telecom@eecs.nwu.edu (TELECOM Moderator) (07/25/89)
In Monday's Digest, Kevin McConnaughey raised an interesting point by asking what might happen to rural (or less populated areas) phone service over the next few years as the plant began to wear out. He wondered if AT&T would show the same interest in 'universal service' they have shown in the past when expenses involved in upgrading and maintainence began getting heavy. Interesting he should mention it.... A little known side to the long, and admittedly sometimes sordid history of the American Telephone and Telegraph Company was its constant grab for small telcos from the early years of this century until the mid-point, when the Supreme Court ruled that AT&T was not to acquire any more operating companies, with a few exceptions; one being if a local operating company was bankrupt, or otherwise in imminent danger of discontinuing operation, then AT&T <had> to take it! AT&T had its own rules where the farmers were concerned, however, and they found in King Roosevelt II their arch-enemy. He threatened to 'nationalize' Mother a couple of times, or break her up. Until about twenty years into this century, electricity was not available to the farmers. No one wanted to go to the expense of running electrical lines. One depression-era project of King Roosevelt II was the Rural Electrification Administration. The REA was charged with the task of getting electrical power to the many rural areas of America. When AT&T stalled on supplying phone service, citing the prohibitive costs of installation and maintainence for just a few people, well, King Roosevelt decided to make the Rural Electrification Administration do it instead. With loans guarenteed by the federal government -- a very important part of the project in depression times -- the REA helped hundreds of tiny little telephone cooperatives set up shop across America. The farmers in a given area pooled their money, supplemented with a federally guarenteed loan, and built the building, bought and installed the switchboard, and typically, hired their wives and daughters to run the board. Usually three or four telephone cooperatives in nearby areas would share the services and employment of a single techician who variously went from house to house repairing/installing instruments, repairing the switchboard as needed, and maintaining the outside wiring. AT&T was 'gracious enough' to let them interconnect for a nice fee, provided the farmers installed the wire to the nearest AT&T point-of-presence, which might be twenty miles down the highway or wherever. And of course there were interconnections to neighboring telephone cooperatives as well as the exchange in a neighboring town of some size. The rules and regulations of service, and the prices, were set by the members of the cooperative, at periodic meetings. One such group, typical of most, was the River Valley Telephone Cooperative Society, with 26 subscribers. The officers met monthly to discuss business, and at semi-annual meetings of the members of the Corporation, rates and policies were discussed. For years, these cooperatives paid on their mortgages. Almost two decades later, most of them were finally able to 'burn the mortgage' and own their building and (by now severely antiquated!) exchange plant free and clear. And once the mortgage was paid off, who showed up on the scene? Why AT&T of course! So here sit a bunch of people with twenty year old apparatus, long since technically obsolete, but at least with the outside plant and subscriber base in place, and AT&T offers them a few cents on the dollar to buy them out. By now the switchboard operator is an old lady and she wants to retire; they can't find any younger people who want to work for the cooperative at the low wages they were paying their wives and daughters all these years; the equipment needs almost constant (and costly) repair; and AT&T steps in as savior..... I have my doubts about AT&T's motives, frankly. But curiously, almost as soon as the mortgages were paid, the Mother Company was on the scene, ready to pounce. Or sometimes they would wait until a disaster hit, then move in. When the Richmond, Indiana central office burned down on Easter Sunday morning many years ago, before the ashes had cooled, executives from Indiana Bell and AT&T were on location, tsk-tsking and poking in the rubble. The little telco there was a family operation; the same family had owned it for forty years. You can assume the insurance came nowhere close to covering the fire losses in what had been a losing business for a few years anyway. AT&T bought them out, midst the rubble, pennies on the dollar. *That* was the way AT&T did business for years. That was how they acquired telcos by the hundreds and achieved their monopoly status. When they moved into Chicago in the early twenties to take over the Chicago Telephone Company it was far from a gentle takeover. The stockholder fights went on for two year afterward in the courts. I cannot fault AT&T's technical standards in any way. I cannot fault their end results: the finest telephone network in the world, bar none. But it was very bloody at times, with court battles the norm instead of the exception to the rule. And there were many small telcos which flatly refused -- and still do so to this day -- to sell out to Bell. It was the bitter fighting with AT&T and the need for mutual protection against AT&T which led to the formation of USITA -- The United States Independent Telephone Association; a group that today is on the best of terms with AT&T, and frequently has executives of AT&T as guest speakers at their annual conventions, etc. Yesterday, Jon Solomon said it was the greed of the AOS people which kept the drive going for divestiture. Maybe, but AT&T's own image in the early years of this century has not been forgotten by a few people either; people who cheered when AT&T finally got its come-uppance. In defense of Sprint/MCI et al, I must say that for the first forty years or so of its corporate existence, AT&T was just as bad, or maybe worse in terms of sheer greed. Remind me to post an article sometime on their reaction to the companies which manufactured telephones in the early years of this century after Mother's patent expired. Talk about ruthless! Patrick Townson