Technology

The Rise and Fall of the American Telecommunications Empire


From the invention of the telephone, America ushered in a glorious era of telecommunications that spanned centuries.

“If Meucci could have paid the $10 patent maintenance fee after 1874, Bell would not have obtained the patent,” prefaced the 107th Congressional Resolution (HRes 269) of June 2002. officially acknowledged the contributions of Antonio Meucci, who is credited with inventing the telephone. Even so, the resolution was criticized for being factually flawed and for not modifying the status of a telephone patent granted to Alexander Graham Bell.

Now, when it comes to the “father” of the telephone, people often know more than the controversial 1876 patent story between Alexander Graham Bell and Elisha Grey. But after all, all three of these inventors made great contributions and ushered in the modern era of telecommunications, especially the rise of the American telecommunications empire for more than a century.

The Rise of the American Telecommunications Empire

As the telephone evolved, AT&T (formerly Bell Telephone) and Western Electric (subsidiary of AT&T) dominated the US market. By the 1900s, Western had extended its tentacles to Austria, Belgium, Canada, China, Germany, France, Italy, Japan, the Netherlands, Russia, and the United Kingdom with 59% of the global appliance market in 1913.

Since its founding in 1925 and until its divestment in 1995, AT&T’s Bell Labs has been called “the world’s greatest industrial laboratory” for the most important inventions of the century. 20 such as cell technology, digital switches, fiber optics, lasers, transistors, solar cells, satellite communications, undersea cables, and UNIX operating systems.

What makes America’s telecommunications system an empire is its close relationship as a closed loop from research-manufacturing-commercial, similar to Bell Labs, Western Electric, and AT&T. This model was also applied by ITT (International Telephone and Telegraph) and quickly became one of the largest multinational companies in the world. It was the company that acquired AT&T’s foreign manufacturing unit under pressure from the Antitrust Bureau in 1925, and by 1972 ITT accounted for 60% of French telecommunications equipment exports, dominated the UK and had a monopoly in Spain.

In terms of scale, Nortel will be the name ranked 3rd in the list of leading US telecommunications corporations in its heyday. The Northern Telecommunications Company (nortel’s predecessor) was originally established by Western Electric to serve the Canadian market, in part because of the high tariff wall that the Canadian government had erected. But again, due to pressure from the US Department of Justice, Western was forced to sell Northern outright to Bell Canada. After being renamed Nortel, the company grew rapidly, especially as AT&T gradually declined in the early 1980s.

Besides the companies mentioned above, Motorola is also a well-known American-born telecommunications brand. Headquartered in Schaumburg, Illinois (USA), Motorola was once one of the leading, most influential companies in the telecommunications and mobile phone manufacturing industries, with the slogan “Hello Moto”.

AT&T, ITT, Nortel and Motorola have brought the US to No. 1 position, when a third of all telecommunications equipment in the world is manufactured in this country, with an export turnover of 13.1 billion USD and a surplus trade surplus is 3 billion USD. By 1999, Nortel had become the second largest supplier of telecommunications equipment in the world, behind only AT&T. This was also the time when Motorola intended to enter the field of broadband communications, but it was the beginning of the demise of a centuries-old telecommunications empire.

The death of the swans…

With Motorola’s decline, it’s remarkable that its history followed a similar pattern of innovation, domination, and collapse. By 2020, the US market will only have 4 national telecommunications companies competing with each other: AT&T, Verizon, T-Mobile, and Sprint. In which T-Mobile belongs to Deutsche Telekom AG of Germany, and Sprint is under the Japanese Softbank Group. These two companies merged in mid-2020 and the Sprint name officially disappeared from the market, leaving the US telecom pie to be divided by foreign brands.

It is hard to imagine how the large American telecom empires could collapse so quickly. Especially when the trend of wireless telecommunications with 5G connectivity is becoming popular, America’s lagging behind in this field makes controversial historic decisions once again appear before the public’s eyes.

Before Motorola left the market, Lucent Technologies – a company founded in 1995 by AT&T itself after being squeezed by the Department of Justice and forced to split into 7 regional companies (RBOC). In 1999, Lucent was the largest telecommunications equipment company in the world, with sales of $38.3 billion, profits of $4.8 billion and employing 153,000 people, and controlled more patents than any other. any other company. However, this brand quickly collapsed after only a short period of time.

Nortel’s story is similar. For much of the journey, Nortel served primarily the modestly sized Canadian market. It was not until the court ordered the opening of the US market in the 1980s that Nortel’s sales there were successful. The Telecommunications Act of 1996 helped Nortel double its revenue from 1997-2000, but like Lucent, Nortel was affected by “a rapid increase in human capital, resulting in increased costs and theft of work. technology” that brought a valuation of $136 billion in 1999 to just $14 billion in 2002, and eventually went bankrupt in 2008.

Who killed the US telecommunications industry?

Once a long period of glory with no competitors, US telecommunications companies are gradually returning to their original starting point and being trapped in the domestic market. While other brands from Sweden, Canada, Korea, and China are in the market, US telecommunications companies can only shrink under trade protection. Where is the source from?

Many argue that American telecommunications companies fail or are acquired due to poor management. If it works better, the story can go in a different direction. As Tim Dempsey, former CEO of Nortel, once said: “The culture of fear and the management system created an environment that allowed poor decisions to be inevitable. But in reality, this is just clumsy consolation, because it is no coincidence that these companies, such as Nortel, can become one of the leading telecommunications companies in the world.

Another view is that these companies are made up of the Bellheads (traditional centralized telecommunications network), not the Netheads (the Internet platform group opposed to the Bellheads) of Silicon Valley, who is changing the world with Internet technology. However, they are not inferior to the technology companies in Silicon Valley and lose to the Bellheads of Europe and China.

The main cause of the collapse of the American telecommunications companies was the administrative and cultural factors, the impact of the challenges posed by the imposition of the Anglo-American economic system, the failure of the Anglo-American economic system. from the anti-monopoly corporate segregation policy and the foreign policy of the US government.

Of course, the planned expansion in China’s foreign industrial policy has also made US telecommunications companies vulnerable to overwhelming competition from rivals. Not only that, but export controls – which are still in place under the Trump administration and new President Biden – have inadvertently blocked the development opportunities of US telecommunications companies. From here, US telecommunications companies gradually become lagging behind and no longer even have the opportunity to turn themselves around…

Diep Luu

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