry

Published online by Cambridge University Press:  03 March 2009

Kenneth Lipartito
Kenneth Lipartito
Affiliation:
Assistant Professor of History, University of Houston, Houston, TX 77204.
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Extract

This article considers whether natural monopoly conditions or AT'T's market power was responsible for the formation of a single, standardized network in the United States telephone industry. It shows that AT&T was able to move the industry towards a single system under its management through a strategy of competition and compromise with competitors. The article also examines the impact of AT's actions on state regulators, concluding that public officials, lacking necessary knowledge and authority to set policy, ended up supporting AT's position in the industry.

Type
Articles
Information
The Journal of Economic History , Volume 49 , Issue 2 , June 1989 , pp. 323 - 336
Copyright
Copyright © The Economic History Association 1989

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References

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7 Fisher, “The Revolution in Rural Telephony,” p. 8.Google Scholar Mutual companies charged from $3 to $18 per year for service at a time when city exchanges in the farm belt charged $36 to $48 per year. For information on exchange rates, see United States Bureau, of the Census, Telephones and Telegraphs and Municipal Electric Fire-Alarm and Police Patrol Signaling Systems, 1912 (Washington, DC, 1915).Google Scholar

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10 American Telephone and Telegraph Company Historical Archives (hereafter ATT) Box 1348, Sub-Licensing, Advantages to Operating Companies, 1903, Hall-Fish, 31 July 1903.Google Scholar

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18 Garnet, The Telephone Enterprise, pp. 128–46.Google Scholar

19 The number of exchanges in the highly competitive South and Midwest fell by 45 percent, and the average number of subscribers per exchange rose almost five-fold between 1902 and 1912, changes due in part at least to the aggressive policy of acquisition and the closing of marginal operations in towns with more than one company.Google Scholar

20 Lipartito, Kenneth, The Bell Sysem and Regional Business: The Telephone in the South, 1877–1920 (Baltimore, forthcoming), chap. 6.Google Scholar

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24 Ibid.

25 ATT Box 1340, North Carolina Independents, Sub-License Agreement with Asheville Telephone, 16 July 1903. See also ATI Box 1263, Sub-License Contracts. 1898“ “Technology's Retreat: The Decline of Rural Telephony in the United States, 1920–1940,” Social Science History, 11 (Fall 1987), pp. 295–327.Google Scholar

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28 This section is taken from Lipartito, The Bell System and Regional Business, chap. 8.Google Scholar

29 Illinois Public Utility Commission Cases, Docket 4462, 4 May 1914; Docket 4235, 1916. See also ATT Box 25, Interstate Telephone and Telegraph Company Acquired by Chicago and Central Union Telephone Company, 1917–1918.Google Scholar

30 Illinois Public Utility Commission Cases, Docket 7966, 18 June 1918.Google Scholar

31 Georgia Railroad Commission, Annual Report, 1914, p. 14.Google Scholar

32 Bureau of the Census, Telephones and Telegraphs. 1912, p. 15, table 5. Today over 90 percent of the public has telephone service.Google Scholar

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