wired nation

Sitting Bull and George Armstrong Custer, 1876

Little Big Horn, 1876

wired nation

Alexander Graham Bell invents the telephone, 1876

• A slowly deployed telecommunications technology

• 1877, Bell Telephone Company created

• Leases equipment to franchisees

wired nation

• The fate of new telecommunications technologies is written, in large part, by the older telecommunications technologies

wired nation

The Western Union/Bell deal, 1880

• Elisha Gray files patent office caveat noting his telephone discoveries on same day that Bell files patent

• Western Union hires Gray to create competing service

• Bell sues for patent infringement

• Settlement: Bell stays out of telegraph, pays Western Union 20 percent of its gross receipts

• Western Union mostly stays out of telephone Elisha “Bitter, moi?” Gray

wired nation

Bell marketing strategy• Target business customers• Doctors, pharmacists,

attorneys . . .• Charge about 10% of a

non-farm employees wages

• $40 to $60 USD a year in San Francisco for service

• New York / New Jersey served 7322 customers – only 1442 residential

wired nation

Slow telephone growth in the late 19th century

• 1880: 60,000 customers (1/1000 people)

• 1893: 260,000 customers (1/250 people)

wired nation

Euro-telephone regulation

• Gave phone companies geographically limited franchise licenses

• limited development so not to compete with telegraph

• taxed profits heavily• nationalized phone

service in Britain and France

wired nation

per capita use of telephone, 1895

• United States: 1/208

• Britain: 1/305• France: 1/216• Germany: 1/397

wired nation

Rise of independent phone companies

• 1894: 285,000 phones, almost all Bell system

• 1904: 3.36 million phones, half of them linked to independent systems

• 1911: over 80 percent penetration of telephone use throughout the United States

• about 11 times the penetration of Europe