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Alexander Graham Bell invents the telephone, 1876
• A slowly deployed telecommunications technology
• 1877, Bell Telephone Company created
• Leases equipment to franchisees
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• The fate of new telecommunications technologies is written, in large part, by the older telecommunications technologies
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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
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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
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Slow telephone growth in the late 19th century
• 1880: 60,000 customers (1/1000 people)
• 1893: 260,000 customers (1/250 people)
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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
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per capita use of telephone, 1895
• United States: 1/208
• Britain: 1/305• France: 1/216• Germany: 1/397