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Theodore N. Vail and the Civic Origins of Universal Service

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Theodore N. Vail and the Civic Origins of Universal Service Theodore N. Vail and the Civic Origins of UniversalService Richard R. John' DepartmentofHistory, Universify oflllinois at Chicago In 1907,AT&T PresidentTheodore N. Vail proclaimeduniversal service to be a key corporategoal. The followingyear, at Vail'sprodding, AT&T popular- ized this goal in a major publicity effort that historianRoland Marchandhas termed"the first, the mostpersistent, and the mostcelebrated of the large-scale institutionaladvertising campaigns of the earlytwentieth century" [Marchand, 1998].Over the courseof the next decade,Vail himselfexplored its ramifica- tionsin a remarkableseries of reportsand addresses[Vail, 1917]. Though histo- riansquarrel about precisely what Vail meantby universalservice, few doubtits importance. For the next three-quartersof a century,it playeda major role in the firm's businessstrategy and wasa centralelement of its corporateculture. Historical scholarshipon universalservice has been greatlyinfluenced by the antitrustsuit againstAT&T that culminatedin its breakupin 1984. While this work is often suggestiveand revealing,it tends to be far more concerned with the consequencesof universalservice than with the contextout of which it emerged.This paper-which, I should emphasize,is preliminary and exploratory,and an invitation to critique-points the discussionin a different direction. It has three sections. The first sectionsurveys the literatureon the originsof universalservice. The secondproposes an alternativeaccount. The final sectionmakes a few observationsabout the implicationsof this alterna- tive for the Galambosian"organizational synthesis"-and, in particular,for its characterizationof the main lines of institutionaldevelopment in the nine- teenth-centuryUnited States. Historicalscholarship on the originsof universalservice typically link the conceptwith the subjectof inquiry. Historiansof AT&T, for example,almost invariablytrace it back to the beginningsof the firm. Characteristicof this genre are the essayscollected in Ithiel de Sola Pool's SocialImpact of the •lephone,a projectthat grew out of a conferencethat AT&T sponsoredin the mid-1970sat MIT. Though Pool declaredin his introduction that AT&T exert- ed no influenceover the contentsof this volume,it would be hard to imagine a scholarlywork that wasmore congenial to the sensibilitiesof its patron[Pool, 1977,p. x]. With minor variations,all of the essaysin the volume sharea sim- • I would like to thank Sheldon Hochheiserand Kenneth Lipartito for their suggestions and advice. BUSINESS,4NDECONOMIC HISTORY, Volume Twenty-eight, no. 2, Winter 1999. Copyright¸ 1999by the BusinessHistory Conference. ISSN 0894-6825 72 / RICHARD lh JOHN ilar point of view, making it possibleto treat them collectivelyas the product of a singlemind. From a PoolJanstandpoint, the originsof AT&T's commitmentto univer- sal service could be found in the intentions of the founders of the firm. From the outset,these men-telephone inventorAlexander Graham Bell, telephone promoter Gardiner Greene Hubbard, and telephone managerTheodore N. Vail-envisionedthat the new technologywould eventuallybecome incorpo- ratedinto an integratednetwork that, under a singlemanagement, would bring the promiseof telephonyto familiesas well as businessesthroughout the coun- try and around the world. Given the prescienceof Bell, Hubbard, and Vail, the subsequentrise of the Bell Systemwas a "self-fulfillingprophecy" that sprang,as it were, more-or-lessfully clad from the brow of its creators[Pool, 1977,p. 132]. The key to the founders'success was their ability to comprehendthe essen- tial nature of the new technology. They sawthe future with "such clarity"-or so Pool contended-becauseof the congruencebetween their outlook and the "verytechnology of the telephone" [Pool, 1977,p. 8]. From a Poolianstand- point, it wasbut a short stepfrom Bell'sfirst telephonepatent in 1876to the establishmentof AT&T as a long-distancesubsidiary in 1885 to the consolida- tion of the Bell Systemas a legallysanctioned national monopoly in the 1910s. In this decidedlywhiggish and resolutelytriumphalist narrative, the riseof inde- pendenttelephony was but a footnote,as was the role of law, public policy, and the regulatorystate. When read today,fifteen yearsafter the break-upof the Bell System,these essayscan be read as prooftexts of a kind of technologicaldeterminism that seemsstartlingly hubristic and naive. The politicalmessage was plain. AT&T's greatness-orso explainedJohn R. Pierce,a scientistat Bell Laboratories,and a contributorto the volume-wasattributable to a unique combinationof tech- nologicalvirtuosity and visionaryleadership. Both were imperiled by govern- mental meddling. Telephonenetworks, Pierce reminded us, were the "largest and most complexsystems in the world." And the foremostof thesenetworks was the Bell System. Yet, if it cameto be imperiledby "drasticgovernment actions"aimed at bringingit in line with "current ideology,"it might swiftly "degenerate"in a veryfew years[Pool, 1977, pp. 181,187]. ThoughPierce was a bit vagueabout the kinds of degeneracyhe had in mind, he expressedspe- cial concernabout the evils of interconnection. Should somegovernment reg- ulator, for example,have the temerity to permit telephone usersto attach a non-Belltelephone to the network,serious injury or even electrocutionmight well be the result [Pool, 1977,p. 192]. Vestigesof the Pooliantradition lived on in GeorgeDavid Smith's_/lnatomy ofa BusinessStrategy and RobertW. Garnet's7•lephone Enterprise, the first two vol- umes of the Johns Hopkins/AT&T seriesin telephone history. Like the Poolians,Smith and Garnet found in the earliestyears of the Bell Company the seedsof its later glory. For Smith, a key turning point wasthe acquisition of WesternElectric in 1881-an event that set the stagefor Bell'spreeminence THEODORE N. VAIL AND THE CIVIC ORIGINS OF UNIVERSAL SERVICE/ 73 in industrialresearch; for Garnet,it wasthe firm's establishment,beginning in the late 1870s,of closerelations with the operatingcompanies-a precursor to the Bell System. Interestinglyenough, one historianwho appearedto dissent from this view was Louis Galambos-the editor of the series. Indeed, in a notable essayon Vail, Galambostook careto distinguishhis businessstrategy during his first careerat Bell-which ended in his departurefrom the firm in 1887-from the strategythat he pursued in his second career following his return in 1907 [Galambos,1992]. Both Smith and Garnet groundedtheir monographsin the structural-func- tionalist frameworkthat Alfred D. Chandler,Jr., used so effectivelyin the VisibleHand [John, 1997a]. Far different in approachwas the fourth volume in the Hopkins/AT&T series-KennethLipartito's study of telephonyin the South. In this monograph,and also in a relatedseries of articles,Lipartito movedfrom an internalisttoward a contextualistunderstanding of Bell'sstrategy. It was not technologyand markets,Lipartito contended,but skillful entrepre- neurship,in conjunctionwith an "almostirrational" commitment to intercon- nection, and-most important of all-the activecooperation of stateregulatory bodies,that translateduniversal service into a reality [Lipartito, 1989a,p. 225; Lipartito, 1989b]. Lipartito did not rejectoutright the possibilitythat the ori- gins of universalservice antedated Vail's articulation of this ideal in 1907. Yet his primary interestwas the conjunctionof eventsthat Vail's return helpedto inspire. Indeed, to a greaterextent than any other historianwho focusedpri- marily on AT&T, he wasopen to the possibilitythat, had AT&T executivesnot provedso successfulin manipulatingthe political setting,government regula- tors could conceivablyhave made a superior"public choice"[Lipartito, 1989b]. Historianswhose main interestlies elsewherethan AT&T have been, per- haps not surprisingly,markedly less inclined to trace the originsof universal serviceto the foundersof the firm. A casein point was Milton L. Mueller, Jr.'s., UniversalService, the most extensiveanalysis of the economicdimensions of universalservice in American telephonyduring the opening yearsof the twentiethcentury [Mueller, 1997]. If the Pooliansread at timesa bit like defen- dantsin the AT&T antitrust suit, Mueller was a star witnessfor the prosecu- tion. In the Vail era, Mueller explained,the conceptof universalservice had far more to do with the interconnectionof existingtelephone service than with the extensionof telephoneservice to under-servedregions. Only later would the conceptbecome synonymous with the establishmentof a nation-wide,low- cost, cross-subsidizedresidential phone networkthat, during the antitrustpro- ceedings,AT&T's championsmisleadingly claimed to have been one of its defining featuresall along. How, then, did Mueller explain the originsof universalservice? Its true creators,he contended,were the swarm of daring, imaginative,and (at least implicitly) sociallyprogressive independent telephone promoters who, follow- ing the lapseof the Bell telephonepatents in 1894,established telephone serv- ice for the many regions that Bell managershad declined to serve. Given Mueller'stheme, it is, perhaps,not entirelysurprising that his book appeared 74 / RICHARD R. JOHN in a seriesthat was sponsoredby the conservative,free-market-oriented AmericanEnterprise Institute. After all, it can be read-which,indeed, seems to have been Mueller's intention-as a brief for today'stelecommunications upstarts,and a forthrightcritique of any effort to re-regulatethe industryfol- lowingthe breakupof AT&T. Equally critical of Poolian orthodoxy was Claude
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