Commercial growth of the telephone

In 1876 American inventor Alexander Graham Bell ushered in a new era of voice and sound telecommunication when he uttered to his assistant the words, "Mr. Watson, come here; I want you," using a prototype telephone. Bell received the patent for the first telephone, but he had to fight numerous legal challenges to his patent from other inventors with similar devices. Bell was able to make his prototype telephone work, and this enabled him to attract financial backers, and his company grew. The telephone was a vast improvement over the telegraph system, which could only transmit coded words and numbers, not the sound of a human voice. Telegraph messages had to be deciphered by trained operators, written down, and then delivered by hand to the receiving party, all of which took time. The telephone transmitted actual sound messages and made telecommunication immediate. Improved switching technology (used to transfer calls from one local network to another) meant individual telephones could be connected for personal conversations.

The first commercial telephone line was installed in Boston, Massachusetts, in 1877. Early telephones required direct connections to other telephones, but this problem was solved with telephone exchange switches, the first of which was installed in New Haven, Connecticut, in 1878. A telephone exchange linked telephones in a given area together, so a connection between the telephone and the exchange was all that was needed. Telephones were much more convenient and personal than telegrams, and their use quickly spread. By 1913 telephone lines from New York City to San Francisco had been established, and by 1930 radio signals could transmit telephone calls between New York and London, England. Eventually, long-distance telephone service in the United States was consolidated into one company, the American Telephone and Telegraph Company (now known as AT&T Corp.), which was a regulated monopoly.

THE EMERGENCE OF BROADCASTING

Telephones and telegraphs are primarily private means of communications, sending signals from one point to another, but with the invention of the radio, public communications, or point-to-multipoint signals, could be sent through a central transmitter to be received by anyone possessing a receiver. Italian inventor and electrical engineer Guglielmo Marconi transmitted a Morse-code telegraph signal by radio in 1895. This began a revolution in wireless telegraphy that would later result in broadcast radios that could transmit actual voice and music. Radio and wireless telegraph communication played an important role during World War I (1914-1918), allowing military personnel to communicate instantly with troops in remote locations. United States president Woodrow Wilson was impressed with the ability of radio, but he was fearful of its potential for espionage use. He banned nonmilitary radio use in the United States as the nation entered World War I in 1917, and this stifled commercial development of the medium. After the war, however, commercial radio stations began to broadcast. By the mid-1920s, millions of radio listeners tuned in to music, news, and entertainment programming.

Television got its start as a mass-communication medium shortly after World War II (1939-1945). The expense of television transmission prevented its use as a two-way medium, but radio broadcasters quickly saw the potential for television to provide a new way of bringing news and entertainment programming to people. For more information on the development of radio and television, see Radio and Television Broadcasting.

GOVERNMENT REGULATION

The number of radio broadcasts grew quickly in the 1920s, but there was no regulation of frequency use or transmitter strength. The result was a crowded radio band of overlapping signals. To remedy this, the U.S. government created the Federal Communications Commission (FCC) in 1934 to regulate the spreading use of the broadcast spectrum. The FCC licenses broadcasters and regulates the location and transmitting strength, or range, stations have in an effort to prevent interference from nearby signals.

The FCC and the U.S. government have also assumed roles in limiting the types of business practices in which telecommunications companies can engage. The U.S. Department of Justice filed an antitrust lawsuit against AT&T Corp., arguing that the company used its monopoly position to stifle competition, particularly through its control over local telephone service facilities. The lawsuit was settled in 1982, and AT&T agreed to disperse its local telephone companies, thereby creating seven new independent companies.

In 1996 the U.S. government enacted the Telecommunications Reform Act to further encourage competition in the telecommunications marketplace. This legislation removed government rules preventing local and long-distance phone companies, cable television operators, broadcasters, and wireless services from directly competing with one another. The act spurred consolidation in the industry, as regional companies joined forces to create telecommunications giants that provided telephone, wireless, cable, and Internet services.