Chapter 3 Section 2 Prosperity

1995 was arguably the pinnacle of AT&T, and in the next ten short years, it fell apart and ceased to exist. AT&T walked up unhurriedly for a hundred years before climbing to the top, but it only took ten years to go downhill. (Note: Today's AT&T is a facility service company similar to a hydropower company that was merged several times by Southwest Bell, one of the small Bell companies in the past. These companies are collectively called utility companies in the United States and have no technical support. In fact, in the past ten years since 1995, AT&T had two excellent development opportunities, the network revolution around 2000, and the leap in wireless communication that has continued since the mid-1990s. AT&T not only failed to take advantage of the opportunity, but lost its life in these two changes.

AT&T has developed very healthy for a hundred years.Although it has been subject to antitrust laws for a hundred years.However, the U.S. government’s Department of Justice didn’t really want to kill it. Every anti-monopoly actually helped AT&T to prune its leaves and make it develop better.Today, when we talk about AT&T, one of the only two companies in the United States to be split up by the antitrust law, we must look at how AT&T's monopoly position was formed. (Note: Another company that was spun off was Standard Oil.) When AT&T was founded, its telephone technology was protected by patents, so its first ten years of development were smooth sailing.However, as early as 1895, its patented technology was invalidated.Overnight, more than 6,000 telephone companies popped up in the United States.We will mention later that at the beginning of the last century, there were countless automobile companies in the United States.Within ten years, the installed base of telephones in the United States went from two million to thirty million.At this time, AT&T quickly wiped out all competitors through leading technology and successful business acquisitions.By the beginning of the last century, AT&T almost monopolized the telecommunications industry in the United States and had a lot of business overseas. In 1916, AT&T became a company in the Dow Jones Industrial Average 20. (Note 1: The Dow Jones Industrial Index included 20 listed companies in the early days, and later expanded to 30. These 30 companies are large companies in the pillar industries of the United States. Therefore, the Dow Jones has become a blue chip stock—bluechips, because the blue chips are gambling. The chip with the largest face value. Note 2: AT&T has been in the Dow Jones Index until it was replaced by SBC a few years ago. After SBC acquired AT&T in 2005, it inherited the name of AT&T. But this AT&T is not the previous AT&T) Today, this 20 Only General Electric is still in the Dow.

But AT&T's troubles have also come with the company's development, and the US government's Department of Justice is eyeing it. In 1913, under the Justice Department's Kingsburg agreement, AT&T had to rein in its expansion. In 1925, it even spun off its telecommunications business outside of Canada to focus on the US market.The contraction hit on the right foot, enabling it to survive the Great Depression of 1929-1933.It is conceivable that if AT&T had spread too much, the possibility of escaping the economic crisis would be much smaller.In fact, many companies in the Dow Jones Industrial Average did not escape the economic crisis.After the Great Depression, AT&T recovered quickly. After World War II, the telephone penetration rate in the United States reached 50%.Bell Labs also achieved great results.The most worth mentioning is that during World War II, Shannon, a talented young scientist at Bell Labs, proposed information theory.Information theory is the foundation of the entire modern communication.By the 1950s, AT&T had grown to the point where the U.S. government's Department of Justice had to take care of it. In 1956, AT&T reached an agreement with the Department of Justice to limit its behavior again.Antitrust laws force AT&T to rely on technological progress to enhance its own strength.Thus, AT&T consolidated its technological leadership. In 1948, AT&T achieved commercial microwave communication, and in 1962, it launched the first commercial communication satellite.Although some small competitors exist, they cannot shake AT&T's foundation.

For a long time, the price of international long-distance calls in the United States was not determined by the market, but was negotiated between AT&T and the Federal Communications Commission (FCC), and the price was three dollars a minute. The way AT&T calculates its prices sounds reasonable -- how much it costs to lay fiber optic cables and cables, how much it costs to buy equipment, how much it costs to research and develop, how much it costs to hire operators, etc., so only three dollars a minute to not lose money.But in fact, by 2002, when the cost of international long-distance calls dropped to an average of 30 cents a minute, AT&T still had 1/3 of its gross profit.

In the 1980s, the U.S. Department of Justice had to file an antitrust lawsuit against AT&T again.This time, the U.S. government finally won the protracted lawsuit that led to AT&T's first separation in 1984.This anti-monopoly lawsuit is nothing more than pruning the big tree of AT&T.After the pruning, AT&T has developed healthier.Ten years later, AT&T is in full swing again.At that time, AT&T was a world leader not only in the traditional telephone business, but also in the emerging Internet and mobile communications.