![]() The Bell operating company took the law to the Indiana Supreme Court. The Hoosier State ruled that telephone operators could charge their subscribers no more than $3 a month for a regular rental. The battle over rate caps in Indiana was particularly nasty. When Bell franchises sprung "measured service" on them instead-essentially pay by-the-call-plans-they organized boycotts, user strikes, and legislative campaigns to get their city councils to regulate telephone service.īell fought these elite consumer crusades in the legislatures and the courts. ![]() They wanted affordable fixed monthly rates. "It is demanded, and daily depended upon, and should be liberally paid for by the capitalist, mercantile, and manufacturing classes."īut the capitalists and mercantile subscribers who Bell coveted weren't interested in good telephone etiquette. "The telephone, like the telegraph, post office and the railroad, is only upon extraordinary occasions used or needed by the poor," declared early Bell manager Charles Fay. Instead consumers sought the ability to make phone calls within their own cities and towns.Īs we've already pointed out, early Bell system managers saw businessmen, retailers, and professionals as the network's main clientele. But most telephone users in the Gilded Age didn't subscribe for long-distance connectivity-the telegraph met that need. The first Bell historians made much of the firm's early advantage when it came to long-distance service. And the telco could begin the crucial process of vertical integration-merging device manufacturing and telephone service. It could establish franchises in all the best locations. The corporation could now amass a new barrage of telephone equipment patents. It first reorganized itself as American Bell, and then as American Telephone and Telegraph in 1899. "It left Bell close to the position of a textbook pure monopolist until 1894," the year that the Bell patents expired.Īs Brock notes, the Western Union settlement and Bell's head start on patents gave it the time to erect entry barriers for the independent companies that would emerge after 1894. ![]() "The Western Union agreement eliminated Bell's strongest competitor and provided additional defense against the entry of other competitors," writes the historian Gerald W. The telegraph company sold its 55-city telephone network to Bell, plus its patent rights, in exchange for 20 percent of Bell's telephone rental revenue. Overwhelmed by the Gould assault and facing patent lawsuits from Bell, Western Union settled. Gould's main weapon was a hastily built rival telegraph startup that also owned local phone exchanges. The infamous "Robber Barron" Jay Gould was plotting a hostile takeover of the company. But Bell's relative newness proved to be a big advantage in its fight with Western Union, which had formidable enemies. ![]() This prevented Bell from making inroads into commercial regions that relied on Western Union telegraphy. It refused to install telegraph lines in locations where Bell had set up franchises. Western Union resorted to vicious tactics in its fight with Bell. ![]()
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