feel especially honored to salute the rect distance dialing, microwave transmission, employees of the Bell System, who have satellite communications, electronic switching, shared so much of their time and talents and fiber optics, to name only a few. Day in and with me during the 35 years I have spent day out, Bell people have given selfless service, in this business. I admit that I would and they also have volunteered countless hours prefer another occasion upon which to pay to better their communities. tribute, because divestiture has been a difficult The use of our technologies, coupled with the and often painful process for all of us. At the humanity of our work, has touched and funda- same time, however, we have been building new mentally altered every aspect of our lives and enterprises, and I know each of us thrills to the livelihoods. The telephone transmits messages prospect of working in them. of compassion and calls to the moon. Taken for I think divestiture should be remembered for granted though it may be, there is nothing com- the new beginnings it brings us - and for the monplace about this extraordinary system. opportunity it provides to build upon our heri- Telephone service in this country deserves its tage. I, like so many of you, have deep roots in reputation. It is, indeed, the best in the world. the Bell System. My father was a district traffic We take pride in what we have accomplished. superintendent in Richmond, Virginia, at the Our heritage is glorious - and our future ripe time I was born; my mother was a supervisor in for further achievements. Divestiture has acted a Long Lines operating room in New York; and to put the destiny of the business back into the my sister worked as a service representative for hands of those who know best how to run it - New Jersey Bell. Each of us had the service its employees. It was never primarily the orga- ethic - that devotion to helping customers day nization of the Bell System that made the by day and in times of crisis. As a matter of fact, company work, though its organizational my parents first met in Philadelphia, where scheme certainly inspired and aided the busi- they were both on loan to help with the very ness. It was, instead, those assets that have not heavy emergency problems brought on by been subject to the divestiture process: our World War I. As I was growing up, I remember Spirit of Service, our tradition of excellence, our my father missing more than a few dinners in sensitivity to people, our reputation as a re- the course of his travels. He worked hard in sponsible corporate citizen, and - above all - helping to establish overseas telephony and our ability to discern the expectations of the TWX service, and he was very proud of the public and then conform the business to those business. expectations. His pride and dedication were two of the qual- If we continue to display these qualities and to ities that also impressed me about the Bell set them as examples for newcomers to our System people I came to work with. Whether companies, then we will surely live up to the they were the pole climbers who taught me that trust placed in us by our predecessors - and end of the business, or the hundreds of people at the Bell System s heritage truly will become an Long Lines and the operating companies whom enduring one. From the standards we have I met in various jobs in various cities across the lived by for more than 100 years, we can grow country, the employees of the Bell System have in confidence in our individual abilities and been distinguished by their integrity, their stand firm on the fundamentals that have made determination, their enthusiasm, and their this business great: that it is an endeavor prof- devotion to excellence. itable to its owners, useful to its customers, It has taken all these qualities and one more - and, to its employees, worth working for. what the French call élan - to make the vision My wife Ann Lee and I plan to spend a quiet of our forebears in this business become a real- time on New Year s Eve this year, as we usually ity: to link Americans to each other and to the do, but we will more than likely raise a toast to world with direct and almost instantaneous the men and women of the Bell System as they communication. Today, we have made that vi- begin their auspicious adventures. And we will sion a reality. In so doing, we also have given say what we feel in our hearts and what my this country more than a century of continuous family felt before me: that we hold you, collec- and systematic innovation - the transistor, di- tively and individually, in the highest regard. CAVALCADE An introduction to the writers, photographers, and illustrators contributing to this commemorative edition.
THE UBIQUITOUS TELEPHONE
SO WE SAY GOODBYE - AND WELL DONE! R. Z. MANNA The telephone was contemporaneous with Tom Sawyer and EDITOR the self-binding reaper; a charming part of America s mythic C. ANNE PRESCOTT past, a vital component of our technological future. SENIOR EDITOR AND AUTHORS LIAISON LORRIE TEMPLE MANAGING EDITOR PARALLELS WITH THE PAST BOB KINKEAD The perception of historic tranquility and a stormy future for the ASSOCIATE EDITOR Bell companies is mainly an illusion. It s just that hard times past tend RICK WILBINS to mellow in memory, and future unknowns loom larger than life. COORDINATING EDITOR GARY OSLAND DESIGN DIRECTOR LOOKING BACK TO SEE AHEAD BEN PASSANTINO, The years leading to divestiture may provide ROSALIND McDONALD RESEARCH ASSOCIATES guideposts for tomorrow. JAMES T. RYAN DESIGN ASSOCIATE ONE WORLD A. BRIAN SAVIN COUNSELING LIAISON A legend remembers when AT T gave something more than her art a voice.
I S K C. L. BROWN CHAIRMAN OF THE BOARD THE RIGHTSPIRIT WILLIAM M. ELLINGMAUS PRESIDENT JAMES E. OLSON VICE CHAIRMAN THIS HAPPY BREED The people of the Bell System are fondly recalled T. O. DAVIS SECRETARY in a tribute to their character and competence. VIRGINIA A. DWYER VICE PRESIDENT AND TREASURER THE MIRACLE OF TELEPHONE SERVICE The miracle may seem magical, a writer discov- ers, but it s wrought by telephone people every day.
TELLING TALES The Bell System can be kept alive through the "living memories" of its people.
CORPORATE BONDS Though not based on blood and genes, a corporate community nonetheless possesses strong familial ties.
I B N
SOCIAL STUDIES
Bell Telephone Magazine is published in four editions this BLACK-CORD FEVER year by American Telephone and Telegraph Company, As seen by a child, the telephone was a device into 195 Broadway, New York, New York 10007. Typeset in Century Schoolbook by Franklin Typographers, Inc., New York City. which grown women shouted. For an adult, it s an addiction. Printed by Georgian Press, Inc., Garden City, New York. © 1983 by AT T. Magazine design concept by Paul Hardy. Design assis- tance, Sally Stone. Clerical support, Gary Pletsch, Vivian Hope, PAS DE DEUX: THE BELL SYSTEM AND THE ARTS and Allyn Sitjar. Back issues of Bell Telephone Magazine are available from University Microfilms International, Ann Arbor, In the business of communicating, nothing quite Michigan; all rights reserved. Unless otherwise specified, all does it like the arts. material published in this magazine is the property of AT T and may not be reprinted in any publication without permission in writing from the editor. No part of this publication may be reproduced or transmitted in any form or by any means, elec- 0! PIONEERS! tronic or mechanical (including photocopy, recording, or any The Telephone Pioneers of America face a future information-and-retrieval system), without permission from the editor. Bell Telephone Magazine is distributed by the Bell in which they will be needed more than ever. System units. They bear the expense of the publication. To receive copies, please contact the Bell Telephone Magazine representative in the local or regional Bell unit. P G H BEGETTING A LEGACY A collection of photographs gleaned from the past that portrays the heritage a future can be built upon.
AN EXALTATION OF DISCOVERIES WHERE R MEETS D At that juncture, as Bell Labs has found, freedom and focus undergird the road to success.
LEARNING FROM SCRATCH A writer, unschooled in Bell Laboratories, finds an enterprise worthy of a book - and preservation.
THE BIG SKILL Time may march on, but Western Electric has no trouble staying in step.
P C C
THE BUSINESS OF BUSINESS
"T" AND WALL STREET The stodgy old "widows and orphans" stock has been one of the markets liveliest players for more than 100 years.
A CAPITAL MOTIF The rise of giant corporations, technological innovation, and government oversight played major roles in shaping the Bell System during its first century.
MINDS INTO MATTER Working smarter is the key in an economy increasingly geared to information.
P M T
A SUMMING UP
RITES OF PASSAGE Cultivating a new culture to match new mis- sions may be the most difficult task facing post- divestiture employees.
Illustrations by Ponder Goembel
COVER: The quotation on the cover of this Special Commemorative Edition- a variation on themes uttered in Irish and Hindu proverbs and recast by such writers as Cervantes and Fernando de Rojas - has, over the years, been attributed to Alexander Graham Bell. One story, perhaps apocryphal, has it that these are words of comfort Bell communicated to Helen Keller. Whatever their origin, however, the words are astonishingly appropriate for this particularly poignant moment in Bell System history. (The cover was designed by Tim Girvin of Seattle.)
PHOTO CREDITS: P 4-5: Nancy Rica-Schiff, Bell Labs, Eric Poggenpohl, C. Marshall Wilson, Ted Streshinsky, Elizabeth Pavey, Phoebe Spackman, Roy Stanek, James Karmrodt Lightner, Shirley Boettinger, Eric Dobbs, Roger Ressmeyer, Ponder Goembel, and Roger Rawlings. P 43-44: Library of Congress, M.I.T., Visual Promo- tions. P 44-45: Visual Promotions, AT T Long Lines, Wagner International Photos, Bell Labs. P 46-47: Telephone Museum, Pacific Telephone, Norman Rockwell, Library of Congress, New England Telephone, Illinois Bell, AT T Long Lines, Visual Promotions. P 48-49: Library of Congress, Bell Labs, Visual Promotions, NASA, AT T Long Lines. P 50-51: Western Electric, Telephone Museum, Jim Lincoln, Mike Mitchell, Visual Promotions, AT T Long Lines, Illinois Bell. P 52-53: The Bettmann Archive, Visual Promotions, Al Ramson, The New York Public Library. P 54-55: Folon, Bell Labs, Visual Promotions, Movie Star News, Walt Disney Productions, Ernest Hamlin Baker. GISH BOETTINGER BERNSTEIN
WHITE HAWKEN SCANLON KARCHIN
TCHEREVKOFF CLEMENS PL NY LAMBOS
zine not as a conventional history of Henry M. Boettinger, the writer, con- the Bell System but as a cavalcade of sultant, and lecturer whose second events, an image of the spirit of the Bell edition of T T B be Telephone Age as perceived by the staff published later this year; since his and by the writers, photographers, and retirement as an AT T assistant vice A cavalcade, the dictionaries tell us, illustrators invited to contribute their president in 1977, he has been living in is a colorful ceremonial procession. In reflections and insights. Our guest England. Bobbie Ann Mason, the history-telling terms, as Noel Coward so artists for the edition, in order of award-winning author of S capably demonstrated in his play aptly appearance, are: O S ; a native of Kentucky called C , the procession is made residing in rural Pennsylvania, Mason up of events. Those events are woven Theodore H. White, the historian- is at work on her first novel. Alex into a human saga, as opposed to a mere journalist and writer perhaps most Haley, the author of R , which be- dramatized chronology, when episodes noted for his "Making of the President" came the basis of the successful televi- are constructed and linked together series of books; this is the first corpor- sion miniseries and the inspiration for a with zest and vigor - something the ate magazine assignment he s accepted. renewal of Americans interest in their Italians call ; the result is neither Alvin von Auw, the prolific writer own roots; he lives in Los Angeles and conventional history nor dramatized who participated in the drafting of lectures extensively in the United States chronology but reflections and insights numerous corporate policy statements; and abroad. Michael Novak, the writer of the characters bearing witness to he retired as AT T vice president-assist- who is at present resident scholar in history and telling the story. In journal- ant to the chairman in 1981 and this religion and public policy at the Ameri- istic or literary terms, such a result can year published his book H can Enterprise Institute in Washington, be called Z - an image of the D : R B S D.C.; his most recent books are C - spirit of the age, a recapitulation of the T (excerpts from which of C and T S of trend of thought and feeling in a partic- appear on page 16.) Lillian Gish, the D C . Gregory Heis- ular period of history. revered actress whose career began ler, the Chicago-bred photographer who when this century was young. Steve lists among his choice work contribu- All of this is by way of suggesting to Karchin, the renowned illustrator whose tions to the book A D L readers that they look upon this Special work is a union of found objects, collage, A and a GEO magazine photo Commemorative Edition of the maga- and paint. essay on ballet.
4 BELL TELEPHONE MAGAZINE 1983 NO. 3-4 PENZIAS NELSON DAVIS
GOEMBEL GOEMBEL NOVAK VON AUW
BROWN TUN STALL HALEY MASON HEISLER
Rita Mae Brown, the author of eight Virginia, illustrator whose artwork for veloped for S M R ). books (among them the sleeper R - magazines, corporate clients, and cul- Ponder Goembel, the Philadelphia J ), who is writing a ninth tural association has won more than illustrator whose "fine arts" technique entitled R H ; she lives in Char- 100 awards. includes painstaking applications of lottesville, Virginia, and wonders why thin coats of paint. John J. Scanlon, the former AT T anyone lives anywhere else. Anne executive vice president and treasurer Davis and Gordon Auchincloss, the While this Special Commemorative who drew on his 40 years in the Bell team that writes collectively as The Edition (more than half a million copies System to recount highlights of the Write People; this is their fifth appear- printed) closes a chapter in the maga- enterprise s financial story for this Spe- ance in as many years in this magazine. zine s publishing history, it may not be cial Commemorative Edition. Louis (Auchincloss, by the way, was a writer the last chapter. True, AT T - no longer Galambos, the author of the current for the televised B T H .) able to use the Bell name - will not be A M A ; he is a professor Betsy Plank, the much-honored public- affiliated with the publication; but the of history at Johns Hopkins University, relations practitioner; she s assistant magazine s name and mission have been where he also edits the papers of the late vice president for corporate communica- bequeathed to the Central Services President Eisenhower. Paul Hawken, tions at Illinois Bell. Clint Clemens, Organization. the founder of the near-legendary the distinguished Boston-based photo- Erewhon Trading Company and author I know I speak for all who have served journalist cum sailor and mathematician. of the current T N E . as editor over the years when I say that Michel Tcherevkoff, the photogra- this magazine has offered corporate Arno A. Penzias, the 1978 Nobel Prize- journalists a rare, often rarefied, experi- winner in Physics; he is vice president of pher whose use of special effects has made him a technical wizard in his field. ence. It has been a privilege, really, to be research at AT T Bell Laboratories. (The able to speak for the Bell enterprise sidebar to his article was written by W. Brooke Tunstall, the AT T assistant through a medium that has reached so Steve Aaronson, a member of Bell vice president and director of corporate many, many people. Labs public relations staff.) Jeremy planning who is chairman of AT T s Bernstein, the writer for T N Restructure Implementation Board; he I take my leave of the collective Bell Y who happens to be a professor of has written several articles on corporate System readership sadly and sincerely physics; he s now at work on a book on culture for this magazine (the article in -but, I trust, . Bell Labs. Bill Nelson, the Richmond, this edition is based on material he de- - R.Z. Manna
NO. 3-4 1983 BELL TELEPHONE MAGAZINE 5 The telephone was contemporaneous with Tom Sawyer and the self-binding reaper; a charming part of America s mythic past, a vital component of our technological future.
he future was entirely invis- (population: 5,728). All would change, "user friendly." But it was more than ible - but what a future that however, as all America was to change, that: It was a pathway for ideas, a path- first telephone would intro- by the display at the Exhibition in a way of communication and information; duce! The end-reach of the little room on the second floor of the it was what Ithiel de Sola Pool of MIT simple horned instrument was Massachusetts education section in has called "the facilitator." then, and still is, immeasurable. But the the main building. It would not by itself change the world date of departure can be fixed with a There, a sensitive and earnest young - but the climate of human affairs certainty rare in any revolution. And so voice teacher from Boston, Alexander would change. The first sound waves on any thoughtful historian must start Graham Bell, was displaying a curious Bell s telephone would lead to the slow his story there. device. His mother had been deaf; the recognition that we lived in a world of The year was 1876, one full century young lady he was soon to marry was invisible waves. Some moved by wire, since the 13 colonies had declared their deaf; his mission was to make the deaf some soon would move without wire; yet independence as the United States of able to lead a normal life. His inquisi- later they would bounce back and forth America. Life was not only changing in tive mind had tinkered with mech- from satellites far, far away in space. On America, but speeding. That year, anisms that could control electric these waves could move sound, talk, Thomas Edison had established Ameri- current and transform it from the dit- i mages, then television, then cascades of ca s first research laboratory at Menlo da-dit of the telegraph system into a instantaneous data. In this new climate Park. In Baltimore, Johns Hopkins had new system that would control in the next century, new institutions just been founded as the first American from the lips of a talker to the ear would flourish; old systems would be- university established primarily to offer of a listener. That Spring, in a Boston come as obsolete as the Pony Express. postgraduate education to college men electrical shop, he had perfected a cone- Time and distance would be erased. So who wanted to pursue learning further. shaped instrument that carried a manners, responses, styles, manage- They were the future, but the past still human voice. And then, with little ment of all human life would change. A cast its spell. Samuel Clemens, under pocket money and no change of clothing, revolution was on its way to reshape the his pen name Mark vain, had just pub- he caught a train to Philadelphia to world as completely as the Mosaic revo- lished a bestseller, T S It was, exhibit his invention. lution or the Industrial Revolution in unknown even to the author, a lyric millennia and centuries past. farewell to an America already passing WHO S SNEERING NOW? America, with its vast continental into myth. His America would never He might have been ignored, or even sweep, needed to talk to itself, although come again. But the celebration of sneered at, as did the T of London it did not yet recognize the need - to America s first century of nationhood one year later, which called his tele- talk suburb to city, city to city, coast to had been set: the Philadelphia Centen- phone "the latest American humbug." coast, then continent to continent, earth nial Exhibition; its theme, America s But luck would have it otherwise. On to moon. The entire nerve system of technological progress. June 25, 1876, Emperor Pedro II of society was to change. Others in this It was hot and humid as the Exhibition Brazil visited the fair and, strolling volume will follow with the wizardry of opened. But the exuberance of the then- through the exhibitions, came upon the scientists, the engineers, the crafts- aborning American technology sur- Alexander Graham Bell s room, where men who put together what came to be passed wonder. The first typewriters, he paused to visit the newest American called the Bell System. But few or none self-binding reapers, web printing "magic-maker." Bell s device actually could then chart the effect of the System presses, duplex telegraphs all demon- worked! You could voices, on human affairs and history itself. strated an America just beginning a carried by modulated electric currents. new era of pioneers - men probing Unlike the telegraph, which required technology s control over matter. Phila- trained operators and racing messen- Historians largely focus on the great delphia was then still America s second gers, anybody at all could use a tele- battles and wars that mark the rise and largest city (population: 647,022), sur- phone. Lift the transmitter, speak into fall of empires. They delight in tracing passed only by New York (population: it, and the person on the other end could the dates, episodes, and politics of na- 1,478,103); Los Angeles was a village hear! It was what we would now call tions as kings, queens, presidents, and
6 BELL TELEPHONE MAGAZINE 1983 NO. 3-4 STEVE KARCHIN
chancellors succeed each other in au- emerged the wizardry that changed war. named senators, governors, presidents. thority. So, disciplined by history, we The Labs research - and the applica- Even as late as the 1930s, a Jim Farley must start with war and politics. tion by its parent, Western Electric - had to travel the country to assemble Battle and war have been the preoccu- underlay the work of MIT s great radia- delegate blocs that would make the pation of men since the walls of Jericho tion laboratory, which made American majority that gave Franklin D. Roose- fell to the sound of Joshua s horns. But radar the best of the warring nations . velt his Democratic nomination. one man must always command - must The Labs microwave research had a Those old politics are gone now. Televi- command not only the action but the in- thousand applications: Bell designed sion has dissolved the old machines, struments and the support. And there is the fire-control radar that let the gun- except in those local races and counties a most convenient date for us to drama- ners of the u.s. Navy wipe out the where, beneath the level of television, tize how war changed: that same day, Japanese navy; the sonar system that word of mouth still counts. New profes- June 25, 1876, when Dom Pedro visited came from their research tracked down sionals control national politics; candi- and destroyed Nazi submarines. Ein- Bell and his telephone in Philadelphia. 2 dates choose their advisers from those Far away in the Montana Territory that stein s equation E = had been de- professionals who know best what the veloped during the war into the day, George Armstrong Custer was airwaves can carry and where, precisely, Manhattan Project, which was planning fighting one of the last cavalry battles its impact is felt. a bomb of fissile uranium. By 1949, the on American soil. And at the Little Big- Bell System and its Sandia Corporation, Even here, in the unstable world of poli- horn River he and his men were under a nonprofit contract with the tics, one must go back to the work of massacred. No field telephone could Atomic Energy Commission, had picked Bell Laboratories and Western Electric. reach command center at the nearest up the burden of research, development, Their workforce had returned to civilian fort to call for reinforcements, so they and prototype production of atomic ord- tasks after the war, and their microwave died. Battle had always been fought nance. Bell did not create the bomb, but experience was to deliver to politicians thus - contact, communication, com- without Bell, America would not hold giant boots that would let them leap the mand ran only by line of sight or by its lead in weaponry. continent. In 1948, the Bell System had swift courier. No signal system could On and on one could go through the con- begun to string microwave towers - 25 save Custer. trol of battlefields, the instant vision or 30 miles apart - from ridge to ridge of movement beyond the horizon, the across the country, for microwave then BELL LABORATORIES: threat that may surface in seconds after A HOUSE OF WONDERS carried only by line of sight. One hun- diplomats bungle their job. But one dred such towers could span the conti- Distance and time response have always must skip all other developments of war been the essential traps and problems of nent. So it was that Edward R. Murrow and wizardry and jump to the crown- could swivel in his chair and display the battlefield commander. The Romans piece of modern battle telecommunica- and Chinese of antiquity had tried to both the Golden Gate Bridge in San tions - to headquarters of the Strategic Francisco and the Brooklyn Bridge in conquer distance and response by their Air Command outside Omaha, Nebraska. great chains of fire towers, semaphoring There, 40 feet underground and encased New York - simultaneously, live - on messages by flame and smoke across in concrete, is SAC command. Twelve the evening of November 18, 1951. But their vast stretch. But America, as it armchairs ring the balcony above the the microwave relay could be used for spread its wings, needed even swifter dazzling operations floor, where display more than entertainment or news. It and wider controls. And so, slowly, charts flash data from around the world, could be used for politics. By 1952, when under the changing demands of modern showing readiness status at each base, Dwight D. Eisenhower faced off against Robert A. Taft in Chicago, television war, the Bell System would change all alerts, planes in the air, blips of un- battlefields, all global command, all re- known planes or missiles rising from could carry the convention proceedings flex and response. the coastal waters or across the Arctic. nationwide into the homes. Taft was de- Lift one of the simple telephones and stroyed by television; Eisenhower won. At this point, there is no way of describ- press a button: You are in contact with By 1968, 16 years later, television domi- ing war as it changed without a swift Point Barrow in Alaska, with Thule on nated conventions; Hubert Humphrey visit to that house of wonders called the outer fringes of Greenland, with was destroyed by the violence and blood- the Bell Laboratories. Founded in 1925, Hawaii, the Pentagon command center, shed that television showed attendant its headquarters now sits in a tan the White House, and all the subma- to his nomination. and terra cotta brick building on 200 rines at sea. All instantly. SAC is trig- green and gardened acres in Murray gered to go - controlled only by the Conventions have changed because tele- Hill, New Jersey. Early in the century, command chain that runs from the base vision is there: No longer do partisans telephone engineers and scientists had to the Pentagon to the White House, chant, stomp, wave their banners in begun, seriously and methodically, to which also must respond by reflex. The interminable demonstration; no longer study the quality of sound and the Bell System installed this command sys- can bosses gather secretly in back materials of transmission. Their work tem - for good or bad. rooms. Conventions are organized now had led them on into the nature and What has been removed, inevitably and for drama and impact on the tube: quality of waves, on into the basic and inexorably, is the filter of time that lets Speeches must occupy prime time; ap- fundamental physics of nature, on into thinking control reflex. It is a terrifying pearances must be timed to the minute. those mysteries which, by 1937, had gift that Bell has given to the potential The old political organizations exist brought them the first of their four of world cataclysm. But it is better that only as skeletons that move the bones; Nobel Prizes. science has given us this dreadful gift the flesh, the emotions, the passions than we be at the mercy of an enemy. are stirred by television. But Bell Labs was, in the early 1930s, still far from war - until the quantum Not only has war changed with the AS THE WORLD SHRINKS jump of national emergency as World removal of time s filter. All else has Politics at every level in America now War II approached America over the rim changed - politics, business and man- move on the airwaves that still rely on agement, and most of all, the quality of two oceans. Bell scientists had al- "Telco" to move the spectacle. Politics of life. ready long been exploring the phenome- are shaped by the paid commercials that non of wireless transmission, had begun Take politics. Time was, back in 1876, experts cut and put into place. Politics to putter with those invisible mi- when politics was the business of profes- move by the dramatic skills of other crowaves that now stitch the world into sionals organizing neighborhoods into professionals who prick, prod, and pro- one. And thus, in the late 3 Os, they bent blocs. Door-knockers and precinct cap- voke the attention of the networks and their research and manpower to the tains mobilized the votes; "bosses" put provide the prime prize - two minutes menace. From their scientists research them together in the packages that on the evening news. Politics rely on the
8 BELL TELEPHONE MAGAZINE 1983 NO. 3-4 telephone banks that automatically dial, then redial computerized names by streets, neighborhoods, and the demo- graphic slices that the candidates need to assemble a voting majority. Others have found a hundred uses for radio and television in politics, but "Telco" pro- vides the service that makes all possi- ble. There is, to be sure, danger in the erasure of time and distance. It is now technically possible for the Congress of the United States to telephone in its votes from anywhere in the world. Yet a Congress assembled by dial voting would no longer be a gathering of men and women, interacting, persuading, challenging each other; it would be a nose-count of faceless digits. The reach of the Bell System into poli- tics is global. In 1963, AT T placed in space the first Telstar, a shimmering, many-paneled ball powered by solar energy. The device could pick up sound or images, then transpond them any- where. Almost within months, the world - and spits out the boarding pass as you a tiny chip, then onto an even tinier contracted. Let American soldiers burn wait at the counter. Tankers, heavily chip, while computers shrank from room a Vietnamese village - the next night, laden with oil, load up at the Persian size, to cabinet size, to hand-held size, instantly, America saw the scene; flesh Gulf, pass through the Strait of Hormuz, and the new world of data processing prickled; the politics of war changed. and do not know their destination until came into being. Let satellites show a Poland in protest someone far away has bought or sold Historians will have their choice of against its dictatorship; the world crude in Rotterdam s free market - and many dates in tracing the impact of the shouts back its anger. Let Walter Cron- directed the tanker to the port of oppor- telephone. 1876 - Bell or Custer? 1915 kite use his evening news, as he did, to tunity. Salespeople call in with a clutch - the first transcontinental telephone bring Anwar Sadat and Menachem of orders or the big deal closed - and call? 1945 - the uranium bomb, or San- Begin together, live, in the same half- production lines and investment plan- dia in 1949? 1951 - the microwave hour - and peace between Egypt and ning must change with the next morn- relay, or Eisenhower s 1952 nomination Israel is under way; the politics of the ing s conference. and election? 1963 - Telstar bringing Middle East begin to change. On and on one could go with the atmos- world events into the sitting room and pherics of this world that has been kitchen? But they will be unable to de- Move anywhere in this climate of the scribe the change in the quality of life or new world; in its atmosphere, all men transformed as the Bell System pioneered and invited it to change. pinpoint the date when and how the and women of affairs breathe differently. telephone invaded the daily life of ordi- Take finance. Within two years of Bell s But what intrigues one most is not so nary people. This, perhaps, is the great- 1876 demonstration, businessmen in much what the System planned as est change of all. New York, Boston, and Chicago had be- what, by brilliance and service, it deliv- come the telephone s first large users. ered to a world that outran its own plan- It would be an impossible exercise to Today, one visits a New York banking ning. The Chinese, for example, had house; there sit rows of palefaced people mark the firsts and lasts of the changes developed gunpowder as a happy of climate in which ordinary families at banks of telephones, trading billions noisemaker, useful for celebrating now live. of dollars in notes, bonds, exchanges, as, holidays. Centuries later, the Europeans from minute to minute, basis points go learned to pack gunpowder into shells, When, for example, did the last panting up or down a percentile of a percentile. then into artillery to command battle- husband race to the doctor s door and The entire world quivers to their split- fields. Just so, in search of knowledge, scream, "Come quick, my wife is having second decisions. One recalls: The Roth- a baby"? We know that druggists and did the Bell System come upon some- schild fortune took its great leap thing to be called a "transistor." Back doctors quickly followed businessmen forward 168 years ago when Nathan there when the war ended, the Bell Sys- and stockbrokers in installing early Rothschild in London employed homing tem had recognized that the vacuum telephones. But when did one family pigeons to bring first news of the out- tubes in its transcontinental Long Lines first phone a doctor in an emergency? come of the Battle of Waterloo; so he system could not give the voice the And when, many years later, did the plunged, after due deliberation, on Brit- purity or amplification required. So a first doctor install that desolating an- ish "consols" (British government notes) team of scientists at Bell Labs, led by swering device that walls him off from and was the first to reap the harvest of William B. Shockley, reached far out all calls that invade his work? Britain s victory. Today, a Rothschild can into the physics of the day to examine Or, at the happier end of the change: wake in New York and, while shaving, the quality of metals, conductors, mate- What boy first called what girl to ask for hear on the radio the price of gold in rials - and in 1947 came up with a a date?Inthe old days, boys married London or Zurich, or the ups and downs device made of germanium with pre- girls whom they met at church, or at the of the Hong Kong and Tokyo exchanges. cisely controlled impurities: the tran- shop, or in the neighborhood. Harry But ignore the financial exchanges and sistor. For this, Shockley and his team Truman, for example, was a young man regard the making and selling of things. received a Nobel Prize. But, though the when the telephone was still a rarity. He No airline could operate today without transistor and semiconductor served the wooed his Bess by mail,from hisfarm to the telephonic data web that makes in- telephone company well, they served Independence, Missouri, then back stant reservations for 10 thousand the wide world better. Others learned to again - three days tomake a date. flights, tomorrow or three months hence pack infinitely smaller transistors onto Today, the youngmanlifts the phone,
NO. 3-4 1983 BELL TELEPHONE MAGAZINE 9 were the problem but the concept of fit- ting the parts into a whole. So evolved the Bell System. "Systems engineering" has now become a theology of giant business, of the Pentagon, of political, government, and geophysical control, copied at home and abroad by all institutions facing the problems of fitting people to machines, machines into a human pattern. Not the miracles of microwaves, nor the mira- cles of the transistor, nor the coming miracles of fiberglass carrying photons her voice is there, and the date is set. cause the nerve system that connects at the speed of light can compare to the We accept all this today, as we expect the America makes it possible for imagina- achievement of making one system, re- telephone to bring us the morning s tion to take wings. sponsive to the touch, reaching from the weather, the instant time, the report of Historians have as many problems deci- moon to warning of riptide. traffic clots on the highway, or the delay phering the past as futurists have in It is to the System we say goodbye. The of the airplane. blueprinting the future. But no subtle Bell System was not designed for change will be as difficult, perhaps, to But underneath this overlay of the web, philanthropic purposes, even though mark as the impact of the telephone on something more important changed: the Alexander Graham Bell, an idealist, shape and character of American cities the imagination - in school, in drama, had set out to help the deaf to hear. in literature. Shakespeare would have Tough lawyers guarded the perimeter of and the mobility of the American peo- the ambassador from France strut on ple. One no longer sets out from East to its patents. Learned economists sparred stage to fling defiance at the court of West Coast hugging dear ones in tearful with regulatory agencies. Dedicated England. The playwright of today uses farewell, never to hear their voices, ex- scientists explored the fundamental the telephone. It rings; the message is cept at intervals of years. In 1938, I left particles and waves; from their research instant; so is the response. The tele- for China for the first time; mother and the engineers of Western Electric phone is the essential punctuation mark. sister wept at Boston s old South Station crafted their instrumentation. Psy- No longer do spies eavesdrop as did the knowing they would not hear my voice chologists explored behavior to train Scarlet Pimpernel; today, the spy wire- again for years. This year, in 1983, on the whole range of Bell s workforce, taps. From the White House, a hotline another visit to China, my brother and I of all races, colors, and origins, to work runs directly to Moscow. Western Elec- called Boston from Peking; there they in a system. tric designed the sound system that let were, both mother and sister, halfway Al Jolson ring out with T J S But the Bell System was more than the across the world, answering immedi- in 1927, and soap opera has since in- sum of these parts. It did make huge ately. And there we are, all of us, free to vaded all American life. profit by putting together the parts. But move around the world, released from what ran through the System and held the tether of distance. Girls leave from Nor, finally, will historians be able to it together was the concept of service. It Westchester to go to school in Pomona, define what the telephone did to simple was the lineman called out of home in boys from Montana to go to school in human loneliness. Loneliness, said the sleet and snow who would be there, Boston - and the calls come: "Mom, I ve Hubert Humphrey before he died, is the restringing the rime-broken wires. It met the most wonderful girl. May I curse of modern times, the last great po- was the operator at her post, hanging on bring her home at Thanksgiving?" Or, litical problem after all other problems as the hurricane blew in from shore, sadly, a voice says, "She died last night are solved. The telephone interconnects making her connections and hastening . . . can you make the funeral if we wait us, brings us close - yet invites us to the warning. These people and countless until the day after tomorrow?" Or, glee- travel and part. The Bell System may others, toiling at unrecognized duties, fully, a voice says: "Dad! Mom! ... It s a have solved all problems of communica- made the Bell System, for its time and boy... seven pounds ... both well." tion - except the transmission of the the state of the art, the best system of kiss, the hug, the embrace, the touching service in the world. So we should pay it FROM SOAPS TO SUBURBS together of two people who love. It honor as it divides and disappears - I travel and see the changing, contradic- might even have achieved that, had it honor to all of them, the lineman, the tory scenery of America. In New York, survived. But it will not survive; it is scientist, the engineer, the operator. or Houston, or Chicago the towers reach under court order to come to its end. So, to the sky. I know architects designed as we close a chapter of history, let us One cannot cheer but one should not them, high-steel men bolted them to- say farewell to the System. mourn the passing of the Bell System. It gether. But downtown America could had become too useful, too efficient, and not work if the coagulation were not "System" is the word to hang onto as we some felt, too large. Others felt it was wired into the telephone net; no elevator part - for the greatest invention of the approaching those limits of power and could carry a fraction of the to-and-fro Bell System was not the telephone, Long influence that government had to disci- messengers whom the PBX has replaced. Lines, radar fire-control, or the Yel- pline by breaking the System into its I observe the penumbra of corporate low Pages, but the system itself. Indeed, component parts. That decision is, headquarters in Connecticut, in New the phrase "systems engineering" was apparently, irreversible. But all of us Jersey, in Westchester, in Orange coined by the Bell System as it tried to Americans owe the Bell System a last- County, set free by the telephone to fit the parts of what it was developing ing debt for knitting us into a nation. abandon the city. The telephone concen- into a whole. Early in the 1890s, an So we say goodbye - and well done! trates cities, yet at the same time tugs undertaker in Kansas City, Almon B. And hope that whatever next may hap- them apart - so downtown centers Strowger, had devised a primitive dial pen, the Spirit of Service survives in its thrive, inner cities die, suburbs boom. system that could bypass the operator offspring. The markets will have one City planners, urban designers, archi- at the switchboard. The Bell System judgment on the offspring, the unions tects all assume as nature this exemp- adopted it because switchboards could another, the customers yet another. But tion from distance, congestion, and fit neighborhoods into cities; but then the spirit of the great Bell System was racial strife given by the telephone. So cities had to fit and reach other cities. It service. Let that be its heritage to those they change the map of America be- was not the mechanics of the parts that who follow. ∎
10 BELL TELEPHONE MAGAZINE 1983 NO. 3-4 The perception of historic tranquility and a stormy future for the Bell companies is mainly an illusion. It's just that hard times past tend to mellow in memory, and future unknowns loom larger than life.
ife has not been the same for Bell System managers since January 8, 1982. The announce- ment of the impending divesti- ture effected profound change for virtually every job, procedure, and practice in the Bell System. Looking ahead, through divestiture and beyond, many perceive a stormy transit fraught with novel problems. Looking back, they recall a tranquil, predictable past. But such a past never really existed. While it s true that the challenges of divestiture will be new and different, they are not entirely without precedent. Past tranquility is, with respect to the Bell System, primarily an illusion. The same kinds of frustrations, uncertain- ties, and doubts about the future that now accompany divestiture have accom- panied all major changes in the business - and were present even at its birth. Alexander Graham Bell spent two ex- hausting years in pursuit of a workable Union Telegraph Company, which de- even were accused - and subsequently telephone. Accustomed to a comfortable clined to buy them. exonerated - of bribing a patent clerk. lifestyle, he found himself scrimping to finance his research, as well as sacrific- The problems and frustrations of the Modern-day managers concerned about ing an active social life and his income business continued to dog Bell. Even the increased risk and threat to job se- as a teacher. During this time, Bell put after the telephone was well established curity brought on by divestiture could in long hours almost every day, and al- and he had withdrawn from active par- take a page from Theodore N. Vail s though a recognized expert in linguis- ticipation in developing the business, diary. Vail left an important, well-paid tics and phonetics, he chose to work in Bell was called on to defend his patents job with the u.s. Post Office and took a an area for which he had little training, in federal court. Today s managers, dis- 40 percent pay cut to sign on with the learning instead by trial and error. comfited by the number of judicial ac- Bell Telephone Company in 1878, when tions the company has been involved in it was preparing to do battle with the Even after his brilliant success in creat- and the degree of control the courts largest and most successful communica- ing the telephone, Bell and his associ- seem to be exerting over the business, tions company in the country, Western ates had little precedent to follow in may be surprised to learn that in its Union. On joining the Bell operation, exploiting the technology. At one point first dozen years the fledgling Bell Vail found a company with a huge mar- they even sought to abandon the field, company fought more than 600 separate ket potential, but under tremendous offering Bell s patents to the Western court cases involving patent infringe- financial stress and in the throes of ment. Bell himself spent much time major management changes. Within a Bob Kinkead testifying for the company in these year, the company would change its Bell Telephone Magazine. suits; at one point, he and his associates name, get a new chief executive, reshuf-
NO. 3-4 1983 BELL TELEPHONE MAGAZINE 11 fle its board of directors, and initiate a mediately after a new company presi- complex legal assault on Western dent was installed in 1887, Vail left Union. In the midst of this turmoil, the employ of the Bell System. Although Vail s job was to manage operations effi- he departed for health reasons - at ciently, develop relationships with least officially - some writers have licensee companies, and, of course, meet interpreted Vail s exit as a sign of dissat- the company s day-to-day obligations. isfaction with management philosophy. As later developments suggest, Vail was The beginning of the telephone era, an idealist with regard to service and thus, seems very like the early days of the company s obligations to the public, the Information Age. but the Boston financiers who controlled The flurry of name changes associated the company at the time were practical with divestiture mirrors the Bell capitalists, profit maximizers making company's early days, when it operated the most of a patent monopoly. Unable under six different names in just five to reconcile these contrasting views, years, from 1875 to 1880. The first was Vail chose to leave the business. The Bell Patent Association (1875); then in succession came The Bell Telephone The patents, however, had only a 17- Company (a voluntary association, year term; the expiration of the two 1877), The Bell Telephone Company basic Bell patents in 1893 and 1894 (Incorporated) and the New England unloosed a blitz of competition. Partly Telephone Company (both 1878), The because of the Bell company s conserva- National Bell Telephone Company tive investment and pricing policies, (1879), and finally The American Bell vast areas of the country as yet had no Telephone Company (1880). The Ameri- phone service, and entrepreneurs can Telephone and Telegraph Company rushed to fill the gaps left by American - AT&T - was organized in New York Bell. Even in those cities where the tele- State in 1885 to provide intercity, long phone already was firmly established, distance telephone service. AT&T did not independent companies successfully re- become the parent company of the Bell cruited customers with offers of lower System until 1899, when, because of the prices and promises of better service. financial strictures imposed on corpora- Hungry, aggressive competitors rudely tions in Massachusetts, it was decided to brushed shoulders with the somewhat reorganize the parent under the more complacent Bell licensees and vied with liberal New York corporate laws. The them for the most lucrative segments easiest way of doing this was simply to of the market. transfer the assets of American Bell to AT&T. Ironically, in light of today s equally vigorous telecommunications competi- A NETWORK BUILT tion, local service was the most profit- Before becoming AT T s first president, able market and intercity long distance Vail had served as general manager of was virtually ignored by the start-up American Bell. While his bosses in the telephone companies. executive suite fought patent wars, raised capital, and initiated reorganiza- While there are interesting symmetries tions, Vail and AT T general manager between the hotly competitive com- E.J. Hall were preoccupied with the munications markets of the 1890s and more practical task of building a foun- those of the 1980s, wide contrasts mark dation for a nationwide network. the Bell managers of then and now who would cope with these markets. At the In its early days, the National Bell turn of the century, AT T was tightly Company built telephone sets, switch- controlled by financial interests cen- boards, and similar gear and rented tered in Boston. Paying dividends to these to franchised licensee companies share owners was the company s pri- around the country. It was not then mary goal, and some considered the apparent that the licensee companies management s style to be haughty. For would someday be part of the Bell example, the New Orleans Board of dent under the aegis of the Boston System. The national company manu- Trade in 1905 reported that "the officers financiers, but the following year he ac- factured and sold equipment and of the company were inclined to assume cepted a seat on the board of directors. constructed and operated long distance an arbitrary and dictatorial tone and Five years later, Vail was appointed telephone routes - much as AT T will were lacking in honest courtesy." In president of the company. His appoint- do after divestiture. Franchise holders retrospect, this assessment might be a ment, which marked a significant turn- were responsible for building local dis- bit harsh. After all, AT T managers had ing point in the company s philosophy tribution networks (poles and wires) built the business into a huge national and direction, was brought about with and drumming up business. Under service company in a remarkably short the help of J.P Morgan, a business ally Vail s stewardship, the number of tele- time. And they were constantly torn be- of Vail s. Morgan had led a banking phones in service grew from about 3,000 tween the simultaneous demands for syndicate that helped underwrite a in 1878 to about 380 thousand in 1887, a service improvements, dividends, and large issue of AT T convertible bonds. short nine years later. funds to expand the business - all com- Subsequently, Morgan was able to seat Despite notable success, however, Vail peting for the same resources. two new directors on the AT T board, did not find the kind of job security and Into this intensely competitive corpo- loosening the grip of the Boston inves- lifetime employment that later genera- rate atmosphere came Theodore Vail, tors and clearing the way for Vail to tions of employees would come to expect. who was invited to rejoin the company take effective control of the company. At the relatively young age of 42, im- in 1901. He declined to serve as presi- Under Vail, the company rapidly broad-
12 BELL TELEPHONE MAGAZINE 1983 NO. 3-4 STEVE KARCHIN ened its share-owner base; within six phone customers. But Vail also had to technological research, laying the foun- years, no single individual or clique of contend with certain financial problems dation for the future establishment of investors owned as much as one percent unfamiliar to contemporary managers. Bell Laboratories. of the outstanding common stock. Unlike the Bell System companies of 1983, which approach divestiture finan- In addition to being an adroit manager, A PRAGMATIC VISIONARY cially resilient and technologically Vail was also a visionary of practical TACKLES COMPETITION robust, certain early Bell operating bent, a business philosopher who early Problems such as Vail inherited when companies were in serious financial recognized that the telephone would he began his new job, at age 62, are difficulty and offered poor service com- soon evolve from being viewed as a lux- eerily familiar to modern Bell man- pared to their competitors. Vail deter- ury and convenience to an everyday agers. The market before him mined to correct these problems through necessity. To accommodate this evolu- burgeoned with potential, and the array better planning and organization. As a tion and to meet his ambitious goals for of competitors vying to serve the market director, he had proposed that the the Bell System, he developed the was vast; they ranged from inconse- company adopt long-range financial theme: "One policy, one system, univer- quential to formidable in size and capa- planning; when he became chief execu- sal service." To later generations of Bell bility. The industry was in ferment. In tive officer, he insisted the operating employees, the "universal service" goal certain areas, two, and sometimes three, companies prepare five-year and 25- seems most inspiring, but to his own companies competed for the same tele- year financial plans. He also centralized contemporaries, the "one policy" and
NO. 3-4 1983 BELL TELEPHONE MAGAZINE 13 "one system" goals were the most Between 1907 and 1913, through acqui- this enterprise," Brown wrote. "However, challenging. sitions, exchanges of stock, and the in my view, it did not represent a signifi- Until Vail s time, Bell operating compa- vigorous pursuit of competition, Vail cant discontinuity in the basic philosphy nies were quasi-autonomous fiefdoms; constructed the nexus of the Bell Sys- that has guided this business for most of the Bell System was a loose federation tem that was to last for the next 70 its history. That philosophy, first stated of licensees in which AT T held varying years. He expanded and coordinated a by the organizational patriarch of degrees of ownership. Vail demanded corps of professional, academically the Bell System, Theodore Newton and got the cooperation of operating trained managers and imbued them - Vail, is that the major task of manage- company managers in formalizing and and through them, the entire company ment is to conform the business to the de- coordinating policy and in creating uni- - with the same "spirit of service" he sires of the public. As Vail stated it, the form procedures and technical stan- fostered as general manager of fledgling qualities that created the Bell System dards that would ensure high qual- Bell in the 1880s. Walter S. Gifford, who were self-interest subordinated to the ity at reasonable prices. Said Vail, "It would be the youngest president of public spirit .... It was that philosophy adds to the permanency and undis- AT T, was one of these managers. that led Theodore Vail to embrace regu- turbed enjoyment of business, as well But, among his manifold talents, per- lation as a substitute for competition, so as to the profit, if the prices create a haps his acute ability to fathom the as to permit the development of an effi- maximum of consumption at a small public mood was Vail s most valuable cient nationwide communications percentage of profits." asset. Sensing the public s weariness system. And it was the same philosophy with inefficiency and free-wheeling that led me, three-quarters of a century With respect to "one system," Vail later, to embrace competition as a substi- launched an aggressive campaign to competition in the industry, Vail issued a call for an end to competition and the tution for regulation -this time in re- eliminate dual telephone service, which sponse to the public s desire for diversity he considered costly and inefficient, by imposition of fair and progressive regu- lation as a substitute. In the Kingsbury in communications services and either acquiring competitors or aban- suppliers." doning the field to them. His influence Commitment of 1913, AT T agreed to dis- was quickly noted both inside and out- pose of all its holdings in the Western Divestiture is surely the most signifi- side the business. The New Orleans Union Company - a massive divesti- cant discontinuity in AT T s long history, Board of Trade, which had criticized ture in itself- and to cease acquisition but it was matched - for shock value Bell s former management, said the year of independent telephone companies and abruptness, if not for lasting effect 1907 "began a period marked by a except with federal approval; to inter- - by a major discontinuity that coin- change of spirit on the part of (AT T) connectwith those independent com- cided with the close of Vail s career. officials." Thomas Alva Edison said of panies not in direct competition with Bell companies; and to provide long America emerged from World War I a Vail, "Until his day, the telephone was victor, a global power, an acknowledged in the hands of men of little business ca- distance capability for all independent phone companies. industrial leader of the world. The hec- pacity. Vail will encourage inventors - tic demands of the war had sharpened he s invented things himself. But be- In effect, Vail set a course for AT T that public appreciation for the critical yond all that, he s square." It would, of was markedly different from the main- importance of electronic communica- course, be unfair and misleading to sug- stream of American free enterprise. tions and stimulated a restive demand gest that Vail s predecessors were Seventy years later, in an article in T - for new service. Encouraged by public anything less than "square" and, judged phony magazine, AT T chairman Charles impatience and following a precedent by the standards of the day, successful L. Brown drew a parallel between the set by most of the world s governments, and competent as well. They suffer only course Vail set and the impending dives- the u.s. Postmaster General recom- in comparison to a remarkable individ- titure of the Bell System: "Clearly mended that the Congress nationalize ual, who has become something of a cult [divestiture] represented the most sig- the country s telephone system. In July figure to his successors. nificant discontinuity in the history of 1918, the government did assume con- trol of operations of the Bell System network. Government authorities, citing deterio- rated service quality, explained the action as an emergency measure needed to guarantee continuity of service and security of the network. Of course, dur- ing the war years prior to the govern- ment takeover, the Bell System had subordinated the needs of residence and ordinary business customers to the gov- ernment s heavy wartime demands. Moreover, the war had created a scarcity of the very materials the operating companies required to maintain high- quality service. In addition, thousands of skilled telephone employees had en- listed in the u.s. Army Signal Corps and other branches of military service to help supply critical battlefield com- munications overseas. Within six months, in an inflationary postwar period, the government-oper- ated telephone company had raised long distance rates by 20 percent. Within 13 months, the whole idea of running a na- tional telephone system had lost its ap- peal, and the government returned the
14 BELL TELEPHONE MAGAZINE 1983 NO. 3-4 Bell System to private management in office in 1933. By 1934, the Communica- ible, but it also was pointing the way to August, 1919. tions Act establishing the FCC was renewed competition, this time in the If the 1980s mark the opening of the passed. The following year, the FCC intercity and customer premises equip- Information Age, one could cite the launched a four-year investigation into ment markets - competition that 1920s as the start of the electronic- the telephone industry, with the Bell would lead to a new antitrust suit. media age. The Bell System played a System as the focus of its efforts. H. I. Romnes, who became chairman in leading role in that age, helping to 1967, was the first and only chief execu- establish the foundation for commercial GOVERNMENTAL SCRUTINY tive of AT T to begin his full-time Bell radio and television, the recording AS WAR AGAIN LOOMED career at Bell Labs. Holder of six pat- industry, and sound motion pictures. No scandalous revelations or congres- ents, Romnes was heavily involved in (S 34.) It was in sional action accompanied the conclu- the nationwide introduction of direct the midst of this flurry of media devel- sion of the investigation in 1939, al- distance dialing during the 1950s, as opment that AT T elected a 40-year-old though the Bell System was branded chief engineer of AT T s Long Lines president, Walter S. Gifford. large, powerful, and in need of careful Department and later as AT T vice and continuous scrutiny. By then, how- president-operations and engineering. At the same time, AT T was becoming a ever, Congress and the country were force in overseas telecommunications Before direct distance dialing, custom- turning their attention overseas, as the markets; technological innovations ers wishing to use the national long world slid inexorably toward another were opening up an array of new, non- distance network had to place their calls world war. The Bell System again began telephone domestic markets. Gifford through operators. In 1951, direct to redirect its resources and research ef- was faced with the same kinds of choices distance dialing (DDD) was introduced forts toward national defense. that are facing Information Age man- when the first DDD call was placed be- agers: which of the numerous new After the war, another government tween New Jersey and California with- technology-based markets to enter. agency, the u.s. Department of Justice, out operator assistance. By the time There were almost limitless investment took an active interest in the conduct of Romnes stepped down in 1972, the final and growth possibilities to select from the telephone business. In 1949, one stages of DDD dissemination had already - but then, as now, only finite resources year after Gifford retired as president been accomplished for the Bell System to support the expansion of the business. and was succeeded by Leroy A. Wilson, and were being completed for non-Bell His challenge was to direct his resources the u.s. Attorney General filed an action customers in Alaska and Hawaii. toward those projects that best satisfied against AT T and Western Electric, DeButts was elected chairman in 1972, both corporate goals and public needs. alleging violation of the Sherman as competition began to burgeon around Gifford also had an unfulfilled obliga- Antitrust Act. the Bell System. Complex times turned tion - the goal of universal service. To In 1951, Wilson died and Cleo F Craig into turbulent times when, in 1974, the meet this obligation, he selected a was elected president. Like his pre- u.s. Justice Department filed a second course not available to present-day decessor, Craig was an engineer who antitrust suit. DeButts calls for con- managers: he sold off the corporation s understood the technical operations of a gressional and regulatory action to overseas operations; dramatically business that had by now established it- settle major telecommunications issues scaled back involvement in radio, TV, self as a world leader in numerous areas went generally unheeded. The technical recordings, and film; and concentrated of scientific research, applied science, side of the business, however, made Bell System energies and resources on and engineering. During Craig s tenure, much smoother progress, so that when the telephone business. He would later Bell System researchers were setting Charles L. Brown became chairman in recall, "As fast as we got out of one the stage for the Information Age. By 1979, it was possible to dial 64 countries thing, the Labs would invent another." the time the first antitrust suit was around the world without operator But he doggedly persisted, eventually settled with the 1956 Consent Decree, assistance. divesting every non-telephone enter- the Bell System had announced the for- But while the Bell System was at the prise started in the 1920s. mulation of information theory, the top of its form technically - the sixth Gifford and his predecessor, Harry B. development of time-division switching, and seventh Nobel laureates from the Thayer, symbolized a new breed of sen- and a host of similar innovations that Bell System had been named a few ior managers who took over managing soon would combine to blur completely months before - Brown took office the Bell System after Vail. Before the distinctions between telecommuni- aware that the judicial and regulatory cations and data processing. Thayer, every AT T president, including environment surrounding the System Vail, had entered the business at the Craig retired in 1956 and was succeeded had become almost Byzantine in its executive level and was beholden for his as chief executive officer by Frederick R. complexity. His most important task for job to powerful financial interests that Kappel. The recipient of some 15 honor- the next three years would be to devise had invested in the company. By con- ary degrees during his years as chair- and implement a solution that would trast, Gifford and Thayer were college man, Kappel was a prolific writer, free it from a stranglehold of special hires, who began as clerks and spent served on a variety of committees and interests; unequal, regulated competi- their entire careers with the Bell Sys- panels under two u.s Presidents, and - tion; and the financial and admini- tem. They were beholden to no outside along with John D. deButts - was anion strative burdens of the ongoing anti- investment groups or special interests the most public and publicized of AT T trust suit. but owed their positions only to their chief executives. Throughout Kappel s Divestiture burst on the Bell System in own abilities and the confidence of the chairmanship, the Bell System experi- January, 1982; doubtless its effects will board of directors, their peers, and their enced rapid growth of the nationwide continue to reverberate through the subordinates. All their successors would network and heavy demand for new and 1980s and beyond for AT T and the seven follow a similar pattern. innovative services. regional companies created to manage The Bell System prospered under Gif- By the mid-1960s, the Bell System was the local telephone service portion of the ford in the 1920s and entered the 1930s closing in on its goal of universal service business. In a sense, this is the renewal and the Great Depression in strong - making the telephone affordable to of a cycle begun in 1876. The balance financial shape, able to maintain its all - and its research was accelerating of the decade crackles with entrepre- dividends despite sharply reduced earn- at a pace that would eventually produce neurial spirit, the years beyond are ings. The System s financial strength more than one patent for every working gravid with promise and challenge - was noted not just by investors but also day. Bell technology was making the and, one is tempted to say, unparalleled by the New Deal government that took telephone network more useful and flex- excitement. ∎ NO. 3-4 1983 BELL TELEPHONE MAGAZINE 15
The years leading to divestiture may provide guideposts for tomorrow
ne of the most persistent (be- politicians to disavow any disposition on cause so often confirmed) their part to equate bigness with badness. notions in the mind of Western Such reassurances were small comfort man is the inevitability of de- to AT T s management. Indeed, that cline and fall. With advancing AT T s bigness was not far from the age, institutions - empires, dynasties, minds of the government staffers who so companies - lose their initial impetus largely rewrote national telecommuni- to action. Success breeds conformity cations policy over the past decade is to the practices that produced success. apparent from their disposition, as they Bureaucratization suppresses - and savored the satisfactions of what they eventually supplants - venturesome- perceived as victory, to characterize the ness. Imperceptibly over time and while confrontations of the era as a protracted still professing its initial commitment, drama in which an understaffed but the institution becomes an end in itself, dedicated agency, joined in time by no unresponsive to its constituents, oblivi- less dedicated public servants in the ous to change, incapable of adaptation. Justice Department and on the staffs of The dinosaur analogy... Congressional committees - all inevita- If on January 8, 1982, there were those bly David s - struggled against over- disposed to think that analogy applied whelming odds to bring Goliath down. to the American Telephone and Tele- And did. In any event, again and again graph Company, they were that day throughout the decade AT T found its served abrupt notice that it did not. own opportunities constrained in the interest of affording opportunities to A PERENNIAL QUESTION What may seem puzzling to future smaller rivals. Finally, as an emerging consensus on national telecommunica- historians is that when AT T at last tions policy came to be embodied in pro- abdicated its role as the biggest com- pany on earth, it did so in the absence posed new "communications acts," it became apparent that the telecommuni- of any evidence of urgent public con- cations industry would hereafter be gov- cern about its size. Moreover, it did so erned not by one set of ground rules but in an era in which populist agitation two - one for AT T, the other for every- over "undue concentrations of economic body else. The only prospect of relief power" was at its lowest ebb in decades. from the constraints applicable to To all appearances, the public over the "dominant carriers" - a classification years had come to understand that with a population of one - lay in ceas- unmanly. Profit, plain and simple, is the large-scale, technologically oriented ing to be dominant. sole purpose of those aggregations of hu- undertakings require large-scale aggre- . . . manity and capital we call corporations. gations of capital and comprehensive planning. Indeed, from time to time the In short, for AT T, there came a point It is not the purpose here to quarrel with Bell System - its integrated structure, at which realism required it explicitly those who claim that idealism is simply its systematic approach to the manage- to confront the question of whether a mask for the intelligence to defer im- ment of resources - heard itself cited as its sheer size might not represent a mediate gratification for longer-term a model for emulation by such troubled sufficient hazard to the future of the advantage. There is a measure of self- industries as the railroads and, after the business as to require deliberate man- gratification, it is said, even in mar- massive blackouts and brownouts of the agement action. The only relief from tyrdom. Accordingly, however high a 60s, the power companies. And in this the onus of bigness, it appeared, was business might fly some other standard era it became a virtual fashion among acquiescence to becoming smaller. - service, say - it is profit, and the more of it the better, to which in its THE PURPOSE OF PROFIT heart of hearts it pledges allegiance. To profess ideals, even to act on them, Excerpted from Heritage & Destiny by Alvin And to pretend otherwise is hypocrisy. von Auw, published by Praeger Publishers , New is in some business circles accounted York, O 1983 by AT&T. unbusinesslike - if not downright Perhaps so.
16 BELL TELEPHONE MAGAZINE 1983 NO. 3-4 STEVE KARCHIN
responsive to interests other than its own - that it had throughout most of its history assumed its unique responsi- bilities required it to be. AN UNUSUAL OBLIGATION? What accounts for the judicial indisposi- tion to credit the Bell System s profes- sions of concern for the public interest or to grant that, even if those profes- sions were genuine, they were the proper business of a business? It is to that indisposition, once it was finally recognized, that history may one day assign as the single most important reason for AT T s astonishing - and astonishingly sudden - consent to the divestiture of its local exchange busi- ness and thereby the dissolution of an organization structure it had professed itself confident would be found in the public interest and accordingly would end up in one piece. What appears to have happened is that the leadership of American business and the leadership of the American intellectual community have exchanged viewpoints. Each has come around to the position the other occupied 40 years ago. Thus, The Business Roundtable must feel badly used at finding itself, for its statement asserting the "social re- sponsibility" of business, the target of ridicule from academics (and even from F ) for presuming to mind any- thing but its proper business, which is profit. After all, it seems only yesterday that it was great intellectual sport to characterize business as a low calling contemptuous of any interests other than its own and indifferent to the finer things of life. After a generation of effort aimed at banishing that image, busi- ness was hopeful that at last it might be admitted to the parlor. Admonished that it is beyond their province to do so, the managers of the "lean and mean" AT T that is to be may look forward eagerly to the day when they will be relieved of an obligation that is in any wise unusual, a day when they will no longer need to ponder what the public interest may require of them. Considering, however, the cyclical na- ture of history and the prospect that one day it may once again no longer be reprehensible to think in terms of the Why, though, should it be denied to busi- the Bell System s managers who have public interest, they may in the interim ness what is admitted to nearly every been called upon to testify in defense of not want to get altogether out of the other institution, and that is that its the Bell System s policies and conduct habit of it. motives and standards may be mixed over the years is the apparently pro- and various and changeable with time found skepticism they have confronted WHAT WORDS and circumstance? Why should it not be as to whether there is actually any TO LIVE BY? acknowledged that, though business business on earth - much less one that Up till now, Bell System policy has for may be Business, there are no two of has somehow managed to become the the most part been based on the assump- them alike and that, more than any- world s largest - that actually, as the tion that the opportunities it has been thing else, it is the character of the Bell System says it does, puts service be- afforded and those to which it aspires people attracted to the ranks and ulti- fore profit and, again as the Bell System depend on its being perceived as an mately to the leadership of each of them says it does, shapes its policies to con- institution that pursues interests other that determines what in the scale of form to its best sense not of its own but than its own. Today it must confront the things - profit or performance - it will of the public interest. Even more trou- possibility that the public may not be put first? bling is a gathering sense that public ready to grant to any private institution . . policy may no longer want the Bell Sys- the exercise of so priestly a function as What has been troubling to a number of tem to be the kind of business - that is, stewardship of a public trust. Perhaps
NO. 3-4 1983 BELL TELEPHONE MAGAZINE 17 the public has come around to the view sulting group that makes a specialty out and what will with the divestiture of the that it would be much more comfortable of gigging AT&T. sots (Bell operating companies) be sub- operating on the assumption that the As interests clash in the process, so, too, stantially lost is the integration of the goal of private enterprise is private gain, do ideologies. Academicians have their organizations responsible for applying and it is ready to count on competition that technology to customer service. say, as do (occasionally) self-designated to keep that objective reasonably con- consumerists. The White House is party gruent with its own. To the extent that to the process and so are, not always in Surely there is no reason to doubt the an institution by its size or structure concert, the Justice Department, the earnestness of AT T s leaders declara- permits its management the exercise of Department of Commerce, the Depart- tions of their intent, although they don t discretion denied to its competitors, ment of Defense and (the) General quite know how, of maintaining support then that institution ought to be re- Accounting Office. At the heart of the of the kind of research that is generally duced to a size and condition that would process is Congress, 100 Senators and called "pure" but which the Laborato- permit its management the pursuit of 435 Representatives who, depending on ries prefers to call simply "research." no other objective than self-interest. how they are persuaded and who per- Accordingly, so long as the present gen- Should this be the public disposition, suades them, decide - not always by eration of AT T management remains in what ethic would then, should then, ani- bringing it to a vote - what national command, it can be anticipated that mate Bell System management? Put telecommunications policy is. pledge will be fulfilled. Looking ahead otherwise, freed of the responsibility to some years to a time when the inexora- Bell System managers would be less bilities the Modified Final Judgment conduct the business as in some mea- than human did they not feel that they sure a public trust, will it nonetheless? has set afoot have worked their way and had been somewhat abused by the proc- when perhaps the memories of some of REGULATION AND FREEDOM ess. Most of them remain convinced the Laboratories more spectacular - How long deregulation s day will last that the public is well served - and will and profitable - achievements will will depend not least of all upon the continue to be best served - by a Bell have begun to fade, can the prospect be ideological ardor of its advocates and System configured the way it is now. said to be that certain? Sol Buchsbaum, the pace at which by its blind pursuit They view the Modified Final Judgment executive vice president of Bell Labora- they bring about its demise. At this not as a "rational policy outcome" but as tories, says - and there is no reason to writing, deregulation can claim no a sensible (because necessary) accom- doubt him - that "if you come to Bell unequivocal victories, and it can only modation to political reality. It would Laboratories three or four years from be surmised whether it will figure in not be surprising, then, if some of them now, the lion s share of what we do will retrospect as simply a transitory eddy from time to time did not give way to a be the same." But 10 years hence or 20, interrupting the main current of history. feeling of resentment that the institu- who knows? Will it turn out... that the whole dereg- tion to which they have given their en- ulatory spasm reflected a failure of tire lives, an institution that embodies One consideration, though, most of the nerve analogous to that of a patient the earnest and sometimes inspired instant analysts of the Modified Final who, because it didn t work as expedi- work of hundreds of thousands of people Judgment failed to take into account - tiously or as miraculously as he had over the course of a hundred years, a consideration that may make its even- hoped, abandoned altogether the regi- should have been undone by a coterie tual impact, not only from Bell s per- men prescribed for him? Surely in an of envious bureaucrats, free-market spective but the nation s, not negative era in which society has begun to recog- zealots and glib politicians, not many but positive. That prospect is raised by nize the limits of its resources, the fra- of whom will be around to face the con- the relief from the constraints of the gility of the environment, the sequences. Surely those Bell System 1956 Consent Decree that the MFJ af- interconnectedness of things, it seems managers could not be blamed for feel- fords AT T. At last Bell Laboratories is not altogether rational to look to the ing that there is something not quite free, as its president Ian Ross puts it, to random interplay of self-interest to right about a process that accords no "follow our technology." Accordingly, manage things sensibly. more weight to the views of the people lamentations that a diminished re- who designed and built what is argua- How AT T reads history will determine search effort may diminish u.s. techno- bly one of the technological wonders of logical prestige may be contradicted by its future. What Vail saw as the occasion the world, the nationwide switched net- for regulation - the absence of competi- the Laboratories ability to pursue lines work, than it does to the views of econo- of investigation and development that tion - no longer prevails. Paradoxically, mists altogether untutored in technology. however, regulation - or something heretofore, seeing no prospect of apply- like it - may be a prerequisite to free- ing them to serving customers or reap- dom, including the freedom to compete. What began as an experiment in selec- ing the benefits of doing so, it might tive competition - to which competi- have abandoned. If the removal of this TECHNOPOLITICS tion the FCC assured the Bell System it barrier to the Information Age cannot The parties to technopolitics are many. would be permitted to respond to the be asserted with complete assurance to They include the Bell System s competi- extent of the advantages "inherent in offset the inhibition of research threat- tors and, depending on whether they see its structure and operations" - seems ened by termination of the License themselves advantaged or disadvan- unlikely to end short of elimination of Contract, it provides legitimate grounds taged by the particular matter at issue, what remains of those advantages. Even for the hope that it might. its larger customers. They include regu- so drastic a remedy as the Modified lators, federal and state, and - as Final Judgment appears to be insuffi- NEW STUDIES IN FEDERALISM important as the regulators themselves cient expiation for whatever sins it may The Modified Final Judgment decided a - their staffs. For some in Washington, have committed. One of AT T s top offi- great many things. Among them, it set- technopolitics is a career. Again and cers describes the experience as like tled once and for all an issue to which, again in the record of the contentions being mugged on mean streets while the precisely because it remained unde- over national telecommunications passersby pay not the least attention to cided, history may credit the astonishing policy that marked the 70s , the same the victim s outcries. Not unnaturally, creative vitality of that unique venture names recur, their bearers, though, ap- Bell System people, according to their in federalism that in the years 1904 pearing in various incarnations, now at dispositions, have been variously be- through 1982 was called the Bell the Justice Department, next at the FCC, wildered, hurt, angry, resigned. System. History, however, will have to thereafter on some Congressman s staff, be blind if it does not perceive that, in and ultimately - and, it is assumed, THE BELL REMNANT the latter years of that span, what had remuneratively - in a law firm or con- ... What makes the Bell System unique been a creative tension became a more
1 8 BELL TELEPHONE MAGAZINE 1983 NO. 3-4 and more debilitating one. In those and not the lesser incentives of other significance." For such a goal the Bell years, there developed what in retro- callings; System at this uncertain interval has spect appears to have been an acute mis- - that, although there is no record of a been provided - to supplant universal match between corporate strategy and regulatory decision on rates of which service - a vague commitment to corporate structure. The Modified Final it publicly approved, it believes - or leadership in the technologies of the Judgment, although that was not its believed - in regulation nonetheless; Information Age. Beyond that, its purpose, averted what might have be- management is pledged to a concept come a constitutional crisis. It rescued - that in the conduct of its public af- vaguer still but, depending on how the business from the horrors of matrix fairs activities it seeks the resolution of earnestly it means it, perhaps more management. public policy issues affecting its busi- compelling. Declared to be its purpose is ness on no other basis than their merits; nothing less than "the highest and best "(T)he more one looks into AT T, past - all it asks is what is every citizen s use of the organizations and resources and present, the more inexorably the right, the right to be heard; we call the Bell System." Surely it would feeling grows that its progress and - and that it opposed "competition" in not have been necessary to articulate preeminence for some decades to come telecommunications not to protect its such a goal were profitability a suffi- are as certain as such things can be in markets and the profits it derived from cient criterion of what it means. As a an uncertain world." them but simply and only because it practical matter, what those words mean will be a product of the contesting Thus F in 1965, in an article would harm service and increase the urges, inhibitions, aspirations, frustra- entitled "AT T: A Study in Federalism," price the average customer pays for it. tions, ideals and aggressions that go to opined, "The key to understanding Add to the above the transient burden of make up the corporate psyche and that AT T, is that it is not a monolith but a asserting that quarterly profits nearing its management must somehow or other unique experiment in decentralization." two billion dollars, far from being exces- take into account in deciding not merely Doubtless it would have astonished the sive, are not quite enough, and it should what their business is but who they are. author of that article had some prophet readily appear why it should be no sur- The highest and best. For a certainty, apprised him that not two decades after prise that the Bell System s public those words mean nothing should they its publication AT T s management relations practitioners have occasion- turn out to have been a season s slogan would reach the conclusion that the key ally encountered evidences of skepti- only. They mean nothing unless it is to the company s longevity lay not in the cism with respect to these notions and made clear that elegance is esteemed unique experiment in decentralization the company s motives for forwarding and will be rewarded and, as a corollary, F admired but in ending it. them. If there is a basis for welcoming all that is shoddy or tacky or tasteless, the Modified Final Judgment, it is be- How it was ended may turn out to be one all that is meretricious or graceless or cause upon its becoming effective they just plain dumb will be excoriated for of the most remarkable episodes in its will be relieved of the obligation of at- history. Perhaps it never occurred to the disservice to the business that it is. tempting to convince the public that No generation of Bell System managers Bell System management that there there is any private institution on earth was any other way to approach the mat- since the first, Mr. Brown has from time that honestly and actually pursues the to time reminded his colleagues, has ter. In any event, within weeks of the objectives the Bell System professes. traumatic news of January 8, 1982, the been in a position to so profoundly influ- ence the future of a great enterprise. officers of AT T and the presidents of its At such a juncture, of what use are Upon decisions made now will depend associated companies set about break- words? If words are, as it has been sug- whether the businesses that at this ing up the Bell System just as they gested here they are, hostages to perfor- writing make up the Bell System will be would go about solving any other major mance by no means assured, if words - what is surely not unworthy - System problem - together. And char- risk becoming, as from time to time in merely businesses or whether, because acteristically, when it came time for the past they have, an unwanted con- its managers will it so, they will be AT T to tell the Bell operating compa- straint on succeeding generations of enterprises of historical significance. nies precisely how the divestiture of management, and if words expose their Confronting ends genuinely incompat- their exchange business should be sponsor to what experience suggests the ible, it is for them to decide, in John accomplished, what it promulgated it public regards as the most unforgivable Dewey s words, "what sort of character labeled not as directions, not even in- of sins - hypocrisy - then perhaps it is most highly prized." structions, but as "guidelines." were best to eschew words altogether for a while and wait for more certain times "WHO ARE WE?" THE USES OF HISTORY before asserting too boldly what words History is not what happened but what Perhaps it is just as well that only at the hereafter AT T proposes to live by. end of a career spent mostly in one as- is remembered of it. History, then, may On the other hand, if words have their pect or another of Bell System public not always be fair. It may, for that mat- relations is the realization fully brought hazards, they have their uses, too. ter, not even be true. Somehow, though, Words inform and instruct. Occasionally home how quixotic an activity that is. history must be reckoned with. For it is they inspire. Words direct action, define Consider, for example, how implausible history that determines what people are some of the notions the Bell System policy, set standards. What down think about the past. And it is on the through the years has guided the ac- has from time to time asked the public basis of what they think about the past tions of the hundreds of thousands of to believe of it: that they decide the future. people who made up the Bell System - that it is a business that seeks profit and focused their energies on a more or . . . History is heritage. It is from history only to serve; less common purpose, kept them head- that companies, like countries, derive - that in its address to regulatory com- ing in more or less the same direction? their character, their ideals, their "sense missions it seeks no higher rates than Answer: words. For it is words that em- of constituting together an association maintaining and improving its service body an institution s idea of itself. It is of... significance." Today AT T confronts require; words, even more than numbers, that the most drastic discontinuity in its en- provide the motive power of business. tire history. At risk is its people s sense - that profit beyond that level it Words, if the Bell System ever needed of who they are. The essence, then, of returns to customers in terms of lower them, it needs now management s task is this: it is some- rates or better service or both; Every organization needs goals worth how to reconcile their business heritage - that what principally motivates Bell striving for, a "sense of constituting with a destiny that is, unless they know System people is the Spirit of Service together an association of historical it, unknown. ∎ NO. 3-4 1983 BELL TELEPHONE MAGAZINE 19 A legend remembers when AT T gave something more than her art a voice.
ack in the days of making least a piano playing even during the silent films, the great director showing of newsreels - but with the D.W Griffith once needed a introduction of each innovation in our baby for one of his interior field, change called for us to tap an scenes. There were no laws at inner reserve of what Dorothy, my the time against children working in mother, and I used to define as the only the movies, so a three-week-old boy was true formula for success: taste, talent, produced quickly from a nearby orphan- and temerity. Temerity was the most age. Mr. Griffith took one look at the important ingredient, the ability to face child through the camera lens and sent change boldly, accept it, and adapt freely. him back to the orphanage with a note It was Christmas in 1920, and I was pinned to his diaper. "Please send us a traveling through Pittsburgh to pro- younger looking baby," it said. "This one W D E when someone photographs like an old man." mote first asked me to do a radio interview. The camera was cruel and heartless in "What s radio?" I asked. "What do I do?" those days. It distorted and exaggerated everything. John Barrymore once said, He indicated a microphone and said, "If you stay in front of the camera long "You just talk into it as if it were a tele- enough, it will not only show what you phone." I agreed on the spot. A few had for breakfast but who your ances- weeks later, I received a letter from tors were." Fortunately, I was one of the someone who d heard the program from To the world, talking pictures opened up lucky ones who photographed well. But Oklahoma, and I marveled at the new- a whole new sensory experience. But there were other problems. One of the fangled invention. Radio eventually strangely enough, Mr. Griffith was hesi- first major roles I played in a Griffith became so popular that the train sched- tant about this latest breakthrough. ules in New York had to be arranged film was in T M H . I was In one sense, I imagine he must have around the broadcasts of , worried that I was overacting, but when A A mourned the loss of a highly personal so as not to interfere with one of the I saw the rushes during a lunch break adventure. Silent films, like radio most successful programs in history. one afternoon, I asked Mr. Griffith why dramas later on, made the viewer or it didn t show up on the film. "The cam- Our work changed the world. Those listener work harder, made him engage era opens and shuts, opens and shuts early films reached a global audience of his imagination more to make up for with equal time," he said. "Half of what millions of people; for the first time in the loss of a visual image in the case you do isn t seen. Take away the sound history, one could see how people of dif- of radio, or the spoken word in silent and you lose another quarter. Therefore, ferent nations were dressing the same, films. But in another sense, Mr. Griffith your expression must be four times as taking their lead from the "fashion" we saw something even more far-reaching. deep and true as it would be normally to wore in those backroom studios in Man- come over with full effect." hattan and California. International In 1921, Mr. Griffith premiered his own first talking picture, D S , to a Those were some of the drawbacks of capitals began resembling New York. working in an infant industry. We were New York audience at the Town Hall. When the talking picture arrived in the He told those around him, "We re com- practically children ourselves then. My 1930s, it was heralded as a technological sister Dorothy and I grew up with the mitting suicide." They must have been leap forward. To actors, it meant devel- startled to hear it. No doubt some of film business, and we watched with oping an entirely new technique from amazement as the state of the art of them even thought he was mad. But Mr. that used in silent films or theater, but Griffith foresaw what others had not: technology so dramatically affected the it also freed us to some extent. Subtle state of the art of dramatic entertain- Only five percent of the world speaks changes in the tonal qualities of lan- English. We were losing 95 percent of ment. We adapted and changed with it guage could communicate what motion our audience. That night, he went back gladly as sound expanded the visual ex- and gesture once had to. Again, I was perience of enjoying movies and as high to his studio and took the sound out of fortunate. My theater background gave D S . fidelity and other breakthroughs re- me experience using speech in drama fined the final product, thanks to the and made my transition into the new Change, I believe, always brings with it research and discoveries made by medium somewhat easier. As Louis B. the forefeit of some great good. It was AT&T and other pioneers. Mayer once said, using the film vernac- film, after all, that drew the final cur- In a sense, there never was such a thing ular of the day, "You re lucky, Lillian. tain on vaudeville. The advent of radio as "silent films" - there was always at Your voice photographs." and television brought new losses. The
20 BELL TELEPHONE MAGAZINE 1983 NO. 3-4 STEVE KARCHIN have been picked up by the newspapers, because hundreds of people greeted me with sympathetic wishes at every sta- tion stop en route. Women held up their children and said they were praying for Mother. Others wept. It s just a side note in this traumatic story, but I remember that it was during that train ride across America that I first realized the power of motion pictures. In London, I found Mother deep in a coma. She improved only slightly dur- ing the next few weeks, but enough for me to try to communicate with her. I took her by the hand and said, "Mother, I have to go back to California. If you want to go with me, squeeze my hand twice. If you want to stay here with Dorothy, squeeze it once." The response came faintly. It took every effort. She squeezed twice. I brought Mother s London doctor and an Irish nurse along with us on the trip home and, once we arrived in New York, hired a private car attached to a fast, nonstop mail train. When we arrived in California, the doctor and nurse went back to England. A new doctor stepped in, examined Mother, and said sadly, "There s no hope." In 1926, transatlantic telephone service was still a year away, but I heard that test calls were being made, so I asked to be one of the first to make such a call. I was told at the time that I placed the second phone call ever made between Los Angeles and London. I wired ahead so that Dorothy would be ready when the call came. Roxy Theatre once was one of the great breadth to any story on the screen. I remember my excitement when I showcases for films in New York City. It AT&Thas been a key contributor to the seated more than 6,000 people and con- advancement of movies. heard her voice on the other end. "I can t stantly was filled from 10 o clock in the believe we re talking to each other half- I know of no other invention that has morning until 2 o clock the next morn- way across the world!" she said. I put saved more time, energy, and money the phone to Mother s ear so she could ing. But the Roxy, like so many of our than the telephone. I give hundreds of cathedrals of film entertainment around hear Dorothy s voice and be reassured. press interviews by phone every year, the world, is gone now. Progress breeds and I often wonder what they would cost In the weeks ahead, both Mother and I loss ... out of necessity. to do any other way. I think of New York, drew constant comfort from the near- But progress also breeds an exciting and I marvel at how someone can make ness of Dorothy s voice, as we became new challenge. When we narrowed our dozens of business and personal appoint- three people held together by a precious audience by making English-speaking ments within the space of an hour just thin wire linking all our lives at a des- movies, Hollywood reacted by making by using the phone. The economy that perate hour. movies. has resulted from this invention can It s strange how we remember such little Throughout it all, AT T has been at the only be described as immense. things so many years later, but as I re- forefront. If the communications busi- But the true value of anything is mea- call, that first phone call to London cost ness has contributed to making the sured best in human terms, and it was 86 dollars for three minutes. To travel world smaller and better, then AT T has the telephone that once played a pro- the same distance in person, and with been one of the great world leaders. It found role in my own life. It became the the necessary medical entourage, had pioneered the telephone, of course, but vital link in a too-real drama of life and cost more than 100 thousand dollars. the company also has long been devoted death. The difference was astounding. to an aim that has brought us enormous But man s progress must be measured in rewards in the film business: a per- In 1926, I was working at Metro- invaluable human terms. Mother recov- fection of sound that could duplicate Goldwyn-Mayer on T S L ered from that devastating stroke and exactly the timbre of an actor s trem- when I received a telegram from lived another 22 happy years. Ulti- bling voice, or a magical note from a Dorothy. She was then in London film- mately, it is the gift of life that is prog- Stradivarius in the hands of an Isaac ing N G , and Mother had been ress greatest gift of all. Stern, setting the mood in a musical looking after her. The message said: score. When the sound of the sea wind "Mother has had a serious stroke. Today, we are living longer than at any blows through T W or T F Please come quickly" other time in the history of man. Who L W , one can taste the I left to board the train from Pasadena knows? It could be due to the energy we dry or salt air. That s film at its finest, a to New York still in costume and make- save by using the telephones that now seizing of reality that gives scope and up. Word of my mother s condition must reach around the world. ∎
NO. 3-4 1983 BELL TELEPHONE MAGAZINE 21 The people of the Bell System are fondly recalled in a tribute to their character and competence.
remember the first time I met a ees came in Japan, where I was building though they had not met each other Bell System employee. I was seven. radio and telephone systems at the end before. While eager to get home and In those Depression days, Mr. See- of World War II. As we put aside the resume their jobs, some stayed on longer bold (he was always known as techniques of combat communications than they had to, in order to see their "Mister") was an aristocrat of labor (highly temporary and full of rickety projects through. I found them stiff in to everyone on our street; most of our improvisation) and began to construct discussion, exuding technical superior- fathers suffered the agony of unemploy- permanent systems, we soon found our ity, amused by and tolerant of ignorance ment, so they watched with envy as Mr. knowledge and experience too limited. in others, but stirred to anger only when Seebold went to important work each An old sergeant told us, "For this kind of we proposed some half-baked, wasteful, morning. Sometimes seen in the neigh- thing we need some Bell folks." or hazardous method. borhood with a splendid truck laden A friendly general, eager to make A few months later, when ordered to with first-class tools, he was held as a impossible schedules, approved our effect transpacific communications, we model of how hard work and education request, and a dozen quietly competent were given Western Electric equipment could make one a master craftsman sergeants and lieutenants soon arrived. of exquisite workmanship and told to practicing mysterious skills, with After inspecting our efforts with politely contact several communications compa- security and prestige for life. disguised disdain, they took over the nies to establish service. The only one to We were told he was a cable splicer with telephone operations, training our raff- show up on time was AT T. I did not "The Telephone Company," an awesome ish types, creating a reference shelf know then that it - and Western Elec- organization whose service was then from personal books, setting up immac- tric - were part of the Bell System. enjoyed by only a few local families. ulate records, testing everything in When told so, I decided to pursue When emergencies demanded the use sight, and getting new equipment to whatever opportunity there might be to of a phone, the supplicant was escorted work with obsolete Japanese apparatus. work with these modern colleagues of to the magical instrument, alongside All the while, they talked about "cus- Mr. Seebold after securing my engineer- which was a receptacle for the five cents tomers" - something I did not know we ing degree. My impressions of the Bell due for the call. Few of us thought we had - and established repair bureaus System were based entirely on its would ever have a telephone of our own, and quality reports! Working round the - the kind of people I wanted and to join Mr. Seebold s company was clock, unperturbed by difficulties, they to join for the rest of my working life. seen as far-reaching ambition, proper set new standards for us all. In talking Financiers, engineers, politicians, and only for the brightest among us. with them, one sensed both shared economists each see their own Bell Sys- My next association with Bell employ- vocabulary and codes of excellence, tem. But mine will always be a vision of
22 BELL TELEPHONE MAGAZINE 1983 NO. 3-4 its people. Individual efforts, talent, and Company of Maryland, spent five effective. Whether they were engineer beliefs formed a character and culture minutes with the facts of my applica- or chairman, clerk or factory manager, unique in American history. tion. Brushing it aside, he propelled me comptroller or lawyer, scientist or finan- Every Bell job, from the earliest days, to a large drafting board holding cier, their contributions came to focus on was aimed toward a set of challenging detailed maps of the Chesapeake Bay the crucial contact points between cus- goals for improvement unrealizable in a bottom. "We have to move our under- tomer and company - which were in lifetime. The range and scope of neces- water cables to make way for the new the hands of local operations people. No sary tasks were so great that nearly Bay Bridge. How should we do it?" he person without firsthand experience in every kind of skill and personality could asked. Four hours later, exhausted by this fundamental work of the business find some springboard for achievement his pace and mental energy, I saw him could hope for promotion to the highest and personal growth. still making calculations and notes. positions. Common experience made for Since the clock stood at seven, I gulped common understanding of what was and inquired about the job. He looked up important at all levels. In this way, Bell AN EXTENDED FAMILY OF impatiently. "O you re hired. people felt secure because they would be ONE MILLION MEMBERS Would I waste all this time on someone backed up on any decision congruent Though the total number of employees who couldn t help on this sort of thing?" with the great service goals, and they reached more than a million, no one at Years later, all kinds of tests and proce- knew that any deviation from them work ever thought in terms of such would not be tolerated. statistical abstractions. Bell people saw dures were used in recruiting, but I learned that many older employees had In historical terms, the major contribu- themselves as members of crews, tions of employees were found in those garages, exchanges, business offices, similar experiences. Jim Dingman, who rose to be a vice chairman of AT T, billions of acts necessary to tie society teams, districts, or, at most, depart- together. For more than four genera- ments. Everyone was important in these recounted how he had been hired on a train trip (returning from a racetrack!), tions, employees produced a vital small, lively units. They would be service - available on demand, any- missed if absent, and notice was taken where his seat companion examined his qualifications as the countryside time day or night - that the nation s of their return - from holiday or hospi- population could take for granted. tal - as in a family. rolled by. I came to see that the character and per- Rapid decisions based on face-to-face The network s reliability and speed sonalities of Bell, Watson, and Vail had contact with a person or a problem of response created a form of "social stamped themselves on all employees were characteristic of Bell people since insurance" for life and property that and their working conditions. Broad Watson hired Vail on a side trip to expanded the choices by which people vision, commitment to continuous Washington in 1878. Bell people have could live their lives and do their work, learning, a faith that solutions to every never liked delay in anything. "Get on thus enhancing individual freedom. But problem could be found with enough with it" was a lesson learned very early. the technology and physical plant of energy and brains, a serene belief in the From the turn of the century until the communications, however marvelous, importance of what they were doing, last decade or so, most employees furnished only the skeleton and muscle technological know-how and eagerness worked in the three great departments of the Bell System. Its soul and mind, to use it, hardheaded pragmatism, alert- of traffic, plant, and commercial. which gave life and spirit, came totally ness for humbug, and an attitude that Switchboard operators handled calls, from employees. Were all the plant de- everything can be - and must be - plant folks installed and repaired lines stroyed, they could rebuild it. Without improved, all mingled to produce the and equipment, and business-office them, the proud arrays of ingenious equipment and machinery would be Bell temperament. people dealt with customers orders, artifacts, silent and useless; instead, Oriented to concrete accomplishment, problems, and billing. Nearly all were recruited directly for work in their they were wonderful instruments used employees were realistic, more inter- by skilled human beings for the benefit home towns. ested in people and things than in of customers. While managers strived to abstract ideas. (Some of their scientist The company, through its employees, get more and better tools for employees, colleagues brilliantly explored realms was deeply rooted in each local com- the crucial test was how well they at the frontiers of thought, but even munity; mutual destinies were linked. selected, trained, nurtured, developed, their work was justified by hope of Any lapses in service would be noticed and made effective the people in their ultimate practical application. They by one s neighbors - very direct feed- charge. T were the precious, indis- approached the theoretical problem back indeed. pensable resources, and anyone careless of putting a man on the moon with The three local heads - chief operator, of such responsibility was judged unfit. the same deliberate competence their wire chief, and local manager - were fellows used in repairing the damage persons of prestige, looked to as respon- REGULATION NOTWITHSTANDING inflicted by a tornado.) Like all human sible for a service vital to all. In many Though the Bell System was a regulated beings, Bell employees possessed two towns throughout the nation, they did monopoly, it was also an American insti- drives: the urge to belong to something the hiring and supervised the training. tution, which made life inside briskly larger than themselves and the urge to This made them powerful figures to competitive. This aspect continually stand out. The service orientation and parents whose children aimed for a eluded observers, who were baffled by organization itself satisfied their first telephone career. They usually were the enormous efforts to excel in every- drive; to fulfill the second, they had to people who came up through the ranks. meet the test of really doing something thing from science to service. "Why do Capable and hardworking, today they you do it when you don t have competi- useful better than others. would probably have gone on to college tion?" they would ask. The answer was They had little time - and even con- from high school. But for them, the simple - and complex. On an individ- tempt - for those who expected distinc- was their educational institu- ual level, the "urge to stand out" as an tion based solely on birth, education, tion, and no alumnus or alumna held indicator of personal achievement was wealth, or social background. "Don t tell fiercer loyalties than those who felt powerful; performance reports for every us about your paper qualifications, themselves lucky in the chances their organizational unit were widely pub- us what you can do" expressed organization gave them. lished and studied. Those lagging their test of true merit. Such teams and the people they trained behind the leaders were stimulated to In the interview for my first job, Sid were the bedrock for the company s find ways to advance. Managers visited Miller, a legendary transmission engi- reputation. All the rest of the enterprise those who had shown the way with new neer for the Chesapeake Potomac existed to make their functions more methods or techniques, and head-
NO. 3-4 1983 BELL TELEPHONE MAGAZINE 23 an honor sought by all. True concern for employees recognizes Such contests tapped that the greatest influence on quality of native ingenuity and life at work is the quality of immediate encouraged people in management. This realization focuses the same field to emu- attention on how those placed in charge late the winners. of others can have their qualifications Bell s constant preoc- suitably matched with their responsibil- cupation with working ities. A host of training ventures, from conditions produced those for newly appointed supervisors to such innovations as seminars for company presidents, cafeterias and lounges attests to the belief in constant learning (some equipped with as essential for quality management. billiard tables!) for the The Bell System was one of the world s refreshment of Bell largest private educational institutions workers. Telephone - with a potential "student body" of one people had these million, offering 13 thousand courses, amenities far in employing 10 thousand permanent advance of people staff members, and spending two billion employed by other dollars a year on the effort. The train- industries. Pension ing was devoted to keeping employee plans and loans for knowledge, skills, and competence family emergencies abreast of a business environment were aspects of contin- changing in every dimension. Such uing concern for training represents an investment in employees off the job, human potential unique in corporate a concern introduced life. Company-sponsored programs, in by Vail himself. endeavors ranging from the basic In 1924, the Haw- telephone crafts to Ph.D. studies at Bell thorne Experiments Labs, provided employees the oppor- quarters experts provided advice and led to profound insights about the social tunity to convert talent into ability. information on ideas for improvement. nature of workplaces. Fifty years later, In 1949, a corporate human relations On major, shared problems, organized scholars from all over the world assem- program enhanced the effectiveness of experiments under field conditions were bled in Chicago to assess the impact of work groups by exposing managers to undertaken, with results and lessons this pioneer effort by Western Electric. the psychological principles of personal made available to all concerned for ap- The investigations analyzed the connec- behavior and conflict resolution, which plication in their own areas. This wasn t tion between working conditions and were increasingly necessary to handle a competition in which you tried to put productivity and were named for the unprecedented growth in the work- down your fellows, but a rivalry among Western Electric s Hawthorne (Illinois) force at the time. Works, where the experiments were con- friends that lifted the performance of By 1956, landmark research that all. In technology, "cable people" tried to ducted. They remain a vital force in the world of work and its academic study. appears to constitute the most extensive outdistance "radio people"; in offices, study of adult lives ever undertaken innovations in scheduling, transport, In the 1920s, another study - this one was begun by AT T s Doug Bray. Among and layout produced constant improve- correlating scholastic and extracurricu- its results are a firm understanding of ments; in construction, new vehicles lar leadership with subsequent success the nature of management potential and tools were designed by collaboration in business - evoked wide attention and the changes in managers motiva- between field personnel and engineers when published by AT T s president, tions and values as they live out their - and so, on and on, in every nook and Walter S. Gifford. The results had great lives in a large corporation. F cranny of the business. Employees knew influence on Bell recruiting and were Y B , published in 1974, is that next year things should be better - validated again in the 1950s. the first book in a series that sets out no matter what the task. During World War II, Bell employees the findings. (It is dedicated to Bob Cynics may sneer at this simple faith wrote many of the field manuals used in Greenleaf, AT T s personnel-research in the idea of progress, but its results training defense-communications per- pioneer of worldwide reputation.) speak for themselves: World leadership sonnel and performed prodigious This work led to the establishment of in telephony was built on it. services of invention and productivity; management assessment centers, where Accompanying such internal competi- 70 thousand of them joined the armed 300 thousand Bell employees have been tion, great surges of cooperation were forces. Participation in U.S. Savings tested and appraised. The assessment required, and never more so than in Bond drives, which began then, has con- technique was adopted on a global scale, emergencies of every kind. During natu- tinued undiminished ever since, with and an international congress on the ral disasters, employees expected to be organizations set up to run internal method is held annually. This selection called on for help, and forces were mobi- fund-raising campaigns during enroll- process is a major contributor to opening lized from Bell units across the nation to ment periods. opportunities for people with real abil- restore service quickly. Opportunities Bloodmobile programs have evoked ity, regardless of their race, sex, color, or for true heroism could come at any time, similar responses in every work loca- any other attribute not related to poten- tial competence for supervising others. and the nearly 2,400 Gold, Silver, and tion. (One AT T supervisor, whose low Bronze Vail Medals bestowed by the Bell blood pressure would have prevented The centers played a vital part in System on its men and women over the him from contributing, was so embar- Affirmative Action programs to make past 63 years attest to the selflessness rassed to face his staff that he ran equality of opportunity a reality for all. and bravery among employees. around Lower Manhattan s Trinity In addition, the assessment process has helped prevent tragic failures in later In the early years of this century, con- Churchyard to elevate his pressure and tests in the telephone crafts, similar to then jumped to the front of the testing life for those with little aptitude for competitions found at county fairs, were line so that he d be examined before his managing others. held throughout the country. To win was pressure dropped.) Several programs have sprung from the
24 BELL TELEPHONE MAGAZINE 1983 NO. 3-4 original effort - for example, initial pressures arose in training for newly hired or promoted the national first-level managers, and studies to dis- telecommunications- cern the differences in attitudes and policy revolution. values among young people joining the Throughout the business. Major explorations abound in uproar and controver- every sphere affecting employees, from sies of the day, certain organizational design to validation of essentials remained tests used in recruiting. This search for unchanged. The sound knowledge in the care and devel- primacy of customer opment of employees has been spear- satisfaction never headed over the years by a human declined. Though a resources research unit unlike any slogan like "the voice other in the world. with a smile" became dated as dial tone Another significant project aimed at replaced a cheerful employees personal growth came to be "Number, please," the known as The Work Itself. Under Bob belief in friendly con- Ford s direction, all kinds of jobs, includ- cern for each customer ing many that people considered boring, as an individual re- limited, or repetitive, were examined mained an ideal for closely to find ways of enriching them - operations people. to make those jobs interesting and open- ended as a person s experience grew. An aspect of telephone Widespread use of this process, and its culture that forever remarkable success, made Bell the baffled skeptics was recognized leader in job-enrichment that complex of atti- research and applications. tudes known as the Spirit of Service. Few The Bell System s evolution has been employees could marked by a succession of major define it in the abstract and, when quently, corrective programs based on changes - social, technological, politi- pressed, they always used examples of early awareness of customer or cal, and economic - that had to be faced extraordinary efforts to assist customers employee dissatisfaction kept the enter- and accepted by its people in meeting in need. Though ineffable, this ethic was prise responsive to changing their responsibilities. As soon as a real - found among the young and the expectations and concerns. new problem area was discerned, atten- veteran, operators and installers, econo- The Bell System s safety record has been tion was turned toward consideration mists and construction crews - a spirit of how employees could be prepared remarkable by any standard and that was ready to express itself reflects top-to-bottom concern with safe to deal effectively with the new whenever the circumstances demanded. conditions. working methods and conditions. There Its source is mysterious but perhaps is constant inspection for safety hazards In technology, a data communications rooted in the fact that the business is a by employee committees in every work- school was established in Cooperstown, person-to-person function, not an arid, place. All employees learned this motto New York, to seed System competence in paper-shuffling bureaucracy. What early in business life: "No job is so that emerging art. The same site was employees do for customers is filled with important and no service is so urgent used for computer courses attended by emotion, affecting everyone involved in that we cannot take time to perform our all System managers, including a specific incident or personal crisis work safely." It is rare where a plaque company presidents. A large training requiring Bell s services. carrying this message is not within complex for advanced engineering skills daily view. was set up at Lisle, Illinois, and another This person-to-person orientation has for plant maintenance in Atlanta. permeated all relationships. Trust in With the end of the Bell System, em- the intelligence of employees who had ployees will be deployed to subsequent Social problems of the 60s triggered been carefully recruited meant sharing and independent entities. Those who many programs to acquaint Bell people as much information as possible, so that travel the avenues of tomorrow must with emerging legislation as well as they could make their own judgments. make a new culture for time. with the actual conditions existing in Since Vail s time, it was felt to be far bet- As they press on, they can be sustained disadvantaged urban areas. Many Bell ter for actions to flow from true by the century of traditions that executives took prominent roles - and understanding rather than from blind brought them to the crossroads. The risks - in assisting their communities obedience to orders, with no reasons long road reaching back to Bell, Watson, to make the enormous social transfor- given. Any employee with a question and Vail, along which great numbers mations required. was entitled to an authentic answer. have made journeys of contribution, now diverges toward routes and destina- The need to deal with the total environ- Belief in balancing the interests of tions no one can foresee. All who trod ment in which the business operated led employees, customers, and share owners that earlier path created a culture, to month-long courses at Asbury Park, was fundamental. Only by keeping though they did not do it consciously. New Jersey, in the 50s and 60s . Corpo- prices low for customers, wages competi- rate Policy Seminars at Princeton, New tive, and earnings in line with alterna- Most of them - like Mr. Seebold - Jersey, and at Buck Hill Falls, Pennsyl- tive investment opportunities could the took pride in "working for the phone vania, immersed managers in the bewil- business function efficiently. Under- company" and enjoyed a purposeful dering issues of the last decade, assisting standing of this philosophy made serenity about the usefulness of their them in preparing their people for the employees unusually receptive to tech- work. They not only believed progress turbulence of those years. Regulatory nical improvements. In fact, surveys of possible but also proved it every and legislative conferences, as well as employee and customer attitudes day, every year, and every decade. They public relations, marketing, personnel, showed that how felt about demonstrated what knowledge coupled and economics courses, were held the company was nearly identical with with vision could achieve, and was continuously as events unfolded and how felt about it. Conse- their real contribution. ∎
NO. 3-4 1983 BELL TELEPHONE MAGAZINE 25
talked to said, "I m not circuitry-minded. I m a ring-and-tip man. I don t pretend to understand the whole network, but when I stop and think about it, the technology is just unbelievable." People I ve talked to in all kinds of jobs were quick to share their sense that the world of communi- cations they re responsible for is close to science fiction. A long distance operator told me, "It s mind-boggling - all these electrons! If I stop to think about it, I get confused. The TSPS is amaz- ing. Underneath, it has all these wires, and we know it s all recorded on tape, but most of us don t really know how it works. It s amazing that people can dial their own calls or make credit- card calls. Now, even overseas calls are routine." A man at Bell Labs told me his mind still gets blown away every day by the stuff they re into there. A Labs engineer told me how proud he was to have worked on Telstar. Another said the de- vice he worked on years ago was still lying on the ocean floor, doing its job; he thinks of it now and then, with mingled pride and astonishment. A central office manager said, "The technology has become so complex and varied you can t remem- ber how it all works, so you have to know to find out. That s the key to service today." Imagine the whole Bell System as a giant compu- ter. Everything people do to make telephones work -all the manufacturing, installation, servicing, management. If you could look at the United States fromjust the right distance in space, the Bell System might resemble an integrated circuit. The employees would be at the gates - the switching points in the design - each one neces- sary to the whole, each one as important as the next. There d be people scurrying down all those pathways. You d see frame attendants connecting wires and looking for trouble, construction people digging holes and laying cable, other employees collecting coins from pay phones, others recycling copper and old telephones, and you d even see all the people who are hired just to keep track of things-cable, light bulbs, telephone numbers- people who supervise the electronic switching systems. I could go on. But you get the idea. Times change. Things speed up. Things get bigger, or they grow smaller. A laser is so small that scientists joke about inhaling it by mistake. The future is wild. It s filled with risk and adventure and undreamed- of frontiers. There are two buttons on my telephone ( and #) that are reserved, I suppose, for whatever is coming along next. My guess is that someday I ll be able to travel from New York to Cali- fornia just by pushing the #. Perhaps the other button will be for time travel. I wouldn t be surprised if the telephone people come up with something that far out, when the time is right, of course. When it happens, I hope we can count on the Spirit of Service to get us there and back, because we d sure as hell need it on a trip like that. And if the public-interest spirit of Theodore N. Vail still prevails, the trip shouldn t cost much, either. ∎
28 BELL TELEPHONE MAGAZINE 1983 NO. 3-4 The Bell System can be kept alive through the "living memories" of its people.
he major television mogul casualty of the dissolution of the Sys- was absolutely serious. "You tem. Its glow should be carried within develop that idea into a strong each worker into whatever is his or her family series," he said, "and new area of employment. we ll try to make it as big as If my experiences in the genealogical R ." So I began wracking my brain, realm can offer any useful suggestion, it hard. It s tough enough to create a nifty is that all who are involved become ac- two-hour special, let alone a powerhouse tive oral collectors of the long, rich Bell weekly series. history. There is not another drama to I had shared with the pinnacle-level match it within u.s. industry. exec my experience of four afternoons Let me try and approach this another earlier, which went something like this: way in my effort to underscore its I was stopped in traffic for a red light importance. What I am trying to stress and spotted a telephone installer s truck. is that the Bell System drama - from A sudden awareness came that the truck Alexander Graham Bell and Theodore and driver were accepted as familiarly Newton Vail on to divestiture - repre- as a cottontail rabbit throughout the sents an American national treasure. United States - in city, town, and ham- Its preservation needs to be active, let. That night, I wrote to AT T in New ongoing, oral - derived from the living York my idea for a "Telephone Man" memories of the millions of proud "Ma series: The Bell System s ubiquitous re- Bell people," active and retired and pair and installation folks, meeting and share-owning. Schools, religious congre- interacting with all sorts of people, gations, civic and social and fraternal could fill no end of one-hour episodes groups, and any other audiences in our with emotions from anger to laughter communities should hear the Bell story. for millions of viewers. Very shortly, AT T was helping me interview scores of Today, according to my friend Alvin Tof- Bell veterans, active and retired, who experiencing. It scarcely helps that all fler (he of F S and T T related their memories - some routine, the upset was generated by a word, W ), nearly 25 percent of u.s. resi- some dramatic, all highly personal. I "divestiture," which most folks never dences are occupied by a single individ- had no question that I d found the per- heard of before, myself included - and ual. It is but one among a plethora fect all-American family series. my business is supposed to be words. of new family forms to which we ve had to adjust - including single So why isn t this great show now count- Put another way, the American people -for generations - have learned to parents, teenaged parents, working ing its Emmys? In discussions farther wives, and housekeeping husbands. along the creative road, the production depend on the Bell System, now being company s high panjandrum agreed that transformed into what must to a con- In relation to what is happening in u.s. he loved the show, "but it simply can t fused public seem as something akin to families, it is generally becoming ac- compete with others in vital ingredi- a jigsaw puzzle. Of course, within the cepted that change is inevitable, that we ents. The bad guys have got to be Bell corporate viscera, there probably should expect it, cope with it. I be- chased, cornered, and fought by the are persons skilled in figures who could lieve, ultimately, that same perspective heroes, who maybe also have sex with tell us to the nearest dollar the gar- should apply to corporate changes. the pretty babe. Your phone guys would gantuan value of the whole corporate But I also believe that as we embark on get fired for doing that on the job - megillah. But I believe that of a greater the adventure of the Information Age, you know what I mean?" non-measurable value is the warm feel- each post-divestiture company must A great series died in the fetal stage, ing of maternalistic endearment the two have not only vigorous state-of-the-art that s what I think. But so much for words "Ma Bell" evoke wherever they re technology but also the legendary "Ma that. It s hardly a jot alongside what the uttered; they symbolize the largest con- Bell" caliber of people to continue pio- million or so members of the largest tinuous family in industrial history. neering in excellent communications - industrial family in the United States I think that warm feeling should by no communications for America and the - which is Ma Bell and her brood - are means be permitted to be lost as another world community. ∎
NO. 3-4 1983 BELL TELEPHONE MAGAZINE 29 Though not based on blood and genes, a corporate community nonetheless possesses strong familial ties.
o one who has B for being anti-community: they are areas; they were almost villages. T M over the characterized as large, impersonal, years can fail to be impressed bureaucratic, alienating, coldly oriented The great historical transformation by three qualities possessed toward profit only. Second, the form of from what the sociologists call G - by the Bell System and its community created by corporations like (the sense of close belonging) to people: the paramount ideal of service; the Bell System is relatively new in G (the sense of mere associa- the stability of Bell s service and em- history - and as such, inordinately tion and contiguity) is recent enough to ployment; and the ubiquitous sense of interesting. have left vivid traces on our memories. familial pride, personal involvement, Americans lived through this transfor- When theologians write about "commu- and employee-to-employee loyalty. No mation during and after World War II as nity," most of them seem to be imagin- organization could have succeeded with- they moved from small towns and rural ing, unconsciously, the community of areas to big cities. Recent advertising out such characteristic temperament, the small village, the medieval guilds, emotions, and strengths. campaigns - "Reach out and touch the other homogeneous, close-knit com- someone," for example - play vibrantly What must it be like, then, to face the munities of the premodern era. Extrap- upon Americans recovered sense of nos- family s breakup? What must it be like olating from this image, theologians see talgia, as people strive to reach across to head into new technologies, new modern life as pluralistic, anarchic, distances of space and memory to "re- market conditions, new philosophies of fragmentary, impersonal, cold, lonely. create" the old community. work, new uncertainties? Numerous Obviously, there is some truth in this Bell publications across the nation re- view. Not very long ago, in such coun- By comparison with the intense com- count the stress, the anger, the anxiety. tries as Germany, England, and France, munity of the older type, the new com- village life did dominate the popular munities we live in are clearly different. To a theologian, the human story at consciousness. Seven or eight genera- Are they in all ways inferior? Close Bell offers fascinating material for two tions ago, great cities like Jerusalem, analysis will not allow us to say so. reasons. First, corporations have, in Rome, and Cologne were contained After all, who - really - would want to humanistic literature, a reputation largely within relatively small, walled go back?
30 BELL TELEPHONE MAGAZINE 1983 NO. 3-4 BILL NELSON To be sure, we miss the old closeness. - and community at that - of their friendships, the resources of But we also have experienced several is a never-ending effort. Human com- their own temperaments and emotions? gains. There is, first, the gain in self- munity is so high and perfect an ideal Bell has been one of the most stable, se- discovery and self-realization, which has that there are always new horizons to cure companies in the world. Suddenly, brought us new challenges, stimulation, march toward together. many of its employees will be working options, rewards. Even our families can Community in a business corporation is for new companies. Many will be sun- enjoy, vicariously, new discoveries made not based on blood and genes and kin- dered from old friends and old ways. by members who have left home, scattered ship. It is not based on proximity. It is I was touched when I read in B T - as if by the winds. not homogeneous in belief, spirit, and M of one technician who Second, new forms of community have sensibility. It is voluntary, partial, task- said how sad it will be to receive a call been invented. Most Americans already oriented, and cooperative, but not all- for service he can no longer respond to are the children of an historical uproot- absorbing, not a 24-hour-a-day pursuit under the new arrangements; to tell ing from the ancient G . or endeavor. Most workers "go home" to people he no longer handles the phones Someone, somewhere, long ago, left communities more intimate and involv- his company has leased during all of family, kin, friends, and neighbors to "go ing. Although life at work captures in his work life; to leave old friends and to America." But what did they do when every lifetime an enormous proportion to work with new colleagues under a they arrived? They built communities, of hours in one s social life, this is not new regime. Yet the times demand associations, families, friendships - and does not pretend to be the whole of such changes. and a new nation. And something else. it. But it is immensely social nonethe- PEER PLEASURE Many of us have been misled in our less. Typically, some of one s best friends But it is not enough to know cogni- thinking about the foundation of Ameri- are found on the job. Some of one s best tively, because there is, for instance, can life. Quite a few of us think in terms laughs, deepest anxieties, and wrench- nothing like the friendship that comes of the lonesome cowboy, or the solitary ing griefs occur there. from weathering a storm together. The pioneer family, alone in the great vast- People at work are thoroughly human. kind of community higher than any ness of the Plains. No doubt, this empty The character of their work other is not necessarily the sort that is land - empty of Europe s traditions, of has perhaps, until recently, been too emotionally intense, where individuals laws and customs, and empty perhaps, long neglected. Theologians do rela- look into each other s eyes with the inti- some feared, of the familiar God - im- tively little thinking about the virtues macy of love, but the kind where all eyes pressed imaginations. But the truth is demanded of people in their work, about are aimed ahead, meeting the demands that was, from the first, the special vices to which they are prey of the task at hand and beating off all reality of American life. there, about the whole spiritual and foes and threats. In this context, the discipline of the marketplace - the One of the new forms of community religious exercised in every task, under fierce competition, of keep- built in America was the business cor- dimension of work s demands. The high- ing profit centers up - teaches us a poration. Even by the year 1800, when est ethical and religious exercises can be great deal about community. It is a mis- America was home to barely four mil- called into play there: compassion, con- take to hold that the discipline of profit lion people, there were more business cern, concentration, service, and prayer invariably must injure community; this corporations here than in all the rest of itself. is not necessarily the case. Typically, it the world. Another point: One of the highest forms is not at all the case. The great corporations, of course, came of community experienced by humans The corporation affords a new model of into being only after the Civil War, with is community under fire - cooperative community. It is filled with grist for the new systems of transport and com- effort put to the test of competition. learning what community is - and for munication. Their economic task was to Soldiers often recall their days of mili- exercising it. Every act of social virtue tie the continent together, to provide tary service as the highest form of com- strengthens the whole; every incivility goods and services to an increasingly munity they had ever experienced; rends it a little. This world is not in- self-reliant nation. Most were born as athletes, in terms of their days in the tended for saints, but it makes demands the result of a new idea or a new inven- sports arena, feel the same. And so do on everyone just the same. tion; goods and services were produced multitudes of workers - certainly in as never before. Thus it was with the the Bell System - recalling times of I am glad not to be presiding over the telephone company, the railroads, and hurricane, flood, or even a particularly Bell System s gargantuan change, the automobile companies. And so it is intense campaign or crisis on the job. trying to make sure the many are kept today with the advent of computers and The competitive fires of technological informed, their anxieties lowered, their microprocessors. change and of the contemporary mar- spirits kept high; and at the same time, ketplace occasionally arouse an entire seeing to it that service is not only con- NO MORE MR. COWBOY company to the sense that it is fighting tinued but also improved, profits are Business corporations demonstrate that for its survival. The flow of teamwork is sustained to guarantee long-term sur- the great invention of democratic capi- quite beautiful then. vival, and sound decisions about tech- nology are made. The skills required of talism is the individual entre- Is this not the case currently in the Bell those presiding would, in my view, com- preneur. But the myth of the lone System? A technological revolution has bine the talents of a Margaret Thatcher, individual, like all myths, dies hard. raced into your midst. Who knows how Willie Mays, Paul Samuelson, Dan That myth masks the pervasive reality it will end? Simultaneously, the govern- Rather, Bob Hope, Peter Drucker, of American - and corporate - life. No ment has decided not only to end your Katharine Hepburn, and Alexander business corporation is, or can be, a col- quasi-monopoly but also to rupture your Graham Bell. By the same token, if the lection of lonesome cowboys or rugged huge national family. At the same time, team is up and the inventiveness strong individualists indifferent to the needs a rapidly developing technology makes and the willingness high and the toler- and opinions of others. On the contrary, possible - and demands (under the pres- ance of all on even keel, the captain of when undiscerning critics of American sures of the marketplace) - a new type the ship doesn t have to be a Lord life are not busy telling us we are lonely of relationship between managers and and alienated, they describe us with subordinates. What sort of human com- Nelson. Community does it. such rubrics as the "organization man," munity can absorb all of these blows in This corporate transformation is a great suffering from "conformism" and "an ex- good spirit and emerge intact, and even human adventure. Some of our churches cess of corporate loyalty." stronger for it? How many thousands might do well to experience it. Theolo- The reality is that building community must fear for their futures, the pattern gians could do well to study it. ∎
NO. 3-4 1983 BELL TELEPHONE MAGAZINE 31 As seen by a child, the telephone was a device into which grown women shouted. For an adult, it's an addiction.
other only dialed a tele- ation. When Grandma first got a tele- was worse. Being an operator gave Orrie phone number if she was phone in her farmhouse sometime before the big head, and one day she quite seated, her legs crossed at World War I, her friends gathered forgot herself and intruded into other the knee, lipstick freshly to witness the event. The object was a people s conversations. At least Henrietta splashed across her mouth, wooden box, a black mouthpiece sticking had the good taste to be quiet. Orrie lost cigarette in her right hand. Mother took out like a beak, with a wooden receiver her job over that and Beadle Shellen- Bette Davis seriously. This morning that hung on a small hook; you stood up berger took over. Orrie never got over it. began like every other morning. At 6:30 while using it. When Grandma picked If Henrietta s and Orrie s eavesdropping a.m., her pose intact, she rang up her focused on sex and sin - the two being sister, Louise. up her receiver and wound up the cur-rent, the operator, Henrietta Falkenroth, synonymous - Beadle s target was was supposed to come on the line and "Hi, Wheezie. What s on for today?" finance. She made money in the stock say, "Hello, Central." This she never did, market hand over fist. Before Beadle This was followed by whatever Wheezie because she prided herself on recogniz- died, she built a new library for Runny- planned. ing every voice in Runnymead, a town of mead and people felt a gold telephone about 3,000, although many did not own "Ha, that s nothing. You should have-" should be installed on the checkout desk. Mother paused, then exploded. "Orrie a telephone. When Grandma died in Tadia, quit hanging on that line like a 1949, she was still served by the same Nosey as Henrietta and Beadle were, blowfly!" telephone, as she saw no reason for they could pitch in and help when improvement. needed. One hot Saturday afternoon, Click. Henrietta was on her shift. The movie This was my introduction to the tele- PARTY LINE PRATFALLS house was full, the square enjoyed the phone - a device into which grown Henrietta s relief, Martha Molyneux, usual traffic, and Mother, Louise, Orrie, women shouted. We were on a party line provoked the townspeople to amaze- and Beadle were in the drugstore and Orrie was sincere about party. Your ment because she had a beautiful head because that s where the young men news was her news. No sooner had you without benefit of brains in it. Martha gathered. Orrie wouldn t talk to Beadle. hung up than Orrie hovered at the back was dreaded at the switchboard more Mother didn t have time to fully appreci- door to help you celebrate, mourn, find a fiercely than Henrietta. From the time ate the foolishness of the situation bargain, or dish whoever fell into disre- you told Martha whom you wanted to because the sky darkened suddenly and pute that day. The time was the late reach or gave her the number, to the turned greenish. An ominous howl star- 1940s, and Mother, Louise, and Orrie time she would plug in the call, she d tled everyone. Orrie ducked behind the coasted into their late 40s with the cen- forget and stick the line anywhere. Once counter. Mother looked out the window tury. Not that this fact was ever openly Grandma found herself engaged in just in time to see a small tornado touch discussed, but as Orrie s makeup pre- conversation with Jason Leader, the down on the movie house, destroy the ceded her into the room by five minutes, undertaker. roof, then pick up its skirts like a hula dancer and roar out of town. you figured the clock was ticking. "Mrs. Hunsenmeir, the Lord calls those Orrie suffered no remorse over eaves- whom he needs most. High-button shoes notwithstanding, dropping. That s why the telephone was "Mr. Leader, I m sure he does, but I don t Beadle flew over to the telephone office, invented, to save Orrie Tadia the trial have the Lord s telephone number." which was untouched. Henrietta tried to of walking to the town square for dirt. get help from the nearest town, which Thanks to this communications miracle, "I beg your pardon?" lay to the west. Then, realizing the she could listen in the comfort of her "Jason, Martha struck again." storm had come from that direction, overstuffed home. Listen she did, be- because the lines were dead, she rang cause Mother and Aunt Louise knew "You mean no one kin to you is dead?" the fire departments of the towns to the everybody who amounted to everything. "No, we re healthy as ticks but don t east. Throughout the night, Henrietta Personal news preceded national news, worry, you ll get us in time." Grandma and Beadle took calls and delivered except for the bombing of Pearl Harbor, laughed and continued to laugh as she messages on foot to anyone whose phone when Mother actually called Orrie to repeated the story over the years. was knocked out, and they sent out calls tell her. I don t believe it myself, but the Finally Martha had to go and none for anyone who came into the office. family swears it on a stack of Bibles. other than Orrie Tadia replaced her. Beadle s exemplary behavior only fur- We ve always kept plenty of Bibles Orrie mastered her duties rapidly and ther inflamed Orrie, but her revenge around for this purpose. was an enthusiastic employee - a little came years later when Beadle married Louise, born in 1900, and Mother and too enthusiastic. Everyone knew that Orrie s ex-husband. Orrie, born in 1905, grew up during the Henrietta and Orrie listened in. At first, Louise, too, got married and set up glory years of American technology. Orrie only blabbed to Mother and housekeeping. Notoriously impression- Mechanical marvels astonished their Louise the scandal too good to be true. able, Louise saw one too many white- generation and their parents gener- While that was unwise, what followed telephone movies. Whether it was
32 BELL TELEPHONE MAGAZINE 1983 NO. 3-4 GREGORY HEISLER D E or T H , the movie Beadle was on duty - a break for York, Pennsylvania, and the Valencia stars used white telephones. Louise Louise. The fights between Louise and Ballroom. There she met her future hus- determined to be the first with this lux- Mother were legendary for their lack of band, thanks to a white telephone. ury item. When Henrietta, informed of restraint. But Beadle went about her Somewhat later I arrived, another tele- Louise s ambition, tittered with deri- business, probably praying that Orrie phone customer. sion, Louise stomped back home and wouldn t show up to compound the mess. Unlike Mother, Louise, and Orrie, I painted her phone white. Use later Mother continued, "As I was saying, don t know what it s like to live without made it look as though it suffered the Beadle - " a telephone. Well, that s not entirely heartbreak of psoriasis. Louise, now true, because my father once built a "Stole my telephone, my own sister!" plagued with the twin emotions of anger wooden box with a lock and key to keep and embarrassment, yanked the phone "Calm yourself, Louise, you ll wind up me away from the telephone. It wasn t out of the wall. Mother, a fountain of with your bowels in an uproar." my fault. Such disgrace and social isola- emotional support, laughed, and Louise "Is that any way to talk, you little_____!" tion began when my cousin, Leroy, had a running fit and threw the phone spilled Coca-Cola over my carefully or- at her. The abuse escalated. The sisters had ganized collection of Captain Marvel been known to slug, smash, and savage "Look what you ve done!" Louise wailed. comic books. He wrecked some of the entire rooms. Wisely, Beadle snatched As Louise desperately scanned the hori- Mary Marvel ones, too. Okay, that s not the instrument from Mother s hands so terrible, but the day before he d zon searching for someone to blame for and shouted above the vilification: "Of demolished my set of Lincoln logs and her troubles, this outburst rolled off course, you should have a new tele- Mother s back. Logically, she offered to I d had it. We were the same age and a phone, Louise. We re here to serve you. fight was a fight, no holds barred. clean off the white paint. That was a Why don t you let me send a man over to good idea until the paint remover ate up your house this afternoon?" CUTTING THE CORD the phone surface. Psoriasis turned to "What?" Louise appeared confused. I hit him first, and he picked up the tele- leprosy. Distraught, Louise sobbed that phone and knocked me over the head she d have to return to the horror of "This afternoon all right with you, with it after I referred to him in an writing letters because the telephone Louise?" unpleasant but accurate manner. I company would not replace an object "Fine," Mom answered, grabbed Louise grabbed the phone and wrapped the she d wantonly destroyed. Well, they under the elbow, and ushered her out of coiled black cord around his neck. Those might replace it, but she d have to pay the office. cords are wonderfully sturdy. Just about for it, and Louise squeezed a nickel until the time his eyes bulged from their sock- Lulled by her sister s intercession, the Indian rode the buffalo. ets, Mother came in and blamed me for Louise soon discovered when Mother Mother picked up the telephone without trying to dispatch my beloved cousin. I called her on her new telephone that the explanation. Louise followed her out the was not trying to dispatch him; I was price was a loan-out of Louise s brand- door. trying to teach him a lesson. Naturally, new sparkling earrings. The news he choked in an exaggerated fashion "Gimme that telephone." nearly killed Louise. A strong heart and bawled. Mother couldn t resist a boy pulled her through, as well as the "I m taking it to Henrietta. She ll give in tears. I got a hiding plus she told use of her telephone, while you a new one." Orrie, who told everyone. Adults versus she informed Orrie of yet children is not fair. "Don t you dare tell that woman another betrayal by Julia. what happened. I d sooner die. This Mother, earrings dazzling, So I thought I d get even. When the tele- is all her fault to begin with!" traipsed off to phone rang, I raced to grab the receiver " Write out your will then, because and said in a deep voice, trying to sound you can t live without a telephone." like Tallulah Bankhead, my idol, "Hi there, daahling, this is Julia s House "Oh, yes I can. Now gimme that of Pleasure." Mother s color changed phone, you little______.Oh dangerously. Empurpled, she pried hello, Mrs. Flannery, I was the phone out of my hand and said in just telling Julia it s so hot. a sweet voice that belied her evil look, Terrible weather, isn t it?" "Why, hi there, Florence. Oh, that Rita Keeping up her good face Mae, she s such a card ...Uh-huh... with Mrs. Flannery I really don t know where they pick up cost Louise time, such ideas - Florence, we certainly do and Mother was in not discuss such things in this house!" the telephone office She slammed down the phone. How was before Louise I to know it was Florence Regenbogen, could catch head of Mother s Sunday School class? her. That s when Dad built the box around Louise blasted the telephone, and when I learned there through the is no justice in this world. Nothing hap- door. pened to Leroy. "Thief! " Today, Mother, Louise, Dad, Orrie, Henrietta, Grandma, and Beadle are gone and their party lines with them. When Orrie died, everyone exercised restraint; there is no telephone on the grave with the inscription "Jesus Called." I live on, however, to suffer black-cord fever and burn the wires. I even call Leroy - direct dial, long dis- tance - from time to time. He is alive and well. I told you there was no justice in this world. ∎
1983 BELL TELEPHONE MAGAZINE 33
Lower Manhattan - was being built two AT T galleries that operate like and embellished. In the manner of the lending libraries; there, employees age, the managers of that day undoubt- faced with a blank wall or the yen for a edly were interested in impressing their creative change of pace can choose corporate peers, and must have wel- something to suit their taste. comed the encomiums the then-new Smith s expression of company philoso- headquarters earned in the press; The phy behind this artistic outreach is building was hailed as "New York s link precise: Art is not purchased to create a to the Golden Age of Pericles," "a tele- prestige-laden "collection"; that is a phone temple" with its lobby "pervaded gambit sometimes used by companies in by an almost holy calm." search of an image. AT&Tspurpose is "to The exterior of 195 Broadway most provide a stimulating environment for assuredly ranks as art, being a succes- employees," where they can "work crea- sion of Greek temples stacked eight tively." Through judicious purchase of high. The A R of Janu- the works of rising artists early in their ary, 1924, rhapsodized about the inter- careers, the non-collection is valued in mingled design of ancient Asia Minor s the millions of dollars. Individual pieces "Temple of Sardis and the Library are not for sale, so the market value of of Pergamum," executed in marble from the art is mostly undetermined. Only an homespun Bethel, Vermont. insurance assessor could hazard a guess. Paul Manship, perhaps best known for Memories of encounters between the Bell System and the Muses include the his mammoth statue of Prometheus at Evelyn Beatrice Longman created the Rockefeller Center skating rink in Golden Boy, a 15-ton statue that troupe of ghosts haunting 195 Broad- New York, was responsible for numer- has become an AT T art legacy. way s fourth floor, where the studios of ous artistic touches at 195: the unique the telephone company s pioneer radio sculptural drinking fountains, details grandeur, compelling in grace of line. station were located. Though the radio in the lobby, and particularly the four The creation has intrigued and exhila- station was initially undertaken as a bronze friezes that dominate the Broad- rated those in architectual circles as technical demonstration of a new com- way entrances. Again from A - well as the man and the woman on the munications medium, the tail soon was wagging the dog as entertainment qual- R : "It remains for a future street ever since the morning of March age to place them where they belong, in 31, 1978, when the world first caught ity became more important than grids, some museum." Today, as 195 passes to sight of the structure on the front page rectifiers, and wavelengths. other ownership, the prophecy has been of T N Y T . At the outset, programs were not so de- fulfilled. Copies of the sculptured deco- A test for design success that often is manding of talent as would be the case ration have now been placed on the later. Witness the radio log of August 3, building s facade, and the originals have applied to Bell buildings is this: Does it fit its surroundings well? Certainly on 1922, the first evening on the air: "After become welcome donations to the some Victor recordings and a selection Metropolitan Museum of Art. that score, the 550 building emerges with top-of-the-class marks. Rising of rolls on the player piano, George W. The winged Golden Boy, sculpted by amid the Midtown Manhattan skyline, Peck (Long Lines) spoke a few words of Evelyn Beatrice Longman to top off the the new structure bespeaks quality, dis- greeting. Then Helen Graves (Plant 195 building, is another art legacy left tinction, and dignity. To the same end, a Dept.) sang J S T by the founding fathers. From 1916 until telephone building at a beach resort will accompanied by Mrs. Swayze (Commer- 1980, the 15-ton, 24-foot statue - origi- most likely resemble a shingled summer cial Dept.); Edna Cunningham (Traffic nally called the Genius of Electricity; cottage; another in Phoenix will be exe- Dept.) recited a poem by James later, the Spirit of Communication; and cuted in pueblo adobe style. The Bell Whitcomb Riley; Joseph Koznick (Draft- now, less formally, Golden Boy - bal- System has, prior to divestiture, an ing Dept.) played Tra on the vio- anced on tiptoe atop 195 and brandished inventory of more than 32 thousand lin, accompanied by William Schmidt his lightning bolts 434 feet above the buildings all over the United States - (N.Y. Telco)." street. Removed from its lofty perch so the range of styles represented is three years ago, the statue has been re- Harry B. Thayer, AT T president at the extraordinarily wide. And the architec- time, listened to the broadcast at his furbished; given a fresh coating of gold tural level has been kept exceptionally leaf, it now stands as the centerpiece home in Stamford, Connecticut, and his high. Some of these structures, dating critique the next day was distinctly of the lobby at 550 Madison Avenue, from half a century ago, include fine AT T s new corporate headquarters. downbeat. Overlooking the artistic side examples of Art Deco. Buildings in of the evening, he commented that the The art of architecture has figured prom- Denver and St. Louis stand out in this radio signal kept fading and was consid- inently throughout Bell System history, respect. As do the lobby mural of New erably weaker than that of competing with the new corporate headquarters England Telephone s Boston headquar- station WJZ . To correct this, Bell engi- as only the most recent achievement. ters and the dozen frescoes on the neers switched to a transmitter and Stanley W Smith, president of the 195 entrance-hall ceiling of New York Tele- antenna atop Western Electric s West Broadway Corporation and chairman phone s West Street building in Lower Street lab in New York, and reception of the AT T art committee, recalls the Manhattan. i mproved in Stamford as well as the rest gist of his briefing session six years But art - deco or otherwise - doesn t of the metropolitan area. The new ago with the architects of the new Madi- stop in the lobby; painting, sculpture, antenna had the assigned call letters son Avenue building, Philip Johnson and tapestries adorn offices and interior WEAF, which, as one eagle-eyed and John Burgee: "We have rich tradi- public spaces as well. These works of art employee noted, formed an acronym tions in every aspect of our business, come under the supervision of the art for the themes of Paul Manship s just- but in spite of that, we re as modern committee chaired by Smith. Consul- completed friezes at 195 - Water, and up-to-date and in front of technol- tants are employed to purchase art; Earth, Air, and Fire - chosen because ogy today as we have ever been." most acquisitions are the work of young they were the basic elements of the The Johnson/Burgee visual response to artists of both representational and ancient world. But the happy, if esoteric, this and other general guidelines was a abstract persuasions. And the works are coincidence didn t even merit a press lean, elegant office tower - arresting in made available to employees through release.
36 BELL TELEPHONE MAGAZINE 1983 NO. 3-4 Using its spreading web of land lines, on any shortcomings of the Western technology. In April of 1927, electronic Bell was the first to establish networks Electric system. moving pictures were transmitted of radio stations that, by 1924, could between New York and Washington, reach a substantial nationwide audi- By 1925, when Bell s research and devel- D.C., demonstrating the feasibility of ence. A dramatic demonstration of this opment division had become the autono- sending images via wire. With the art of Bell capability was staged by "General mous Bell Laboratories, Sam Warner television and Picturephone service and his brothers Harry, Albert, and Jack John J. Carty of the R D Department" in still 20 and 40 years in the future, front of the prestigious Bond Club in were convinced by their own chief tech- respectively, the coming technological Chicago. Listeners across the country nologists to witness another demonstra- feats were to cast artistic shadows were treated to a speech from the tion of the sound system. Not long after, before them. Philadelphia and Washing- general, the M from T per- the Warner brothers decided to make ton, D.C., were the anchor points in a formed by a violin soloist in Havana, the leap. After some experimental trials demonstration of high-fidelity sound and H , S H played on a set at the Vitagraph Studios in Brooklyn - transmission and reproduction in April of chimes in San Francisco. The feat of where Bell technicians found out about 33. This involved the famed conductor linking performers almost 5,000 miles actors and actors adjusted to emerging Leopold Stokowski, in Washington, apart may have been primarily techni- technology - the Vitaphone Corpora- directing the Philadelphia Orchestra in cal, but art was served. tion was born. its home city s Academy of Music via a Technology also was responsible for The problem was not so much one of phone circuit linking him with a surro- Bell s entry into the movie business as synchronizing sound and screen action gate conductor. Stokowski himself was a pioneer. That interest started with the as one of acoustics; the early sound- at the back of Washington s Constitution refinement of Lee De Forest s "audion" tracks seemed very artificial, so the Hall, where by remote control he mixed into the high-vacuum tube used in relay illusion of unity between actors voices the orchestral passages and solo instru- stations to make long distance tele- or sound effects and screen images sim- ments as they came over the line and phony more efficient. As a side effect, ply wasn t believable. Eventually, Bell were reproduced stereophonically electronics made reproduction of the Labs acoustic engineers achieved a through speakers set up at stage left expanded audio spectrum technically breakthrough, and the first result was and right. For an assemblage of digni- possible. Before 1916, Bell technicians the filming ofD J that starred taries, he conjured the delicate whispers had recorded sound on film and devel- John Barrymore. This impressive com- of Debussy s A F and oped improved reproducers for the wax- patibility between art and science was thunderous excerpts from Wagner s disk phonograph. And in a key step, proclaimed by the billboard over the T G . Bell researchers created a "condenser" Warner Theater on Times Square - According to a contemporary account, microphone capable of picking up fre- W B T the sound system was unique for its quency and intensity ranges almost W E C . B T day, involving what would be labeled a equal to those audible by the human L - all prominently "three-way crossover network of band- ear. Building on this technology after billed above the title. The sound of this pass filters with a flat response of 40 to World War I, Western Electric in 1924 first epic consisted mainly of the musi- 15,000 cps." The output had a potential had advanced well along the path to cal score performed by the New York of 150 watts per speaker - high even by commercially acceptable sound motion Philharmonic; but a later Vitaphone modern standards. A curious sidelight pictures. But the Hollywood moguls production was the celebrated "all-talk- to this event: Someone from Bell Labs were unanimous in rejecting the sound ing, all-singing" J S , released in also whipped up a demonstration of system, their decision being predicated 1927 and generally considered the first musically pulsed colored light at the on the industry s sizable inventory of milestone in "talking" movies. Washington end, but nothing much silent films and heavy investment in Art tagged along as Bell experimented came of the technique artistically movie-making equipment, rather than with expanded uses of long distance until disco proprietors and rock-show entrepreneurs rediscovered it in the 1960s. Possibly as a preliminary to this sound spectacular, Bell Labs was in- volved in some early adventures in stereo during 1931 and 1932, when a number of Stokowski concerts with the Philadelphia Orchestra were recorded experimentally on 16-inch disks. All this discussion of matters musical brings us, quite naturally, to the B T H , artistically and statisti- cally Bell s most notable foray into the performing arts since the impromptu paging of Mr. Watson by Alexander Graham Bell. During its 18 years as a weekly half hour on radio, T T - H was showered with awards and critical acclaim, and its subsequent 10 years on television brought two Pea- bodys, three Emmys, five additional Emmy nominations, and three dozen other citations. The memorable radio version presented a lion s share of the renowned classical musicians and singers of its time: Fritz Kreisler, Artur Rubinstein, Jascha Hei- fetz, Lily Pons, and Ezio Pinza were This work by William T. Williams is among numerous pieces among them. Later, numerous world- of art that adorn AT T offices and interior public spaces. class classical and popular performers
NO. 3-4 1983 BELL TELEPHONE MAGAZINE 37 made their TV debuts under Bell spon- clear corporate vision was slightly sorship. The roster of guest stars for the clouded, at least temporarily. For first television season provides a gifted instance, it was said that one or more cross section typical of this applauded executive wives blushed a bit over the series: Harry Belafonte, Van Cliburn, "revealing" costumes worn by some Jacques d Amboise, Alfred Drake, Duke female chorus dancers, male folk sing- Ellington, Ella Fitzgerald, Benny Good- ers, and certain buxom opera stars. man, Melissa Hayden, Helen Hayes, Husbands were rumored to have been Ethel Merman, Patrice Munsel, Andre pestered to get things changed, but few Previn, Isaac Stern, Joan Sutherland. such edicts actually got sent down from Mention might also be made of a rehear- on high. In another case, in the throes of sal pianist who toiled behind the scenes the restless 1960s, the well-known bari- that year named Marvin Hamlisch. tone Earl Wrightson was scheduled to appear when word did come down from A controversy of artistic freedom and the executive floor at 195 Broadway that human rights also landed in Ma Bell s the singer s beard, a lifelong trademark, lap that first TV season. The fur began to was "too hippie" and that he should be fly even before the first show when it told to shave it before the telecast. was announced that Harry Belafonte When the word reached Wrightson, he would be the principal performer. responded that inasmuch as Alexander Almost unbelievable today, but sadly Graham Bell had worn beard with not completely unexpected in the late dignity, Earl Wrightson would do the 1950s, certain regional interests same. Nothing more was heard on objected to the appearance of a black the matter. principal artist in a network broadcast. When Bell management sternly re- Although at this writing T T buffed these objections, some TV H has been off the air for 15 years, it affiliates actually refused to air the is fondly remembered by a large seg- broadcast. ment of the American public. And it is assured now that many of the perform- The same issue arose again in connec- ances will outlive the generation that tion with the appearance of black ballet viewed them live. This step toward dancer Arthur Mitchell, subsequently immortality started with a 1972 call founder of the Dance Theater of Harlem, for help to AT T from ballet superstar but Bell held its ground despite an Rudolf Nureyev. In a T H Bell support enabled many outpouring of mail. And when Carl appearance some years earlier, Nureyev orchestras to expand their Sandburg was engaged to appear on a had made his u.s. television debut tours and their scope. Lincoln s Day program, there was an only weeks after his defection from the outcry from the self-appointed Red Soviet Union. And in that notable tele- Nureyev was at a loss to recapture the Channels censors who sprang up in the cast, he had performed a certain ballet, choreography for another performance, post-McCarthy years. Again, manage- the choreography of which had never but his problem was solved when AT T ment stood firm. been preserved in the "language" of was able to respond to Nureyev s plea On a few other occasions, however, such dance, a system known as Labanotation. with a videotape of the original T - H performance. That gesture led to a request from the Library of the Performing Arts at New York s Lincoln Center for a complete videotaped set of the series. Compiled after a year of diligent file research, the reconstructed series was given to the library for the exclusive use of scholars, historians, and others who, like Nureyev, may have let a precious moment slip by unrecorded. Another complete set of T H video- tapes now resides in New York s Museum of Broadcasting, where it is in continual demand. T T H was charged as advertising on the company books, but its commercials often were the softest of sells. Mention of the "product" some- times was limited to a suggestion, voiced over the closing B W theme, that "Perhaps there is someone some- where who would like to hear your voice tonight." (Somewhat the same subdued commercial policy was followed on Bell s presentation of Leonard Bernstein s Y P C on television. But a decidedly more explicit commer- cial approach was employed on T B We e n Elec ic and Bell Lab ha ed abo e- i le c edi S F T , which suc- fo 1926 mo ion pic e p od c ion of Don J an. ceeded T T H .)
38 BELL TELEPHONE MAGAZINE 1983 NO. 3-4 "It was good business, and it was good ing arts that are in step with our new years to the Metropolitan Opera Cen- art" is the way Edward M. Block, AT T business interests." tennial Fund. And AT T chairman C.L. vice president-public relations and Over the years, the arts in America Brown is personally involved in helping employee information, looks on T have been the beneficiary of substantial the Met campaign for funds. The chair- T H . "We were trying to make philanthropic gifts from the corporation. man, by the way, is just one of countless a statement about the company, trying Here are just two recent examples: Bell System representatives who devote to reach an influential audience, try- some of their time to the arts cause. ing to identify with excellence. This is - When a drama produced by New Virtually every arts institution in the what we ve always tried to do, and it York s Negro Ensemble Company won country can count among its prime fits in with support of the arts." the Pulitzer Prize, a special contribution movers a Bell employee or two. was made to publicize the award, thus Though the Bell System s more recent helping to earn the play an extended As the company recognizes the achieve- approaches to an influential audience run, amounting eventually to 62 weeks ments of great institutions like the Met, still identify with quality and excel- and a national tour. it also pointedly understands the impor- lence, they have taken a strikingly dif- tance of artists who are creating new ferent direction. A prime example is the - A joint venture with the Academy of works today. This year, AT T took the A O T program, Motion Picture Arts and Sciences insti- lead in putting together a consortium of which over the past five years benefited tuted annual student film awards. This from more than 12 million dollars in seven-year-old program has served as supporters for the Next Wave Festival Production and Touring Fund, spon- underwriting by the Bell System. Ini- encouragement for the young filmmak- sored by the Brooklyn (New York) tially, seven major symphonic organi- ing students honored. Today, the names of early award winners appear with Academy of Music. This unprecedented zations were involved: the orchestras program will serve as the forum for of Boston, Chicago, Cleveland, Los increasing frequency and prominence in the credits of major motion pictures. large-scale works by proven younger Angeles, New York, Philadelphia, and American composers, choreographers, Pittsburgh. Eventually, the program A recent reorganization of AT T s corpo- and theatrical artists and will take was expanded to embrace 23 additional rate philanthropic funding has resulted them on tour to other arts centers. American orchestras. While touring has in the establishment of a new founda- long been an activity of all the groups, tion. Proceeds from the sale of the 195 Philanthropic and promotional funds this extra financial support enabled Broadway building will be placed in occasionally join forces on a single them not only to extend their reach trust - with the income, together with project. An example in prospect is a beyond the beaten track of major cities subsequent donations, devoted to contri- major James McNeill Whistler exhibit but also to enlarge the scope of their butions on behalf of the new AT T. Sub- at the Freer Gallery in Washington, D.C. visits in each community. Chamber stantial funds are earmarked for the Promotional funding brought about the ensembles from among the orchestral arts. The new foundation will consoli- world premiere of composer Richard musicians on tour gave added perform- date the giving formerly handled sepa- Adler s W S by the Utah ances of quintets, quartets, and trios. rately by the AT T General Depart- Symphony in conjunction with the Principal and first-desk players con- ments, AT T Long Lines, Bell Labs, and A O T program. ducted master classes for aspiring Western Electric. The new work was recorded by RCA V - young musicians along the route. tor under a partial grant; then, 5,000 AT T currently is making the largest The Bell operating companies have single arts grant in its corporate-giving copies of the recording were made avail- followed this cultural outreach effort history: 350 thousand dollars over five able to conservation groups for use in in hundreds of ways in every part of conjunction with their own fund-raising the country. It would be impossible to activities. Promotional funds also are list all the local dance companies, involved in a projected Carnegie Hall smaller orchestras and chamber groups, radio program for next year (a one-hour museums, regional theaters, and weekly series featuring orchestras and summer-theater programs that have artists appearing at Carnegie Hall, to be been the recipients of this support, or broadcast on Public Radio as well as a to discuss all the local architects and special network of commercial stations) artists whose work is displayed in and in a major New York art exhibit on buildings, on the covers of directories, the occasion of the opening next Spring and in sponsored exhibits to which of the Museum of Modern Art s new members of the Bell System have con- wing. tributed generously. Indeed, it was the In any overview of the Bell System that local telephone companies that gave was and the companies that are about major organizational support to the to be, the continuing commitment to touring orchestra program. The strong the arts must be judged as substantial, identification of individual Bell compa- sincere, and far-reaching. But vice nies as well as the entire Bell System president Block has no illusions that with this program has been important corporate involvement with the arts in making Bell s presence known to could be used as a smokescreen or apol- national, regional, and local audiences. ogy for operational shortcomings. In his The national tours came to an end this own words: "If all the phones in the year. Block comments on the termina- United States went out of service tomor- tion of this highly successful program: row for just an hour, it wouldn t make "We reluctantly abandoned the orches- any difference if we funded every sym- tra tours because the program was con- phony orchestra from here to eternity. ceived with the business interests of the Our business is phones. If we get telephone companies in mind. And a more or less straight, we ll be tolerated. `funny thing has happened - don t Then, presumably, we ll have enough have any more telephone companies, so money in the treasury to do some of the it doesn t make sense for us to continue Famed Telephone Hour conductor other things that are expected of the on that basis. But AT T is seeking Donald Voorhees, shown here modern corporate institution. That s equally vital programs in the perform- with pianist Clifford Curzon. what it s all about." ∎ NO. 3-4 1983 BELL TELEPHONE MAGAZINE 39 The Telephone Pioneers of America face a future in which they will be needed more than ever.
t's obviously a name tag because it program to go to the main meeting. going as may be desirable." That became says "Hello." Hanging from it on a the "elastic clause" that would be faded blue ribbon is the familiar Though AT&T's president, Theodore N. stretched to make the Pioneers unique. Pioneer triangle. Below, the dates: Vail, wasn t there, the idea for the con- Nov. 2-3-1911. Typewritten on the vention was his. He already had blessed One of those "other meritorious objects" tag is the conventioneer s name: A.G. the plan to organize telephone veterans, was translated to mean community Bell. Today, they keep that modest trea- bringing together several local groups of service. Chapters, councils, and clubs sure under glass at Pioneer Association "old-timers" throughout the country. In began working on their own initiative, headquarters in New York, but for years the beginning, friendship and fellow- mostly with children s groups - the it was stuffed in a manila envelope with ship were what it was all about: Boy Scouts, the Girl Scouts, the under- other leftovers from that first annual industry people "recalling the facts, privileged, the handicapped. By 1958, meeting of the Telephone Pioneers of traditions, and memories attaching to community service was established as America in Boston. the early history of the telephone," they the Pioneers "New Tradition." And said. Not really different from a lot of today, the association is the world s larg- Bell was the star of the meeting, of industry groups proud of their heritage est voluntary group of industrial em- course. The main speaker. The indus- - promoting fellowship, loyalty, and ployees dedicated to community service. try s pioneer. The Pioneers first honor- service to their members. ary member. Attending that first The current score is more than 2,000 annual event were 244 men, each with But those who wrote the original Pio- projects, receiving more than 480 thou- 21 years of service in the industry. While neer statement of purpose were pres- sand hours of time monthly. The litany none of the 12 women Pioneers made cient in adding that the organization includes raising funds and volunteering the trip, the men s wives came. Some also would encourage "such other meri- in homes for the elderly, therapy cen- even bolted from their special poetry torious objects consistent with the fore- ters, hospitals, Head Start programs,
40 BELL TELEPHONE MAGAZINE 1983 NO. 3-4 GREGORY HEISLER child-care centers, and centers for trou- these national efforts are, the Pioneers 72nd anniversary this year, he wrote, bled teens. Pioneers distribute food to will continue to make their mark on the "Our nation benefits immeasurably the hungry, help the mentally disabled, local scene. That s the place where it from the efforts of volunteers who con- equip "Vision Vans" for eye tests, and counts the most. tinue to lend their time and support to donate electric wheelchairs. Using tech- Word of divestiture came hard to the those in need and to those less fortunate nical skills honed in telecommuni- Pioneers. While employees of Rochester than themselves. The Telephone Pio- cations, the Pioneers equip "beep balls" Telephone Corporation and certain neers of America exemplify this .... They so blind children can play baseball. are an example of what is best in the Canadian telephone companies are Pio- They repair tape recorders, Braillewrit- neers, most of the membership - by far American tradition of voluntarism." ers, and talking-book machines for the - is rooted in the Bell System family. KEEPING FRIENDSHIPS INTACT blind. They design smoke detectors for Pioneers are veterans of and with the the deaf and "talking" stuffed animals Yet, despite the significance of its System, so the prospect of divorce was - community-service role, the role that for withdrawn and retarded children. and is - personally traumatic. On the Scarcely a national or local welfare Pioneering inherits as a result of practical side, there were disturbing divestiture will be even more signifi- organization has escaped Pioneer first thoughts about the organization s attention. cant. Pioneering will be the established future finances. Most of the support for ground on which former Bell System col- The environment claims that attention, the Pioneers has come from AT T and its leagues will continue to meet, to enjoy too. Pioneers build nature trails, clear companies. Would that continue? Would memories and fellowship, and to engage dumps, restore parks and historical a strong, unified corporate commitment in efforts to give vitality to the organiza- markers, work with wildlife federations, still exist? tion and its work. spearhead neighborhood beautification, In typical System style, the Pioneer As- transplant trees, campaign to weather- AT T chairman Charles L. Brown has sociation formed a task force. As a result assured Pioneer leaders that regardless ize homes, build urban forests, and of its recommendations and other dis- clean up rivers. of new working relationships after cussions, some of the association s 13 re- divestiture, Pioneering still will be the PIONEERS: A SLEEPING GIANT gions were realigned to conform more primary force behind the "humanism Beyond meeting human and environ- directly to the future regional compa- and idealism that have come to typify mental needs, such community service nies. Now there will be 12 regions with the Bell System." He has been unequivo- is becoming increasingly significant for 98 chapters. An advisory group of execu- cal in his confidence in the future of the operating companies that sponsor Pio- tives from supporting companies will Pioneer Association: "It will continue to neers in their territories. As companies replace the single parentage of AT T. be a national organization - divesti- apply the wonders of technology and the The commitment still will be strong, ture or not, restructuring or not, One economies of consolidation, more and and multiple corporate support for the Bell System or not - with common pur- more customers are served from loca- Pioneers won t be jeopardized. However, poses. And I hope one of those purposes tions hundreds of miles from where they divestiture has accelerated the associa- is to keep us together - personally" live. The troublesome fallout, of course, tion s efforts to become more self-sus- is that the telephone companies "com- taining. Membership dues of Pioneers He has asked the Pioneers to accept the munity presence" diminishes. But often who are active employees have been in- responsibility of solidifying old friend- the Pioneers are still there. creased. A fund-raising program is well ships among the people of the industry under way. and to build new ones, "even as we And, more and more, they are inherit- splinter into different organizations. It ing the corporate tradition of com- Healey, retiring this year as association is a friendship, pure and simple, that mitment to the community. Not all executive director (Art Galipeau, of will keep a right spirit alive in each of companies have yet recognized this for New Jersey Bell, is his successor), our companies. It is friendship that will the priceless asset it can become. Nei- points to that effort as one of the major keep our character intact as we break ther have all Pioneer chapters yet made recent achievements of Pioneers. "As an our organizational bonds. It is friend- the case strongly enough with their attempt to be less dependent on our sup- ships like ours, rooted deep in this good sponsors. But they will. As Joe Healey, porting companies," he says, "this fund- Pioneer ground, that will help keep our association executive director, puts it: raising program has been a spectacular companies great when they are no "Even with all its accomplishments, the success. Our 1982 goal was one million longer one." Pioneer organization is a sleeping giant. dollars, and we made it. In 1983, the There is no end to the things it could do." goal was two million dollars, and we This year, at the conclusion of the final passed that. In 1984, we re going for four General Assembly occurring during the Clearly, one of the first mutual efforts of million dollars, and we hope to build up history of the Bell System, Brown raised a Pioneer chapters and their sponsoring to ten million dollars eventually. At that toast as the 1,400 delegates and Pioneer companies should be to make public time, we ll be paying a lot of our ex- spouses and officers of the Bell System knowledge about Pioneering more wide- penses ourselves without having to go to stood together: spread. The general public knows little or not enough about this army of volun- supporting companies at budget time "May Pioneering keep alive the heri- teers, despite its membership of 583 every year." tage that has made our industry great. thousand and the appreciation of the Delbert C. (Bud) Staley, association May it continue to enrich the traditions thousands whom Pioneers help. The as- president and chairman-designate of of fellowship, loyalty, and service. May it help us to remember who we are, what sociation s profile has been high inside NYNEX, introduced the current year s the industry but too low in the outside theme at the 1983 Pioneer General we believe in, where we ve been, and world. Or at least not as high as it Assembly in Chicago. "That theme - where we re going. And whatever the deserves. Pioneering: Today More Than Ever - future holds, may Pioneering always says where our thrust must be," he de- bring us together as friends. Ladies and Two national service programs may help gentlemen, here s to the Telephone remedy the situation. Pioneers are clared. "We re not only in a period of transition and change in our industry Pioneers of America!" working with AT T Communications to but also of transition and change in our organize and put the 1984 Olympic It was more than a ceremonial. It was a country with the move toward more Torch Relay on the road from New York Special Moment, celebrating the past voluntarism. Pioneering goes right to Los Angeles. They also are involved and - most of all - the promise of the along with that." in the national fund-raising campaign future. to restore New York s Statue of Liberty President Reagan thinks so as well. All of us should have been there. And and Ellis Island. But as important as When he saluted the Pioneers on their somehow we were. ∎ NO. 3-4 1983 BELL TELEPHONE MAGAZINE 41
At that juncture, as Bell Labs has found, freedom and focus undergird the road to success.
- A , AT T B L - was all the material they had left from J - . T the prior experiment. I was under the 420 100 impression that Bell Labs had infinite resources, but here were these three engineers doing the best experiment - T , - - - AT T W E P : 256K RAM, - - they could with a left-over piece of fer- rite ; WE-32, 32- - - and not trying to hide the fact. . That has stayed with me. - T UNIX" de facto - At Bell Labs, we always have more I A . opportunities than resources, so we must use these resources to work on - T N . 5 E S S what s best and most important. . I - The Labs has often been described as a - . great national resource. That s been said so often by so many people that we should remember that the hese examples show that Bell cess in turning the R of research into the beneficiaries of our work have been the Labs and Western Electric are D of development is largely the result of Bell System and its customers, the tele- among the world leaders in our unique corporate culture that communications users. For instance, each of the key Information values ingenuity over brute force. I spent the early years of my Bell Labs Age technologies: photonics, In order to find out how light is scat- career in the radio research laboratory, microelectronics, software, and digital tered by raindrops, for instance, a friend where the basic principles and compo- systems. It s been said that the Battle of named Morton J. Saunders had to figure nents of microwave radio were con- Waterloo was won on the playing fields out how to capture and hold raindrops ceived and combined into prototype of Eton. In the future, it may be just as long enough to make measurements. communications systems. These sys- apt to say that the Battle of the Informa- Recalling the drops of water clinging to tems, which emerged following World tion Age - society s struggle to improve spiderwebs, he set about stealing War II to fill an important Bell System the quality of life amid scarce energy threads from some unsuspecting spiders need, form the backbone of today s sources and materials - was won at and spraying them with water. His long-haul network. They testify to the Western and the Labs. scattering-and-absorption data is still synergy of research and systems engi- Our technological history is so rich that the accepted standard in the field. neering with development and opera- tions. Certainly, the whole country many of our achievements - the tran- Before I began to work for Bell Labs in benefited from this synergy; but the sistor, laser, communications satellite, 1961, I thought the Labs awesome benefits were brought to the nation by as well as our 20 thousand patents accomplishments were produced by the Bell System, which grew and pros- and numerous awards -are taken for armies of Ph.D.s marching in lockstep pered in the process. granted, almost like a law of nature. at a giant institution. But my first en- People are not surprised when we in- counter with Labs people quickly Our Bell Labs culture began taking vent something; they re surprised when changed that notion. This occurred shape before Bell Labs existed. Around we . Throughout our 58-year his- while I was a graduate student in 1910 - at a time when "electrons" were tory, we have taken the knowledge physics and needed to know something laboratory curiosities studied by a hand- resulting from scientific research and, about ferrite switches. I was referred to ful of physicists - Frank B. Jewett (who with few exceptions, have turned it into B S T J article later became the first president of Bell useful and profitable developments. written by three Bell Labs scientists. Labs) asked Robert A. Millikan of the The people who have made this possible Technically, the paper was just what I University of Chicago to recommend are an unusually curious and skeptical needed. But more importantly, it gave someone who could conduct research bunch, so much so that people talk me a glimpse of what life at Bell Labs into an electronic means of signal about a recognizable "Bell Labs type." was really like. I remember that the amplification. This step launched our Furniture salespeople, I m told, can spot authors specified the length of a special tradition of applying us by the way we pull out drawers to see ferrite material they had used in one science to provide a base for communi- what s on the inside. We do the same experiment, going on to explain that cations technology. Millikan recom- with each other s ideas. In fact, our suc- they d adapted their design because that mended a Ph.D. candidate named
56 BELL TELEPHONE MAGAZINE 1983 NO. 3-4 CLINT CLEMENS Harold D. Arnold, whose investigations subsequently led to the first reliable vacuum-tube amplifiers. This one invention made transcontinental tele- phony a reality and laid much of the groundwork for the electronic age that soon followed. As our first director of research, Arnold left his imprint on the culture of Bell Labs: "Invention," he said, "is not to be scheduled or coerced. It follows research through the operation of genius. The best that any department can do to promote it is to provide a suitable environment." That environment, it seems to me, com- bines two essential elements: freedom and focus. Our most precious asset is the freedom to pursue ideas across the en- trenched frontiers of established disci- plines, and past the persistent lures of short-term payoffs. My favorite ratio- nale for this high-sounding policy is simply this: It works! Try to imagine, for example, what Bell System software would be like if all our computer scientists had merely kept their noses to the grindstone. Fortu- nately, a couple of them used their free- dom to set up shop in an attic and com- mandeer an unused minicomputer - and came up with a novel operating- systems approach they called UNIX. They and their colleagues contributed ideas and improvements that spread the UNIX system throughout the Labs and the Bell System. The UNIX-based pro- gramming environment growing out of these research concepts have helped the Bell operating companies to make effi- cient use of computerized systems in increasing their productivity. Today, the UNIX operating system is fast becoming a standard of American computer technology. My favorite story about the power and utility of the UNIX system comes from an informal survey that one of my friends took. He asked people, "How many lines would it take you to write a computer program that would list, in descending order, the number of times each word was used in an English text?" The underlying notion was that the fewer lines the programmers estimated, the more powerful and versatile their own programming environment probably was. Their range of answers was star- tling. Senior software managers at large, well-known computer companies gave answers ranging between 5,000 and 20 thousand lines. Experienced COBOL, FORTRAN, and PL-1 programmers typically estimated the job at about 1,000 lines. I guessed 50 lines. The punch line is that my friend figured out how to do it in a single line - by linking together existing UNIX utility programs. Still, we try not to become complacent about the success of the UNIX operating system. We constantly test the power of the UNIX system philosophy against alternatives. One excellent way to mea-
NO. 3-4 1983 BELL TELEPHONE MAGAZINE 57 sure the success of software approaches bleshoot almost a million customer lines finding tough problems is almost as is to use them to play well-studied at Southwestern Bell. easy as keeping the door to your office games. So it wasn t accidental that two open. For instance, when our graph This brings me to the other half of our Bell Labs scientists, Ken Thompson and theorists want to exercise their skills successful research environment - Joe Condon, built a chess-playing ma- and enhance their knowledge, they can focus. Our researchers benefit by keep- chine (named BELLE) that was entered in get their axioms from the topology of ing in touch with real-world needs, thus - and won - a number of world-class private-line networks or integrated- chess tournaments. Nor was it a coinci- exploiting the synergy between re- circuit layouts. Furthermore, they search and development. Our develop- dence that Thompson, one of BELLE s don t have the luxury of changing their inventors, started the UNIX revolution. ment people benefit from having axioms when the going gets rough, as research scientists down the hall. And One alternative to current software ap- their more theoretically motivated both groups have benefited from their peers might be tempted to do. This extra proaches is a more complex approach contact and involvement with Bell oper- known as "artificial intelligence," discipline of working in the real world ating companies and with Long Lines, has paid off in practical results and in which supplements our conventional now known as AT T Communications. computer-science efforts as we prepare professional recognition as well. for the era of "smart" computers. An The most important single reason our Not every problem requires a mathe- important recent development in the researchers are so successful is the matical solution. One of the most ele- field has been in learning to devise a problem-rich environment at Bell Labs. gant fixes I know came from a member way of encapsulating human expertise Whenever I sit on a university tenure of our technical staff who worked in a in an easily accessible computerized committee or am asked to evaluate the group responsible for improving coin form. One of the most exciting of these research potential of a candidate for a phones. Some years ago, many public new "expert systems" was conceived, senior faculty position, the same ques- telephones in New York City began to be and is being implemented, by a Bell tion always comes up: "Will Dr. X seek robbed, seemingly systematically. It was Labs operations/support-system/devel- important problems to work on?" a plague, like Dutch elm disease. Sadly, opment group. An experimental model Problem-solving ability is taken for the phones most often vandalized were of this system, called ACE (automated granted; problem selection is the rarer in neighborhoods where they were most cable expert), already is helping trou- and more valuable skill. At Bell Labs, vitally needed. People unwittingly left
58 BELL TELEPHONE MAGAZINE 1983 NO. 3-4 their money to someone who had stuffed simple. The fact that today s telephone wrong answer. Much more important, the coin-return mechanism for later wire, for example, is coated with however, was the fact that we were harvest. This was a serious problem - brightly colored plastic is almost as well working on the right problem. As Rich- and someone at Bell Labs solved it. All accepted as the fact that tuna fish comes ard W Hamming, the Bell Labs scientist it took was a small tab of sheet metal, in little round cans. But it took a lot of who devised error-correcting codes, once less than an inch square, added to an science to make the plastic coating said, "It is better to do the right problem existing part. Installed in a few min- work. The same ultraviolet rays that the wrong way than the wrong problem utes, it closed the coin slot whenever the cause people to get sunburned also the right way." We were learning to put coin return chute was opened or cause chemical reactions in plastic, in together the components of a lightwave jammed. The plague was cured. combination with ozone, moisture, and system using whatever pieces our in- local contaminants. Telephone wire genuity could find available at the time. On another occasion, an operating must last - almost forever. So before we company came to Bell Labs because a leaped from pulp to plastic, we had to By the early 1970s, a better transmis- particular run of outdoor telephone ask, "What holds a polymer together in sion medium had been found: very lines was under siege by grizzly bears. the first place?" It turned out that pure glass fibers that carried the Did we have a zoologist who could help polymers are long molecules hooked pulses of laser light. Of course, it took them? The closest we had was a human- together in particular ways. Very long, more than glass fibers to make light- factors specialist, who noted that when heavily entangled chains don t come wave communications systems work. the wind blew, the wires began hum- apart easily. That s a lot easier to say The early lasers were too unreliable, ming like bees. The bears would climb now than it was to prove and to learn and even the continuously operating gas the poles looking for bees and their how to make such suitable materials. lasers invented at Bell Labs wouldn t honey, and would pull the wires down. work for communications (although The solution was to put springs on the Our concern about electrical insulation they are now widely used in medicine wires to adjust their tension so they in the outside plant could someday be- and industry). What was needed was a would hum a less "beelike" tune. come a thing of the past, as light sup- solid-state laser that could pulse rapidly, plants electricity as the primary vehicle last a long time at room temperature, Some of the high technology applied in of telecommunications. Yet the success and be manufactured at reasonable cost. telephone plant may appear deceptively of photonic communications is another And in 1970, that laser was invented at example of the partnership between Bell Labs. science and technology at Bell Labs. We don t always invent the first of some- It started in 1961 with the invention of thing, but we do try to invent the best. the laser. Suddenly, that invention had We didn t invent the first optical fiber, created new opportunities for under- but we did invent the process that West- standing the properties of matter - ern Electric and others use to produce opportunities that quickly attracted the finest fiber in the world. We don t many of our scientists. Those who went have a monopoly on good ideas and into laser work weren t thinking pri- inventions, but we do have a knack for marily about communications systems, combining our own ideas with the best although the original laser patent had from a wide range of others and turning mentioned communications. They were it all into practical results. Our freedom simply furthering science, searching for gives us insight into what ; fundamental understanding. Technolog- our focus gives us insight into what is ical change - the laser invention - had needed. an impact on overall scientific as well as telecommunications opportunities. The Even though the lightwave revolution is scientists bought optical benches and barely upon us, it s still not too early to modern spectrometers. They worked on peer beyond it. Powerful as today s tech- making better light detectors, light nology looks by yesterday s standards, sources, and other new devices; from how crude and puny it will look by these devices, they soon created compo- tomorrow s! We have only to look at the nents and subsystems. They became technology that nature displays all adept at dealing with optical technology around us to glimpse the vast opportu- even as they were contributing to it. The nities for invention that beg to be ex- result was that in the early 1960s, be- plored. Two examples: the number of fore the term "lightwave" was invented, bits of information contained in a single Bell Labs already had a corps of light- strand of DNA, and the subtle complexity wave scientists. of the pattern-recognition system every one of us is born with. Of course, no one could be sure then that Together with these endless vistas for lightwave technology would lead to a innovation comes an equally imposing practical system. Inasmuch as early ex- agenda of unmet human needs that call periments confirmed that light doesn t for imaginative solutions. The Informa- travel well through fog, reliable light- tion Age we ve brought into being is not wave communications needed some sort just a slogan - it s the best hope of of enclosed medium. Because solid glass mankind. If we continue to deplete the cut down the amount of light too much, limited material resources of our planet, someone thought of guiding the light our species will doom itself to inexorable through pipes. The pipes were filled scarcity. We have a chance to use our with gas and heated on the outside, so ingenuity to create information-based that the gas would form a "lens," bend- alternatives for scarce material re- ing the light rays toward the denser, sources - to provide new markets, unheated gas flowing in the middle. create jobs, and improve the quality of Although these gas lenses worked after life. Bell Labs has pledged to do its part a fashion, they turned out to be the to make this happen. ∎
NO. 3-4 1983 BELL TELEPHONE MAGAZINE 59 A writer, unschooled in Bell Laboratories, finds an enterprise worthy of a book - and preservation.
lthough I am a practicing physicist, I did not know, and very likely would not have gotten to know the Bell Sys- tem, let alone Bell Telephone Laboratories, through my physics. My interest in physics has always been in the theory of elementary particles - one of the least practical disciplines imaginable - while most of the physics done in the Bell System has to do with aspects of the solid state. Only rarely does someone like Philip W Anderson, the Bell solid-state-theory Nobel Prize winner, come across some- thing in solid-state physics that turns out to have ramifications in elementary- particle theory. There is, of course, only one nature, but the American Physical Society nevertheless lists 12 discipli- nary divisions, under which there are innumerable subspecialties. Be that as it may, I came to Bell Labs wearing my other hat - namely, that of science writer. For more than 20 years, I have been on the staff of T N Y magazine. And most of the nearly two million words I must have written for that magazine have concerned science. The idea of writing about Bell Labs came to me from the aforementioned Philip Anderson. We were hav- ing a casual conver- ture a laboratory that, at the time I I explained this to Anderson, and he set sation at the Aspen began my work in the Fall of 1982, had about thinking of a group of representa- Center for Physics in some 25 thousand people in 20 different tive people I might meet. He called them Colorado, where we locations around the country. As I do the "troops," inasmuch as they were peo- both were working in the this, it will, perhaps, give readers an ple on the front lines of research and Summer of 1982, when he idea of how Bell Labs appears from the development. On my first visit to Bell asked, laconically if I d ever perspective of an informed outsider. Labs headquarters at Murray Hill, New thought of writing about Bell Labs. I Jersey, Anderson managed to assemble confessed that I hadn t and gave, as at I began my job with . I had those troops for lunch in a smart dining least a partial explanation, the fact that read next to nothing about Bell Labs, room near Arno Penzias office. There my area of science seemed so far re- and what I had read I found very dif- were perhaps 15 people there. One thing moved from those areas practiced at the ficult to keep straight. I knew, of course, that struck me immediately was that Labs. However, I did promise to ask Wil- that the transistor had been invented at several of the people did not appear to liam Shawn, editor of T N Y , the Labs and that the cosmic photon know one another. For example, Ronald whether or not he d be interested in an radiation we all are bathed in had also Graham, who is now the director of Bell article on Bell Labs. been discovered there by Arno Penzias Labs mathematics center, was, to some and Robert Wilson. I knew, too, that the of the theoretical physicists, a sort of As it turned out, Shawn was intrigued communications satellite had been de- mythic figure they were pleased to meet - but I don t think he expected what he veloped there, because my friend Arthur in-the-flesh, so to speak. What intrigued got. Instead of one piece, I turned in 15 C. Clarke, who proposed it, often told them, and me, was that Graham is not - a book. me of his admiration for John Pierce, only a first-class mathematician but I want to describe something of the pro- the man who really made the thing also a professional juggler and acrobat. cess of converting into a piece of litera- work. But that was about it. He was the first person I interviewed.
60 BELL TELEPHONE MAGAZINE 1983 NO. 3-4 CLINT CLEMEN While I was certainly interested in his Julesz, who recently won a MacArthur plant." Among other things, I learned remarkable acrobatic skills, I have been Foundation fellowship, is head of Bell that the people at the Chester facility at my present craft long enough to know Labs visual perception research depart- test the readability of Bell service those skills by themselves are neither ment. He was the second person I inter- manuals by placing an order with New necessary nor sufficient to form the viewed. He told me how he had come Jersey Bell and then standing around nucleus of a profile of several thousand upon the notion of "random dot stereo- when the repairperson comes, to see if words. What did form the nucleus was grams" - strange visual displays, he or she can readily follow the direc- Graham s explanation of how the Bell usually in two colors, that look like tions in the manual. One only wonders System is able to make use of the rela- sandpaper until you put on special what can be going through the mind of tively arcane kind of pure mathematics colored glasses and a selection of those the repairperson while being studied by he is involved in. This comes about visual symbols appear to pop up off the a group of Bell engineers. Incidentally, because the System has an arrangement page and hover over it in three dimen- at the end of my visit to Chester, I was with so-called "private line" customers sions. These stereograms now are used invited to place a telephone call over - large-business customers - to charge to test almost-newborn children for nor- a fiber-optics line that connects with them for costs of service based on the mal three-dimensional vision. If it turns New Jersey Bell. I phoned a friend in shortest route that a long distance out that the child does not have normal New York, with the intention of explain- phone call could possibly take. vision, this abnormality can, in many ing that I was calling via glass. The cases, be corrected by an operation done line was busy, which proves, I suppose, in the first few months of life. Because that ... of his interest in the deaf, Alexander Graham Bell himself began the tradi- INVENTIVE COLLABORATION tion of applying the latest in telephone The learning process I am describing technology to health-related problems. very, very briefly here went on for So Julesz was simply following this nearly a year. By the time I finished, I enviable tradition when he used current thought I had some idea not only of telecommunications technology to what makes Bell Labs B L , but design a process that might discover also of how it got that way. Louis Pas- vision deficiencies. teur (no, he never worked for Bell) once As often happens with these things, said that in scientific discovery "chance once I actually began interviewing peo- favors the prepared mind." There is, ple, one thing - as they say - led to Pasteur would have said, an element of another. For example, I learned from chance in the transistor having been one of my subjects that Bell physicist discovered at Bell Labs. The people at Joe Condon was the son of physicist Purdue University were very close. But E.U. Condon. From this, I cleverly de- it wasn t chance that Bell Labs and the duced at once that Joe was the brother Bell System were looking for something of physicist Paul E. Condon, who had the transistor to replace vacuum once saved me from failing a lab course tube repeaters. After all, it was Bell in modern physics. This emboldened me Labs own John Pierce who used to say to ask Joe if I could play BELLE, the best that "nature abhors a vacuum tube." It chess-playing machine in the world. It also wasn t chance that Mervin Kelly weighs about 133 pounds and can beat and his associates had the wisdom in the 99 out of every 100 chess players who 1930s to turn loose a small group of peo- are willing to play it. It is the joint ple - solid-state physicists - who had a work of Condon and Ken Thompson. chance to come up with something. One Thompson also helped to design the of the secrets of Bell Labs has been the UNIX" operating system that keeps right kind of management. order among computers. It also is not accidental that collabora- A date for the combat was arranged. tion of all kinds is encouraged in the And under the watchful eyes of Condon strongest possible way at Bell Labs. It When someone with a mathematical and Thompson, the machine beat me in has been an open society, unlike many background hears about a problem like 27 moves, though it did make a strange universities where scientists sometimes this, the first thing that comes to mind castling maneuver that at first seemed feel they must cling to their ideas for is "traveling salesman." To the mathe- to have been a mistake. (It wasn t.) I dis- dear life. One common theme ran matical , this is the infamous covered that the chess players at through the interviews I had; that was problem of finding the minimum route a Murray Hill have a special warren not a sense of community, of collaboration, salesman might take between various far from the cafeteria where they can do and of sharing. Bela Julesz told me cities; it is a problem that, in general, battle after lunch. about a description of Bell Labs he once has no simple solution. It is somewhat During the time I was interviewing peo- read: "It is like a big baroque organ. If the same with how one arrives at the ple at Murray Hill, I was reminded that you are interested in playing one-finger private-line tariff, although it has been than 10 percent of Bell Labs activ- accompaniments on a baroque organ, then you shouldn t be at Bell. But if you shown that the optimal solution can dif- ity was in undirected basic research fer no more than 18 percent from an and that if it were to be my intention have something to do where you have to arbitrary solution. Finding approximate to give a balanced account of the work, I pull out every register, then this is the place to do it." solutions to problems like this is a major needed to interview people doing things activity at the mathematics center, and that had more immediate applications As an example of what industrial I made this the centerpiece of what I to telephony. To this end, I spent time in science can be at its best - a role model, wrote about Graham. the company of Hutch Loony and if you will - it is important to continue Norwood Long at Chester, New Jersey, the tradition of Bell Labs. Bell Labs is a Graham is a Californian. Bela Julesz is approximately 50 miles from New national treasure - a unique entity, a Hungarian. Each has been at Bell York City, where there is a 210-acre like a great university or a great concert Labs for more than 20 years, but I am site devoted to testing facilities involved hall. We all have an interest in making not sure they d met before that lunch. in what the Bell System calls "outside sure it continues to prosper. ∎
NO. 3-4 1983 BELL TELEPHONE MAGAZINE 61 employee from the first day they set foot 120-degree heat and vicious sandstorms y some accounts, it was the in the door": schedule, quality, and cost. to install 6,000 miles of microwave only drawing card in Bryant The product had to be delivered on time, towers in Saudi Arabia? Pond, Maine. The "old crank," be reliable, and offer the best value for Or, closer to the commonplace, who it was called - not to be con- the price. could have imagined that from that first fused with the man of the Time, in some ways, changes nothing. supply contract would eventually come same nickname. But minutes after 2 Sewing machines of Western Electric more than 320 million telephones, liter- p.m. on Tuesday October 11, 1983, the manufacture still stitch hems as pre- ally of conductor-feet of cable, last hand-cranked telephone system in cisely as they did when they were new and countless numbers of components, the nation was cut over to dial service. - at the turn of the century. And which Western Electric has engineered Fittingly, it was Elden Hathaway who Western s fireplace equipment, though and produced for everything from the pulled the plug on the past. He had run made during the Depression, still rests 1882 magneto wall set to the 256K the Bryant Pond telephone company for on the hearth in Midwestern homes. dynamic random access memory, whose 24 years before he sold it in 1981 to enjoy Even Western s wringer washing immense computing power fits on a a leisurely retirement amid the foothills machines still work - though they re chip half the size of an aspirin tablet? of the White Mountains, where Bryant hell on lingerie. And who could have foreseen that Pond nestles just 35 miles from the New What is gone is the Western-made elec- Western employees would recondition Hampshire border. tric stove and the panoply of other more than 30 million telephone instru- The old system may be gone, he points electrical equipment - light fixtures, ments a year (more than twice the num- out, but it lives on in the name he is electric fans, burglar alarms, irons - ber they manufacture each year) or known by on CB radio: Old Crank. And that made Western Electric the nation s recycle scrap to extract copper that is the telephones themselves live on - largest supplier of electric appliances in 99.99 percent pure? those model 202s, 207s, and 302s, sit- the 1890s. The company that began as a Opdyke doesn t pretend to have had that ting black and sleek in their antiquity. small model-making shop in Cleveland kind of vision. Joining the company in They were bought by many of Bryant in 1869 grew to become the nation s 1936, he was looking for a job with se- Pond s 435 customers, because it s hard largest manufacturer of telecommunica- curity. During his first week, he was to part with a friend. At three dollars tions equipment, ranking 22nd on the handed a copy of "The 10 Command- apiece, the phones sold, ironically, for a F 500, with sales of 12.6 billion ments" - 10 employee-relations policies dollar a pound. They had been in service dollars in 1982. the company drafted in 1924 and has for 50 years and could handle another lived by since. When he read the poli- 50, Hathaway swears. After all, they FROM MODEL-MAKING TO cies, Opdyke mused, "Western Electric were made by Western Electric. UNPREDICTED EXOTICA certainly is a good place to work." About a thousand miles down the moun- Yet time, in some ways, changes every- In his first job, Opdyke was an office tain range that sweeps up the Eastern thing. Who could have predicted in 1881, boy. The long buildings of the Kearny Seaboard - in the foothills of the Appa- when Theodore N. Vail bought Western Works in New Jersey often echoed only lachian Mountains in Greensboro, Electric, that the company would play a the sound of his feet; many of those North Carolina - Bill Opdyke listens to pivotal role in sinking Japanese ships buildings were empty and bare. The the Bryant Pond story with amusement. during World War II and in putting a Depression had slowed the manufacture But not surprise. Though his career man on the moon a quarter-century of panel switches at Western facilities, with Western spanned 43 years before later? Or that it would get out of the and the crossbar switch was still a few he retired in 1979 as vice president of international business - and then re- years away. Some Western sites, notably personnel and labor relations, he still enter it? Or that Western people in the the Hawthorne Works, were producing remembers the three criteria that were early 1950s would trudge across Arctic furniture and other home furnishings "burned into the head of every Western tundra in sub-zero cold to install an just to keep employees on the payroll. 8,000-mile network of radar and micro- Opdyke himself was "short-timed" - wave stations for the Distant Early asked to take every other Friday off C. Anne Prescott Warning (DEW) Line and the White without pay. Western s one busy location Bell Telephone Magazine. Alice project - and, 30 years later, fight during those years was its ERPI subsidi-
62 BELL TELEPHONE MAGAZINE 1983 NO. 3-4 ary (Electric Research Products, Inc.), automatic test center for switchboard easier communications. Western was the corporation that installed sound sys- circuits. The Kearny cable shop, where changing internally, too. Seven regional tems in theaters. Everyone went to the he later worked, produced 600 million service centers were formed to bring movies to forget their troubles. conductor-feet of cable per week. And by Western operations closer to their cus- Despite the somewhat tenuous circum- the early '50s , when Opdyke moved to tomers - the operating companies - stances, Opdyke sensed that the people the manual switchboard shop, 80 toll and to give the companies a single point of Western were special. "I got the feel- switchboards were being turned out of contact with Western. Opdyke ended i ng that they were eager to be part of weekly, and dial service was coming to a 28-year association with the factory the hum and rhythm of production," he homes and businesses across the coun- workers when he was promoted into the recalls. And they soon got their chance. try. Then, in 1954, a major milestone service division. World War II erupted, and workers was achieved: telephones in decorator Western's sales and marketing activity streamed into Western's factories. War- colors. Basic black became a thing of blossomed in the '70s as technology ex- time employment doubled; more than the past. ploded. Solid-state circuitry produced half the workforce was female. everything from Touch-A-Matic-" tele- COLD-WAR CATCH UP phones to Dimension" communications The company shifted 80 percent of its As the Western people scurried to catch systems with energy-saving features, production capabilities to military up with telephone demand, they also from bubble-memory chips with voice- needs. Many military systems were became involved in cold-war communi- storage capacity to microprocessors with tooled at the Kearny Works, where Op- cations and defense projects. And at the the power of room-size computers. dyke had risen to temporary assistant request of President Truman in 1949, Production of computer software to subforeman on the second shift. Western Western agreed to operate Sandia manufacture, install, and test systems people worked in shifts around the National Laboratories under a no-profit, became a business all its own. Light- clock during the war, turning out hun- no-fee contract. guide fibers transmitted voices, data, dreds of defense projects - from sophis- and images in digital form over glass ticated fire-control systems to fungus- Western's work for the government wires the thickness of human hair. With proof phones. culminated in the generations of Nike missiles and tracking systems that fol- Design Line* sets, even the telephones Chief among these projects were the lowed U.S. satellites into space. Opdyke got new looks. Western's products and radar systems that aimed the big guns was one among many who took special services received worldwide attention, of battleships and went aloft with Army pleasure in the success, in 1962, of the and its forays into the international Air Corps night fighters. Western Elec- Nike-Zeus missile, the first to intercept market eventually helped launch AT&T tric employees manufactured half the an intercontinental ballistic missile. International as a separate subsidiary. radar produced in the United States - The Zeus success followed on the heels And what of the future? Well, some nearly a billion dollars' worth. It was of Project Mercury, a globe-encircling traditions just "stick to the walls," the only company in the country big chain of communications stations that Opdyke observes, and the passage of enough to do the job, and it had nearly kept ground controllers in touch with time and technology don't make much 75 years' experience in precision electri- the astronauts. And in 1962, AT&T and difference. Traditions like the Spirit of cal manufacture. Moreover, the coopera- Western established the Bellcomm sub- Service. Like the pursuit of excellence tion between Bell Labs as researcher sidiary, which, with technical assistance i n the goals of schedule, quality, and and Western Electric as manufacturer from Bell Labs, performed systems cost. Delivering reliable products and yielded advances in telecommunications engineering for Project Apollo moon services on time at the least cost. "The and command guidance systems that l andings. people of Western will go on to find new l aid the foundation for space travel two ways to use state-of-the-art technology decades later. Closer to earth, astounding leaps in telephone technology also occurred in i n communication, medicine, transpor- When the war ended, the Bell System the 1960s. Western began producing tation - you name it," he says. "And faced a boggling task: filling two million electronic switching machines, now many of those innovations will still be back orders for telephone service. Work- being installed at the rate of more than around in a hundred years, just like the i ng in Kearny's engineering depart- one a day. Trimline" telephones with phones in Bryant Pond, Maine." ∎ ment, Opdyke helped develop the first Touch-Tone'' dialing made for faster, Trademarkof AT&T
NO. 3-4 1983 BELL TELEPHONE MAGAZINE 63 The stodgy old "widows' and orphans"' stock has been one of the market's liveliest players for more than 100 years.
s 1983 draws to a close, Wall tem, the enduring statement of its Street brokerage houses, bank- fundamental policy was succinctly ing interests, the financial stated by AT T president Walter S. Gif- press, and investment scholars ford in an oft-quoted speech delivered to around the world have focused the National Association of Railroad on a financial event unprecedented in and Utilities Commissioners in 1927: size and scope - the historic Bell Sys- "the best possible telephone service at tem divestiture set for New Year s Eve, the lowest cost consistent with financial 1983. At the time of divestiture, the safety." For the Bell System, a highly total capital of the consolidated System capital-intensive enterprise responsible will approximate 120 billion dollars, un- for a major portion of the nation s tele- years from 1876, when the telephone phone service, this statement implies a doubtedly the world s largest commit- was first introduced at the nation s Cen- special obligation to assure its ability to ment of investors funds to a single tennial celebration, the early years enterprise. The System s parent, AT T, raise the capital needed to finance its were a hectic period of acquisition, con- has some 3.2 million share owners, growth on sound terms. solidation, and the gradual elimination representing by far the broadest disper- of duplicate local telephone service. In This statement of fundamental operat- sion of equity ownership in corporate 1879, the stock price of National Bell ing policy has given rise to three cardi- annals AT&Tshares - designated by Telephone Company - one of the Bell nal elements of financial policy for the the stock ticker symbol T - are consis- System s forebears - rose from 50 dol- Bell System. The first is a dedication to tently among those most heavily traded lars a share to about 1,000 dollars a a conservative financial structure. Most on the nation s stock exchanges. The share in an eight-month period. This businesses find it advantageous to em- Bell System has long been foremost suggests an early high-tech perform- ploy some measure of debt in their capi- among corporations drawing on the ance of the sort seen recently in the bull- tal structures, not only to draw on a capital markets for new investment ish equity market of the 1980s. And, in substantial source of investment capital funds - in both equity and debt form. 1905, there was a coup resulting in the but also because of the associated cost An enterprise of such superlatives of transfer of control of AT T from Boston and income-tax benefits inherent in the size necessarily has a unique and force- to New York City and the return of use of debt. Excessive use of debt, how- ful presence in the financial markets. Theodore N. Vail as president of AT T, ever, will inevitably erode investor It is no wonder, then, that the approach- an episode somewhat analogous to con- confidence and severely diminish a ing divestiture commands the attention tests for control evidenced in the mod- firm s ability to attract new capital. The of investors and the investment com- ern corporate world. Bell System has consistently sought to munity. A multitude of studies assessing keep the proportion of debt in its capital the likely operating and financial THE STRUCTURE THAT structure at a reasonable level in order effects of this unprecedented event STOOD FOR 60 YEARS to preserve a high-grade credit rating. have been published. Several major The Bell System, and its relationship This assures access to the broadest investment firms also have established with the public, emerged in its present range of investors in debt securities and special funds in which AT T s present form in the years following World War I. provides a margin of borrowing power share owners may concentrate their The corporate structure that evolved at for periods when it is impracticable to holdings emanating from the divesti- that time remained much the same for raise equity capital. ture. And Wall Street is preparing for the next 60 years. Regulation at the The second major element of the Bell the greatly expanded trading activity state level was pervasive, although System s financial policy is an unswerv- expected to result. With the formation interstate telephone traffic was then ing commitment to fair treatment of its of seven new regional corporate enti- under the jurisdiction of the Interstate equity investors. Essentially, this means ties, AT T s 3.2 million share owner Commerce Commission. Universal tele- earning a return on equity investment accounts, holding nearly one billion phone service was a common objective of that is competitive with alternative shares, will form about 22 million ac- the System and its regulators. It was equity investments, risks considered. counts, holding about 1.7 billion shares during the 1920s that the basic founda- Fair treatment also includes the pay- of the eight successor companies. tions of Bell System financial policies ment of reasonable dividends. Because were set down. The singular character of the occasion its earnings characteristically have prompts some reflections on the unique The specific financial policies of an been less volatile than those of manu- financial history of the Bell System. Al- enterprise must derive from its basic facturing companies, AT T s dividend though we conventionally number its operating philosophy. For the Bell Sys- rate as a percentage of earnings per
64 BELL TELEPHONE MAGAZINE 1983 NO. 3-4 share has tended to be higher than is reputation as the bluest of blue chips demand for the stock manifested itself. typical of manufacturing companies. and a "widows and orphans" stock. Thus, new stock resulting from the use Earnings during these years, however, of convertibles was absorbed gradually The third element is recognition of the did not cover the dividend require- rather than through large and possibly need to be flexible in using various ments, and the surplus built up during indigestible bursts. modes of financing. Conditions in the the 20s was drawn upon. Cash flow was In those early postwar years, the Sys- economy and in the financial markets adequate to maintain the dividends be- are changing continually, and investor tem also resumed an earlier practice of cause of the sharply reduced construc- making periodic offers of shares to preferences vary from period to period. tion requirements during the period. Moreover, internal forces affecting the employees for subscription under pay- financing of an enterprise also are likely The World War II period was marked roll deductions at a price 15 percent to fluctuate. The seeker of capital must largely by restraints imposed by the na- below market. Employees became a sig- adapt to such changes as they occur. It tion s dedicating its resources to the war nificant source of equity funds, and the has been said aptly that the history of effort. Backlogs of demand for civilian discount from market, approved in ad- organizations and nations is littered goods and services built up, including vance by share owners, approximated with the corpses of enterprises that almost two million unfilled orders for that which would be required for a failed to respond adequately to the de- telephone service. Despite wartime straight stock offering. mands of the environment for change. wage and price controls, inflationary By the late 1940s, as a consequence pressures became manifest. Interest These centerpiece policies have gov- of the straight debt/convertible debt rates, however, were kept artificially erned the Bell System s financial financing program, the System s debt low through government intervention. operations throughout the nearly six ratio was in the neighborhood of 50 per- decades of its modern form. cent, compared to the range of 30-to-40 A ROCK AND A HARD PLACE percent that was then the System s After a brief spurt of postwar inflation, In the early post-World War II years, objective. A significant portion of this the 1920s became a period of remark- interest rates continued to be held at debt, however, was in convertible form, ably stable prices and interest rates, in- artificially low levels but, with the so there was the prospect that the debt creasing corporate earnings, and a cessation of wage and price controls, ratio eventually could be brought down dramatically rising stock market - previously suppressed inflationary pres- to the objective range. culminating in a spectacular blow-off at sures erupted with full force. Nonregu- the end of the decade. Early in this lated industries raised prices to meet Into the early 1950s, the System aggres- period, the Bell System successfully the increased costs of labor and ma- sively sought rate relief, but the regula- completed a rate-increase program to terial, and the reported earnings of such tory authorities again were slow in restore its earnings from the low level industries soared. In contrast, the Bell granting the increases required. And it reached at the end of World War I. The System was unable to raise its rates was well into the 1950s before this rate historic nine-dollar dividend was estab- without the approval of regulators, who activity, in combination with the effects lished, and a policy of maintaining debt were tortuously slow in recognizing the of rapid technological improvements, at one-third of total capital was adopted. 40-to-60-percent increase, in costs over produced acceptable earnings. Better the prewar levels. As a result, the Bell earnings brought about conversions of AT T s earnings per share improved System s rate of return on investment the appropriate debentures; the debt over these years to competitive levels, fell to Depression-era levels, and this ratio was reduced to the middle of its but the dividend was held at nine dol- was reflected in the market price of its objective range, setting the stage for a lars to build a substantial surplus. The balanced program of debt/equity financ- company s bylaws provided for preemp- stock. Yet there was the huge need for new capital to meet the large backlog of ing during the years 1955 through 1965. tive rights; share owners were periodi- cally afforded an opportunity to acquire unfilled orders for telephone service. In the latter 1950s, a pervasive change in investor preferences became evident. new shares at favorable prices - thus In these circumstances, AT T could not By 1958, the concept of total return on improving their return. In these years, mount a rights offering of common stock despite a tripling of its total capital, the to meet its capital needs without pricing equity investment - both dividend System was able to bring its debt ratio stock so low that the company s earnings yield and market appreciation - had gained wide acceptance. For the first down from 46 percent to about the one- per share would be diluted severely. In- time, the expectation of growth in both third objective, and to treat its share stead, AT T chose to offer straight debt per-share earnings and in market price owners fairly as well. The number of interspersed with offers of convertible drove common-stock dividend yields AT T share owners grew from 140 thou- debentures through pre-emptive rights below those available on high-grade sand to 470 thousand during this period. to share owners. These convertibles had distinctive features. They required addi- bonds, AT&T at that time - with its The 1930s were ushered in by a precipi- vaunted and long-continued nine-dollar tional payment upon conversion - thus tous decline in stock prices and the dividend - was almost alone among increasing the ultimate amount of Great Depression. While Bell System equity capital raised. They could be con- major stocks not showing a record of revenues did not suffer the drastic drop both dividend increases and substantial verted in a relatively short period after experienced in the manufacturing sec- price appreciation. Clearly, a change in issuance. And there was an unusual tor, they nonetheless fell by 40 percent, provision that set the conversion price stance was required if AT T was to re- compared to a decline of only 16 percent main competitive in the equity market. per share below the market price pre- for the electric-utility industry as a vailing at the time of the offer - but not By that time, fortunately, its earnings whole. The price of AT T stock fell from so much below current market as would had improved, its surplus position had a high of 310 dollars in 1929 to 70 dollars been restored, and the debt ratio was have been required in a direct offer of in 1932. common aimed at generating an equiva- near its objective level. Accordingly, the In this environment, two aspects of the lent amount of new equity capital. In- company decided to split the stock three-for-one and to increase the divi- Bell System experience stand out. First, deed, it is questionable whether direct because of its modest debt burden, it common-stock offers of equivalent size dend for the first time since the nine- was able to survive. In contrast, many in the environment in which these post- dollar dividend was established in the over-leveraged electric utilities and rail- World War II convertibles were offered early 1920s. roads went bankrupt, wiping out whole could have been absorbed without disas- Investors responded enthusiastically, classes of investors. Second, the nine- trous discounts from existing market and the market price of AT T s stock dollar dividend was continued through- prices. In contrast, the debentures were surged upward. By 1961, AT T s share- out the Depression years - giving T its subsequently converted as the price and owner list had grown to two million. Two
MICHEL TCHEREVKOFF NO. 3-4 1983 BELL TELEPHONE MAGAZINE 65 large direct-stock offerings through pre- emptive rights to share owners also were mounted in 1961 and 1964. De- mand for AT T stock was strong enough to permit setting the offering price in each case at a significant premium above book value, thus enhancing the per-share earnings growth so desired by investors. It is axiomatic that the time to issue equity is when conditions are favorable, and such conditions did prevail in abun- dant measure at the time of AT T s 1961 and 1964 offerings. The Bell System s debt ratio after the 1964 offering, how- ever, was in the lower portion of its objective range. By that time, the corpo- rate community generally accepted the proposition that dramatic Depression/ boom swings in our economy could be prevented, or at least mitigated, and that corporations might therefore safely carry a higher level of debt than was previously considered appropriate. The Bell System accordingly concluded that it might employ debt financing almost exclusively for a period, with the inten- tion of testing for the appropriate debt ratio under what it perceived to be al- tered economic circumstances. The appropriate level, the company decided, might be found to be in the range of 40- to-45 percent. In the late 1960s, however, events occurred that put considerable pressure on the System s financing program. Fueled by the escalating conflict in Vietnam and massive federal social pro- grams, the inflation rate began a long rise, accompanied by increasing interest rates. The System s capital needs to fi- nance its building program rose mark- edly because of increased construction and higher prices. System construction requirements were further increased as service problems surfaced in the late 1960s, notably in New York City but elsewhere as well. Operating costs were increased - again by inflationary pres- sures and by the need to restore service levels - with the result that the Sys- tem s return on investment declined. It was once again necessary to mount a rate-increase program aimed at restor- ing adequate earnings.
DEBT- MARKET MANAGEMENT Large capital requirements, high inter- est rates, and lowered earnings - combined with an investor perception that regulatory lag impeded the restora- tion of adequate earnings levels - forced the price of T into a decline. Al- though its share owner list had grown to three million, AT T stock in 1970 was selling below its book value, making it impracticable to consider straight stock offerings through pre-emptive rights as a means of meeting the System s mount- ing capital requirements. In these circumstances, the System was forced to rely heavily on the debt mar- ket - no longer voluntarily to "test" the
66 BELL TELEPHONE MAGAZINE 1983 NO. 3-4 appropriate debt ratio, but as a matter rants. Every 100 dollars of debentures Bell System Savings Plans devoted to of sheer necessity. Debt issues of Bell s was accompanied by two warrants, each the purchase of AT T stock. Also, in constituent companies were offered in permitting the purchase of a share of 1973, share owners approved the waiver size and at intervals that were deemed AT T at 52 dollars at any time in the of pre-emptive rights. Considering the close to the ability of the debt market to ensuing five years. The market value of scale of modern-day equity financing, absorb. Even so, the amounts raised in AT T shares was about 47 dollars when this provision had become something of the conventional debt market were the offer was made. The debentures pro- an anachronism. Its elimination permit- insufficient to meet the System s capital vided a going market rate of interest, ted the subsequent offerings of straight needs. Because the market price of T and the rights value was set by the mar- stock on much better terms, facilitating was depressed - which effectively ket estimate of the likelihood that T s the System s financing and benefiting barred entering the equity market with price would exceed 52 dollars a share at the share owners as well. common-stock issues - alternative fi- any time in the next five years. In that Since then, stock offerings combined nancing measures were necessary. event, the company also would have a with equity raised through the dividend In 1968, the System initiated a program prospective source of substantial addi- reinvestment plan and the savings plan, tional equity capital. by which the operating companies have reduced the System s debt ratio to would begin borrowing in the short- a level of about 41 percent. term debt market through bank loans DEBENTURES WITH WARRANTS and the issuance of commercial paper. The sale was a success, and the System Earnings have improved in the past 10 Previously, it had been System policy to raised the additional funds required. years, permitting a succession of divi- finance construction expenditures in ad- Unfortunately, the equity market in the dend increases that have treated share vance and to maintain a pool of funds at following five years did not carry T s owners fairly in a highly inflationary period. The market price of T also has AT T on which the operating companies price materially above 52 dollars. The could draw, pending their periodic, warrants expired largely unexercised. improved enough to allow two billion- permanent financing issues. This short- Nonetheless, share owners were treated dollar stock sales - one in December term financing program served to fairly. Those who subscribed obtained 1982, and another shortly after, in supplement the System s borrowing in debentures at a then-going rate of inter- March 1983. Both issues were record the long-term market, but it was neces- est. Those who sold their rights or the setters in terms of size - the first raised sarily a one-time measure. By 1970, the warrants obtained through subscription about 1.04 billion and the second 1.14 level of System short-term debt was up gained additional benefits. Another billion dollars - and both sold almost to that considered prudent by reason- interesting aspect of this financing is immediately. At about the same time as able tests; further increases in the that the volume of warrants involved - the second AT T stock issue, a number of amount of such short-term borrowings some 30 million - prompted the New operating companies successfully re- were no longer available as a source of York Stock Exchange, for the first time, turned to the debt market for the first meeting ongoing capital needs. to authorize the trading of warrants on time since the divestiture was an- the Exchange. nounced. Despite the success of these In 1970, the System again faced the capital-raising activities, the prolonged need for a significant amount of new The following years saw further ex- debate in the regulatory arena, in Con- capital (approximately 1.5 billion dol- traordinary measures to supplement the gress, and in the courts concerning the lars) to supplement the amount that capital raised, because the System con- System s future structure and permitted might be raised in the conventional tinued to issue large sums of straight spheres of operations has likely moder- long-term debt market. Various alterna- debt. In 1971, concern about the rising ated the price of T. Wall Street is not tives were considered. One possibility debt ratio and its effect on the System s comfortable with uncertainty. was especially interesting: selling credit standing persuaded the company small-denomination debentures to the to sell preferred stock. The amount re- And the uncertainties concerning struc- public. But the Bell System s financial quired, however - again, about 1.5 bil- ture and spheres of operations - ad- influence soon became evident. When lion dollars - was much larger than dressed by the Modified Final Judgment word got out that such a move was being the estimated market for this class of se- - have been replaced by new uncertain- considered, u.s. Treasury Department curity. This time an offering of convert- ties arising from the monumentally representatives expressed concern that ible preferred stock was selected. Some complex task of implementing divesti- it might have an adverse effect on the 1.37 billion dollars - then the largest ture. How will it all turn out? In due sale of Savings Bonds. Furthermore, the stock sale on record - was successfully course, the uncertainties will be re- thrift industry feared the sale would raised by this device. And in 1972 - solved as the successor companies begin cause a serious drain on savings depos- still faced with needs greater than the operations and evidence their invest- its. Finally, the idea was abandoned be- straight debt market could supply and ment worth. Meanwhile, it must be cause it was uncertain that 1.5 billion still unable to issue straight stock at a concluded that the System approaches dollars could be raised in this fashion. satisfactory price - the System was divestiture in reasonably sound condi- Moreover, there might be an overlap able to negotiate a large private place- tion - certainly much more sound than with sales in the straight debt market, ment with major insurance companies some 10 years earlier. for the sale of 375 million dollars in and the offering would cost the company These, then, are some of the highlights more than conventional debenture long-term debt and 625 million dollars of the financial heritage to which the issues. in nonconvertible preferred stock. separate entities emerging from the Though the company deemed a straight The Bell System s debt ratio at the end divestiture fall heir. Each of these offering of common stock impracticable of 1972 had risen to about 47 percent; it companies, in time, will shape its own in 1970, the share owners nonetheless was approaching or exceeding the limit character, its own fundamental policy, represented a prospective source of new that could be maintained prudently. and its own financial objectives. This capital that would not impinge on the Some relief from the persistent heavy writer can hardly doubt, however, that System s continuing heavy sales in the capital needs was gained in the ensuing the cardinal elements that have marked straight debt market - sales that were years by the restoration of service stan- Bell System financial history - sound being absorbed largely by institutional dards; by the advent of investment tax financial structure, fair treatment of investors. So, in a rather novel ap- incentives that reduced external capital investors, and adaptability to changing proach, share owners were offered an requirements; and by the substantial conditions - will figure prominently in opportunity to subscribe through amounts of equity capital supplied by the formulation of the tenets by which pre-emptive rights to an offering of 1.5 the Dividend Reinvestment Stock and these new and exciting entities will billion dollars of debentures with war- Purchase Plan and the portion of the guide themselves. ∎ NO. 3-4 1983 BELL TELEPHONE MAGAZINE 67 The rise of giant corporations, technological innovation, and government oversight played major roles in shaping the Bell System during its first century.
ardiner G. Hubbard was a largest firm was in communications - ments to give them a more active role in shrewd man with a knack for the Western Union Company, a formida- the nation s economy. New regulations promotion. His conservative ble Bell competitor in the late 1870s. were passed, for example, in an effort to appearance - those wire- In the years that followed the successful control the country s railroads. State rimmed glasses and the long, establishment of the Bell System, the legislatures and the u.s. Congress full beard - might have made you think exception became the rule in American imposed new controls on banks and he was just another cautious New Eng- business. Great corporations came to insurance companies. Conservation lander with his eyes turned to the past. dominate the nation s industries. These laws were introduced. Antitrust became But you would have been wrong. giant enterprises were, increasingly, public policy. While many of the new run by professional managers who were laws were passed at the behest of lib- Hubbard was a man of vision who put eral reformers, some were in answer his confidence and cash on the line to specialists; they created elaborate con- trols in order to monitor their firms to demands from business itself: ship- support Alexander Graham Bell when pers wanting railroads controlled; oil the telephone was still just a dream. In operations. New forms of competition emerged - through large-scale adver- producers wanting prices stabilized; the late 1870s, after the invention was bankers seeking monetary policies that successfully patented, Hubbard helped tising campaigns, for example. Mass distribution was the necessary comple- would eliminate wild fluctuations his son-in-law get the original enterprise in the economy. off the ground. He had grand plans for ment to mass production, and both the future of the telephone. became hallmarks of the American By the end of the 1930s, the government style of enterprise. was an important factor in most major But even Hubbard would find it difficult In this 20th-century setting, technologi- business decisions, especially those to understand the Bell System after its cal and organizational innovation re- made by the largest, most visible firms. century of rapid economic growth. As we placed the acquisition of new resources By the end of the 1970s, the United look back over those 100 years, three as the key element in the country s eco- States had a very large administrative dramatic developments stand out: the nomic development. To promote growth, state that directly controlled about 20 rise of giant corporations staffed by u.s. businesses had to come up with new percent of the nation s gross national professional managers; the increasing and better products, improve their pro- product and had a substantial degree of importance of technological and organ- ductivity, and manage change efficiently. influence on how the rest was used. izational innovation in business; and Major firms began investing substantial The Bell System played a major role in the expanding role of government in sums in research and development. Busi- every aspect of economic life. all three of these revolutionary changes. ness entered the age of highly organized The tiny, capital-poor telephone venture When Hubbard was helping Bell get science and engineering and a new age in of the late 1870s grew into the largest started, most businesses in the United business-government relations. corporation in the world. And it did so in States were small and controlled by an In Hubbard s day (when neither he nor an unusual way. Most other corporations owner-operator. Few of those businesses any other American had to pay income became highly centralized as top man- were incorporated. Most - like the taxes), the government seldom figured agement consolidated its control and early Bell enterprise - had little capi- very heavily in business decision mak- brought the entire organization under tal, especially working capital. They ing. If it did, it was most often when its oversight. This phase of centralized had a small workforce and usually either the federal or a state government operations usually lasted for several specialized in one product or function. provided some help for those entrepre- decades. Then, however, after the While the bankruptcy rate for these neurs taking advantage of America s companies began to diversify their companies was high, this style of small, great store of natural resources. Some of operations and to extend their business specialized business was responsible for the railroads, for instance, were partly into new areas at home and abroad, the the longest phase of u.s. economic subsidized by the federal government. centralized firm ran into trouble. Man- expansion. But, clearly, the government s most agers were forced to decentralize author- important roles were protecting private ity so that the business could continue Of course, a few companies were differ- to be run efficiently and innovation ent. Some of the country s railroads property, and ensuring that the world s largest free market - the market we had could be managed successfully. grew in the late 19th century into very large corporate combines. There were, here at home - remained open to u.s. The Bell System was different. It started as well, large companies in manufactur- business interests. out as a highly decentralized organiza- ing and in communications scattered However, Americans began to change tion. From the very beginning, the Bell around the country. In fact, the nation s their local, state, and federal govern- companies were encouraged to develop
68 BELL TELEPHONE MAGAZINE 1983 NO. 3-4 MICHEL TCHEREVKOFF business in their areas. Later, when long enterprise acquired its modern orga- hands of managers down the line. The distance transmission became possible, nizational structure. Bell System did. Local, statewide, and regional operating companies had a separate firm, the original American One crucial part of the Vail agenda in- Telephone and Telegraph Company, was volved tightening the central control of degrees of autonomy and could continue to adjust to local conditions - a most organized to operate this part of the certain essential activities - in finance unusual policy for that era of business business. Western Electric, the manu- and technology, for instance - without facturing organization, was also a sepa- sacrificing the advantages of a decen- history. This distinctive style of orga- rate firm. This type of decentralized nization let the Bell System operate effi- tralized and, hence, flexible system. system let Bell managers adjust to local ciently over a vast geographical area AT&T had by then been transformed into conditions and promote their business the central command post of the Bell without experiencing the kinds of mana- without always waiting on directives gerial problems that more centralized operations. Under Vail s direction,AT T from some distant headquarters. began to provide more leadership and to firms encountered. As the industry s early expansive phase develop better fiscal controls for the Vail also led the Bell companies into the ended and a higher degree of coordina- System. But the change was a matter era of government regulation. By 1907, tion became technologically desirable of degree; even when Vail had completed the states had begun to create regula- and administratively feasible, the Bell his work, the Bell enterprise still was tory commissions, and the federal gov- System began to change. In the early more decentralized than most American ernment also was becoming involved years of the 20th century, under the industrial corporations of that day. with the industry. By recasting the com- leadership of Theodore N. Vail, the Bell Other firms left few decisions in the pany s mission, Vail embraced rather than fought reasonable state and federal regulations. The Bell System learned to coexist with a more active govern- ment without sacrificing its efficiency as a source of vital public services or as a private, profit-making enterprise. Government regulation in this case did not inhibit technological innovation - in part, it seems, because AT T s corpo- rate leaders did not squander energy by blindly resisting the new government presence. Nor did they ignore their responsibilities to the public. Vail s con- cept of universal service dovetailed with the precepts of regulation, easing the Bell System through a transition that was very difficult for many other Ameri- can businesses. To keep the Bell System ahead of its competitors, Vail actively promoted technological innovation. Under his leadership, the company not only con- solidated its research efforts but also laid the foundation for Bell Telephone Laboratories. After World War I had attracted attention to the need for tech- nological development, many other American corporations began to orga- nize their own laboratories - sometimes using the telephone company s as a model. Thus did the Bell companies help move the nation into a time of techno- logically centered economic growth. Without the growth achieved through technological change, the United States surely would have been unable, in the decades that followed, to maintain its high standard of living and its strong position in world markets. The Bell System that Vail helped reor- ganize remained intact - though certainly not unchanged - for more than half a century. Now, of course, tech- nological developments, the rise of com- petition, and changes in public policy have set the stage for AT T to devise a new business strategy and a new struc- ture for the industry. A new type of com- munications system - the third one in the past century - is being created for a nation long accustomed to universal ser- vice and newly attentive to the need for technological progress. ∎
NO. 3-4 1983 BELL TELEPHONE MAGAZINE 69 Working smarter is the key in an economy increasingly geared to information.
hink of the American economy a system wherein 182 million Bell and facturers must seek ways to make a as economies, not one. non-Bell phones can complete more better product using fewer resources. The first is the economy of the than 60 quadrillion possible connec- This means using computers to process Industrial Age, a mass economy tions. In biology, that would be called a information, to keep inventories at a that produced in the last hun- nervous system. minimum, to monitor the flow of work dred years an overwhelming prolifera- Seeing the economy as changing from or robots, or to design components. tion of manufactured products, cities, an Industrial Age to an Information Age transport and communications systems, Just as we did in the Industrial Revolu- is not entirely revealing. After all, we tion, we are completely remaking our houses, and factories. The second need durable goods to survive. What we economy is not so easily defined. It has work - only this time, the purpose is to have learned, however, is that we can- make society information-rich so that it been called the Information Age, an era not automatically dip into resources to in which the majority of the American will work more effectively, efficiently, supply our material needs without re- economically. In the Industrial Age, we workforce is engaged in the production, gard to the earth s physical capacity to distribution, and dissemination of infor- put muscle into matter through the supply those needs. Some call this the extensive use of fossil-fuel energy. In the mation in contradistinction to the Age of Limits. production of goods. I prefer the term Information Age, we are extending our "informative economy." This transition Many studies document the finiteness of minds into matter. If the old Bell System has been occurring for decades, but be- natural resources and the seeming infi- was akin to a nervous system, the new came most obvious and rapid during the niteness of our wants. The Age of Limits companies will resemble the mind. past decade. exists to the extent that we do not The work environment of the United change how we produce, live, work, and States will be permeated by machines The question for the Bell System is function. We are moving to an informa- what role will the post-divestiture that think; machines that formerly only tion Age not merely because of new companies play in this transformation did work will soon be fitted with chips technologies, but because only through that will monitor and adjust their func- of the u.s. economy? The fact that the the use of more information can we con- Bell System is undergoing the divesti- tion while relaying information to other tinue to grow, prosper, and thrive. The ture process during this transition in machines. The rapidity of this change is Bell System companies, whose function unparalleled. In 1982, there were more the economy may be more than mere is to transmit, promote, and produce coincidence. The role of the new compa- computers than people on the planet (if information, are critical to this nies in the economy will not be their you count the chips used in watches, transformation. role of yore, just as the economy of the microprocessors, and mainframes). By next century will bear faint resem- It is important to understand the root 1990, there will be nearly 80 million blance to the economy of the past. word: inform. To inform means to in- computer terminals in use every day. By the year 2000, I wouldn t be surprised to The century-long period of industrial spire or imbue an object with a higher quality or value. And why do we now see the number of computer terminals development parallels the birth and redouble to 160 million - one for every growth of the phone system. For exam- need more information than ever be- fore? Simple: Either we work smarter or adult in the country. By the end of the ple, in 1870, the United States had no century, we ll regard computer illiteracy steel industry to speak of. We imported we get poorer. To be smart requires knowledge. We are going into a pro- the way we regard English illiteracy our steel from Europe. Twenty years today. The job of the Bell companies is later, we were the world s leading sup- foundly more materialistic economy, an economy of radical scrutiny of time, simple and enormous - to connect these plier. This pattern was repeated in tex- extensions of the human mind so that tiles, railroads, automobiles, housing, energy, material. This scrutiny means that in the coming decades, virtually they can freely exchange information, construction, energy, and machine tools. imagery, data, and intelligence. There wasn t a major industry in which every product, manufacturing method, America did not emerge as the largest and service will be completely rede- The Industrial Age was hooked together producer. The rise of industrial civiliza- signed or newly constituted. with copper wires. One billion circuit tion required of a communications sys- Because using more energy and miles of cables created a communicating tem to interconnect all aspects of an resources makes our goods and services system that is the most complex mech- expanding world of material civilization. more expensive - and, therefore, less anical system on earth. The old com- Because growth produces differentia- available - we will have to use fewer munications system was devised to tion, it requires increasing amounts of resources to produce and deliver the transmit voice and words, by telephone, knowledge and information to coordi- same or better goods we are to main- telegraph, telex. But the Information nate and manage such growth. Begin- tain or improve our standard of living. Age requires that same system to be ning with Alexander Graham Bell s first Likewise, the amount of information per able to do much more. Information must transmission, the Bell System produced unit of production must increase. Manu- be coded, bundled, packeted, and trans- lated into languages that will allow it to pass through the burgeoning diversity of technologies that are arising to meet the demand for this information. I can sit at my desk and call any other phone on earth. Within 20 years, I expect my desktop computer to reach in seconds any other computer. It will exchange, ask for, and retrieve informa- tion, and relay it around the earth using laser bursts that will send a billion bits of data per second. It will be cheap, effec- tive, reliable. Because industry, banking, and com- merce are busy, full, fast-moving, and complex, one might assume that we live in an efficient world. But that is far from the case. The greatest efficiencies are yet to come. Just as we look at the 1880s as a relatively somnolent period in terms of human efficiency, we will, a century hence, see the 1980s as quaint and curious. The key to progress lies al- most completely in our ability to redesign every human function in the economy through the use of radically improved communications and information-generating systems. For the economy to prosper and grow, Bell companies will need to continu- ously increase their productivity as they did during the first century of the Sys- tem s existence. As resources become increasingly expensive, it will be the lessening costs of transmitting, develop- ing, and disseminating information that will keep costs down, wages high, and economic growth possible. The amazing and constant flow of technologies de- veloped by Bell Labs is critical because it will result in continued reductions in the cost of information. Since 1965, Bell System productivity has increased at an average rate of four percent per year; overall productivity of the economy has been growing at just one percent per year during the past decade. While the latter is disappointing, this differential is crucial to the health of the informa- tive economy. The companies that issue from the Bell System can no longer be mere distribu- tors of information. They produce, mar- ket, and service the end user with the hardware and software necessary to generate and process the large incre- ments of data and information that businesses and individuals will require. The fact that the Bell System companies are entering a market that is unregu- lated, feistily competitive, and quick changing, spells difficulty and oppor- tunity. New technology alone cannot win the day for any company. The oppor- tunity for the future rests with some very old virtues coupled with some very new technologies. These qualities, embedded deeply into the ethics and values of the Bell System decades ago, are precisely the ones that will decide the winners and losers of the technology race. ∎
MICHEL TCHEREVKOFF NO. 3-4 1983 BELL TELEPHONE MAGAZINE 71 Cultivating a new culture to match new missions may be the most difficult task facing post-divestiture employees.
t AT&T operational headquar- ther broad nor well marked. The idea of bills, and a Justice Department anti- ters in Basking Ridge, New managing corporate culture has only trust suit combined in an avalanche of Jersey, a remote 20-by-32-foot recently surfaced and is still considered change. Decision after decision by gov- room serves as the status con- an unknown art. No disciplined ana- ernmental bodies moved the industry trol center for the staggering lytic method exists for an objective incrementally toward greater competi- job of disaggregating the Bell System - assessment of cultural attributes and tion. Finally, in late 1981 and early 1982, a job whose magnitude and complexity their proportionate influence on corpo- the FCC S Computer Inquiry II order and are only suggested by the component rate performance. No accepted concep- the divestiture agreement with the De- divestiture of 125 billion dollars in oper- tual model of corporate culture exists partment of Justice opened the flood- ating telephone company assets from for diagnosis and orderly change of gates of change. corporate culture requirements. the parent, AT T. The walls of this The magnitude of the structural "Corporate Divestiture Management changes flowing from these mandates Center" are adorned with timeline AN AMORPHOUS ELEMENT can hardly be overstated. In simplest charts, schedules, and graphic represen- IN CORPORATE SUCCESS terms, the two government mandates tations of critical issues. A computer In fact, there is not, as yet, even a clear call for the of the Bell terminal in one corner instantly dis- consensus on how to define culture. In- System as the nation has known it. plays any one of the 300 corporate as- deed, there appear to be almost as many This, of course, strikes at the heart of sumptions, 2,000 work activities, and/or definitions as definers. M , Bell s historical legacy - 150 major events underlying divestiture , - over the course of a century. planning. Yet nowhere in this room or of of The culture shock created by these in the computer s memory can be found , , , , changes is difficult to exaggerate. In the single element that may ultimately , fact, when Bell System people began to be most critical to the enterprise s suc- - verbalize their feelings on January 8, cess through divestiture and beyond. . Taken together, the elements in a 1982 - the day the agreement to divest That element: corporate culture. company s culture encompass the very was announced - they spoke in meta- Clearly, the culture must be reshaped, meaning of the organization, and in- phors of personal grief, almost as if they adapted, reoriented to bring the value creasingly, they are recognized as had been deserted, or as if there had systems and expectations of Bell people virtually for ultimate been a death in the family. Gradually, into congruence with new missions - success. In fact, it has been observed the shock abated, helped along by occa- and to prepare employees for the com- that culture can play an equally signifi- sional flashes of grim humor. "My initial petitive telecommunications battles cant role as either strategy or structure reaction," one company president said, looming ahead. No manager is charged in the long-term performance of a "was that my best horse had just been specifically with the management of company - most especially the large shot out from under me." corporate culture. No task force is corporate organization experiencing sig- studying its dimensions. No committee nificant changes in its markets and/or Every one of the Bell System s employ- is planning approaches to altering its business environment. ees knew that the world would be for- ever changed; that they would be work- underlying aspects. In the fullness of time, this may be the ing for new companies requiring new The reason is that culture is as broad as Bell System s greatest challenge. Corpo- skills and new ways of doing things. the enterprise itself; as pervasive as a rate culture is, therefore, a concept that value system evolved over a century of holds the fascinated attentions of Bell Of course, all of this is happening at the service; as amorphous as the attitudes employees charged with helping steer precise moment when the American and expectations of one million employ- the corporate ship through the stormy business community is experiencing a ees. Thus, managing the required seas of divestiture. virtual explosion of interest in corporate changes in culture is not an event The root causes for the Bell System s culture. "Corporate culture," T N underlying divestiture; rather, dives- impending transition lie in a decade of Y T has reported, "is the magic titure is one of the causal factors extended debate on whether or not - phrase that management consultants underlying change in culture. No one and how - the nation s telecommuni- are breathing into the ears of American manager is assigned responsibility cations industry should be opened to executives." for managing the change because all competition. Throughout the 70s, scores Corporate culture appears to be an idea managers must be responsible for it. ofFCC dockets, dozens of private anti- whose time has come. Yet no one seems The road to such responsibility is nei- trust suits, several proposed legislative to be doing much about it. Among the
72 BELL TELEPHONE MAGAZINE 1983 NO. 3-4 PONDER GOEMBEL
reasons: Culture within the corporation corporate mission. Significantly, neither It is difficult to exaggerate the impact of is difficult to pin down, nearly impos- the mission nor the culture evolved acci- Vail s "oneness" and Gifford s "fairness" sible to quantify or measure, and dentally. They were molded successively doctrines on the attitudes of millions of remarkably resistant to change. How- by two historic Bell System leaders - employees through the years. Vail s ever, culture can be influenced posi- Theodore N. Vail and Walter S. Gifford. ideal of universal service provided the tively by consistent, thoughtful It has been said of the former that if common purpose that would unite and managerial action. Alexander Graham Bell invented the motivate generations of management To be sure, no cookbook recipes for telephone, then Vail invented the Bell and craftspeople alike. Gifford s concept change are possible because each corpo- System. Interestingly, Vail patterned of balancing the interests of employees, ration s culture is made up of elements the structure of the Bell System after customers, and shareholders further unique unto itself. But certain concepts defined that purpose. And in the inter- will not change from corporation to cor- ests of both ideal and concept, a mutual poration. The most basic of these is that reinforcing set of elements evolved into managing cultural change is a three- the intrinsic descriptors of Bell s cul- step process: ture. What are these elements? The first involves treatment of employees - em- - Management must understand the ployees representing, of course, one leg meaning and influence of corporate cul- of Gifford s stool - and a prominent part ture and must ascertain - largely of the psychological contract between through empirical methods - precisely company and employee. the elements of its own culture. L , for example, are an - Cultural wheat must be separated essential aspect of the Bell culture. A from the chaff. Decisions must be made high proportion of employees have as to which elements are supportive of spent all of their working lives within future goals and strategies and are the corporate boundaries of the Bell to be retained, and which elements no System - many, especially among longer are appropriate and must be managerial ranks, in as many as 15 changed. different assignments in a variety of - Appropriate actions must be taken departments and territories. to effect the required changes - in a Career longevity is accompanied by - way that leaves the desirable elements to the company. Almost na- unaffected. tionalistic in its fervor, corporate loyalty ASCERTAINING BELL S extends even into retirement when for- CORPORATE CULTURE mer Bell System employees are united It has been said of the Bell System that as Telephone Pioneers of America. it contained all the necessary attributes the u.s. government in its local/federal A quid pro quo for their dedication and of a nation: territory, idiomatic lan- division of responsibilities. He then loyalty is Bell employees' perception of guage, history, culture, and govern- coined a six-word mission statement fair treatment by the company. ment. The assertion may have been that would provide singular direction slightly exaggerated, but its cultural Employment security, good salary and for the enterprise for more than 70 component was unarguably accurate. benefit treatment, and enormous years: "One System, One Policy, Univer- emphasis on employee safety are not That culture, in fact, generated the sal Service." energy to drive the enterprise as it be- constructs honored in the breach; they came the world s largest in terms of both This doctrine became the driving force are facts of life under the benevolent assets and employees. behind the integrated telephone net- protection of "Ma Bell." Over time, em- ployee perception of fair treatment To understand Bell's culture, it is neces- work, pricing of products and services, and unified administrative systems - gradually crystallized into a sense that sary to understand that it evolved in a from Vail s day to the present. senior management cared - really precious way, to be directly supportive of cared - about each employee s welfare. the corporate mission. That mission: to Just as Vail provided the structural blueprint and mission, AT&T president Concomitant with all of the foregoing . Everything related to cul- Gifford in 1927 provided the "value sys- cultural attributes has been Bell s policy ture flowed accordingly: the kind of peo- tem" to realize them. Gifford stated that of - - - - ple Bell companies hired, their shared the Bell System s goal was to strike a . Promotion from within is a value system, and the infrastructure of fair balance in the treatment of employ- deeply ingrained aspect of Bell System processes to run the business. For most ees, customers, and shareholders. His culture: One veteran manager wryly ob- of this century, Bell System people were philosophy was to "furnish the best served that if faced with the need for a persuaded that the surest way to possible service at the lowest possible troop of ballerinas, the company would achieve universal service was to man- cost, consistent with fair treatment of reassign and retrain a group of tele- age the entire telecommunications employees and share owners." This sim- phone operators. system "end-to-end" as a single entity, ple yet profound guideline, which For all its strengths, such a self-con- with both vertical and horizontal permeated the Bell System s decision- integration. making process, soon became symbol- tained employee-development system gives rise to mores which may, over ized as "the three-legged stool" - Gif- These two driving forces - the goal of time, tend to become less than com- universal service and the concept of ford s vision of balanced responsibilities to customers, share owners, and pletely productive. For example, there is end-to-end responsibility - shaped the throughout the Bell System a powerful employees. network, guided Bell Laboratories - that is, an ex- technology, permeated Western Electric Thus, Vail provided Bell employees with treme deference to the status inherent manufacturing, forged operational of and of - in each level of the managerial hier- methods and practices, even influenced fication -and Gifford, a sense of fair- archy. There is, as well, a powerful bias depreciation schedules. Equally impor- ness -that would establish patterns of toward - tant, these forces fashioned a corporate managerial actions and employee rela- tendency exacerbated in years past by a culture entirely congruent with the tions up to the present day. functional organization structure that
74 BELL TELEPHONE MAGAZINE 1983 NO. 3-4 required a high degree of coordination standing Bell System cultural attri- way of life permeating every job, and a between and among departments. butes. Taken together, they explain primary element used in evaluating em- a great deal about the patterns of behav- Another cluster of cultural attributes ployee performance. It must remain ior and the expectations of generations relates to the second leg of the three- that way for each of the new companies. of Bell System people. They resulted in legged stool - customers. D Other cultural characteristics need to be extraordinary and extended success in an especially power- changed. These begin with the way peo- protecting the well-being of employees, ful, shared value among Bell System ple think about doing business on a people. The importance of quality ser- the investments of shareholders, and daily basis, and extend to broadening the quality of service to customers - in vice is instilled early in every employ- the paths of managerial succession, as ee s career, with constant reinforcement sum, a unified and universal service. described in the following paragraphs. by senior management along the way. Corporate mission and corporate culture Adapting the Managerial Mindset The quality-of-service measurement have rarely been so well matched - a As AT T and the regional companies system used in evaluating managerial match that was sustained for decades, move more and more toward a fully performance, the anxiety attending primarily because the environment competitive environment, the mindset publication of the "Green Book" of ser- remained largely unchanged. Then of their management, up and down the vice indices each month, and the famil- suddenly, as 1981 faded into 1982, an line, will of necessity shift toward a iar prints of Angus MacDonald fighting became clear that one enduring prin- market orientation - unquestionably a a blizzard to keep the lines open - all of ciple, universal service, had essentially welcome change to senior managers these were reminders of the System s been achieved, and the second, end-to- long embroiled in a quagmire of regula- emphasis on service. end responsibility, would have to be abandoned. As the regulated environ- tory, legal, and legislative matters. Finally, the third of the stool s three legs ment gave way to a competitive one, Clearly, such a shift will affect not only - accountability to shareholders - is many of the bedrock philosophical doc- the ways people think about doing busi- safeguarded by those elements of corpo- trines of the Bell System would have ness day to day, but also the way rate culture that foster productivity and to be overhauled to fit new realities. business is done. For instance, strategic sound financial management. SEPARATING CULTURAL planning will employ competitive-anal- Emphasis on productivity measure- WHEAT FROM CHAFF ysis techniques for the first time; a func- ments and on customer service perhaps Sensing such change in the wind, a con- tional organizational structure will move further toward market-segmented has been the most powerful shaper of feree at an AT T management seminar the Bell value system. In fact, the com- asked a senior manager if "in its ardor lines-of-business structures; costing and petition among Bell companies for ever to become a successful competitive pricing methodologies will move from a greater has been enterprise, the Bell System would be- basis of cross subsidies and national so intense that redirecting this internal come a shlock outfit?" The question price averaging to product-by-product competition toward the external envi- strikes at the very heart of what many and service-by-service computation ronment is now seen to be one of the employees fear most about the loss of schemes; capital-recovery formulas will post-divestiture companies major man- cherished and still-valuable aspects of be overhauled to recognize the shorter agerial challenges in the 1980s. Al- an idealistic cultural heritage. product life inherent in competitive ready, however, the transferral of this products. Such changes already are internally competitive spirit to the Clearly, any tampering with the corpo- reverberating intensely throughout all marketplace can be witnessed in each rate value system must be executed of the companies. of the regional companies and AT T with great care in order not to throw Conforming to a More F M recognized this shift out the baby with the bath water. "Risk-Oriented" Management when an quoted one of AT T s consultants It is recognized throughout the Bell Sys- In a move toward a more competitive as saying, "I ve never seen managers so tem that any loss of faith among em- willing to change." environment, management style must ployees that the corporation has their be adapted accordingly. In the process Another dominant aspect of Bell s cul- best interests at heart would represent a managers will recognize that market- ture has been its severe setback, one not easily repaired. place uncertainty will replace regula- . Because Thus, as this family of one million is tory uncertainty, and that cultural management of the network has been broken apart and as hundreds of thou- mores soon will change to value entre- the central core of the Bell System s his- sands of people are reassigned, Bell preneurial types of managers more than toric mission, managers with technical/ management must demonstrate con- in the past. In competitive industries operational skills have tended to pre- sistently that the process is being that experience sharp shifts in market undertaken with no lessened sense of dominate - a fact borne out by the Sys- share and economic conditions, conser- tem s senior management profile. caring about each employee as an indi- vatism is tantamount to default in the vidual. Obviously, the new companies marketplace. Unquestionably, man- From a strategic standpoint, senior will no longer be able to follow Vail s agers of the future will be more inclined officers in the operating companies and historic vision of oneness. But an is to risk-taking than to caretaking. at AT T have necessarily maintained a i mperative that they not lose sight of . For- Giffords vision of fairness. AT&T recog- Accepting Organizational Change as mer chairman John D. deButts once quoted nizes, too, that in a competitive arena Continual Phenomenon a colleague as asking, "Wouldn t an be where service quality may provide the The "steady state" organizational nice if on coming to work some morning edge, an must continue to foster as a structure, once part and parcel of the we found ourselves thinking not about strong corporate value the service corporate culture in the Bell System, the FCC or the Justice Department or doctrine - buttressed even more than must continue - into the foreseeable the state commissions or even the Con- in the past by Western Electric s pro- future - to adapt and readapt to meet gress, but thinking first about the duction skills and Bell Laboratories changing needs. customer?" In the absence of external technological innovativeness. competition, Bell management perforce For a half century, the Bell System en- Efficiency of operations, so long focused high-level attention on the joyed a stable structure; one ideally enshrined in the corporate value sys- industry s regulators, working assidu- suited to its regulated world. But in the tem, also must be preserved in im- ously to create a favorable regulatory past 10 years, two major reorganizations portance. Productivity rates in Bell have been implemented, and now the climate in Bell territories. companies have exceeded those of other System is poised for the third and by far These then are some of the most out- industries because efficiency has been a the most far-reaching restructuring of
NO. 3-4 1983 BELL TELEPHONE MAGAZINE 75 all. As strategies change to meet chang- body. Managers and craftpeople are Harvard Business School has written: ing market conditions, so must orga- beginning to think of themselves as "Acquiring and developing the right nizations adapt to implement these competitors. And, as the focus continues talents for the business as it changes strategies. Such adaptation will be a to shift from regulators to the market- strategy, technology, and products continuing phenomenon - one that place, so too will the culture reflect this requires more shrewd, wise, long-range must become a part of every employee s shift in outlook. planning than any other corporate system of expectations. Of course, even the influence of leader- endeavor." He might have added that Broadening the Routes to Power ship has its limits, particularly in large recruiting the talent is a powerful if indirect means of influencing the corpo- Under regulation, operational and tech- corporations where the principal man- rate culture. In addition, problems of nical skills were held to be paramount. agement is far removed from day-to-day middle- and lower-management func- "culture clash" can be avoided by mak- Line operating jobs were the seed-bed ing certain that the individual value developmental assignments for high- tions. Cultural norms, then, must be systems, personalities, and educational potential managers to progress first to reoriented by changing the system of management - the many management backgrounds of younger managers com- the coveted operating vice president ing aboard are in harmony with the spot in the operating companies and processes, the organizational structure, corporation s aims. then beyond to levels of even higher re- and management style that form the en- sponsibility at AT T. In the future, with gines that make the corporation go. In Anthropologist Emile Durkheim has a substantial portion of the operating changing reward systems, in reorienting proclaimed that shared symbols are units divested, and with the success of the resource allocation processes, necessary for cultural cohesion. By the competitive strategies highly dependent in restructuring the organization and same token, modification of symbols is a on technological development, market- establishing its new identity, Bell is necessary component of change. communicating clearly the patterns of ing prowess, manufacturing know-how, In AT T s case, for example, the loss of values and behaviors it wants to achieve. and financial acumen, new patterns of the Bell name and logo is a serious loss. executive succession may be more It is critically important to communi- However, by continuing to use AT T as a appropriate. This is not to say that oper- cate to all employees in quite specific trade name, the corporation capitalizes ating line experience in the surviving terms precisely what the corporate on its longstanding reputation through- regulated sector will no longer be a path value system is - most especially in out the world. And in replacing the to the top. It is to say that it may not be periods of change. In AT T s case, a care- familar Bell Seal with a globe girdled by the only path. fully recast document - "A Statement graphic representations of electronic of Policy" - sets forth the corporation s communications, AT T has a new sym- MANAGEMENT ACTIONS evolving goals. From the first day of the bol which, as has been noted, "suggests TO EFFECT CHANGE divestiture announcement, key Bell new dimensions - of our business and IN CORPORATE CULTURE officers have voiced clear messages of our future." Can a company deliberately change its corporate positions and expectations. Of course, not all symbology changes. culture, as it can its strategy or struc- For example, when asked how he The operating companies have been al- ture? As noted earlier, there are no cook- wanted the business to be viewed five lowed by the presiding court to retain book recipes. But once a corporation s years hence, chairman Brown replied: "I their names and the Bell Seal. And culture is defined, and its cultural at- really want the business to be regarded another long-standing symbol, a 1917- tributes are analyzed to determine as one that adapted itself to what the vintage 16-foot bronze statue personify- which should be preserved and which public expected of it, was not a prisoner ing the Spirit of Communication, has modified, actions can be taken to effect of embedded thinking,. was alert to been taken from atop AT T s headquar- changes. Such actions are now under opportunities, and was able to take its ters building at 195 Broadway in New way in the Bell System. place in a different setting with the York, refurbished, and placed in the same high regard for ethical conduct in Cultural changes cannot be delegated to lobby of the new headquarters building a well-managed business that it has the employee communications staff. at 550 Madison Avenue. This statue, always had." They must begin at the top of the orga- affectionately known to generations as nization, with the chief executive officer To adapt appropriately, to think and act Golden Boy, will continue to symbolize and his inner circle of officers. creatively, to maximize opportunities, to excellence in providing service - this Chairman C. L. Brown began to set the continue as a highly ethical, well-man- time, around the world - in the years stage for cultural change in a speech be- aged, powerful business are goals out of that follow divestiture. fore the Commercial Club in Chicago - which behavioral norms and ways of With divestiture, the Bell System will several years before the process of dives- doing business will be shaped in the experience a metamorphosis that would titure began. In that speech, Brown future. challenge the most boastful caterpillar. asserted, "There is a new telephone Another mechanism for effecting The organizational, technological, and company in town ... a high-technology change in the corporate culture is man- operational complexities to be faced are business applying advanced marketing agement training that is explicitly without parallel. Yet, changing the strategies to the satisfaction of highly geared to modifying behavior in support corporate culture may well be the most sophisticated customer requirements." of new corporate values. The Bell difficult task facing management. He questioned how apt a label "Ma Bell" Advanced Management Program - a The fact that corporate culture has yet was to describe such a business. He then developmental experience for high- to be quantified makes it no less real, asked his audience to pass the word that performance fourth- and fifth-level no less important as an ingredient in a "Mother doesn t live here anymore." managers - exemplified such training. corporation s fortunes than return on It sought to prepare participants to For Bell employees, the statement investment, market-share percentage, carried strong signals about their cul- create and implement strategies that hurdle rates, or debt ratios. Chairman would keep the company at the leading ture, not least among them that symbols Brown summed up both the objective of the past - even so venerable a sym- edge of change, and to anticipate and and the importance of the cultural bol as M B - should be set aside. respond to strategic issues of the future transition when he said, "If we are able in a rapidly changing environment. It That the Bell System companies have a to adapt our marvelous culture to a dif- clear vision of their new mission is emphasized entrepreneurship. Other ferent environment - and if we remem- examples abound, not the least being demonstrably evident. The process of ber that the business in the 80s cannot AT T s Corporate Policy Seminars. strategic change already has begun be run by memory - we can set the with a striking effect on the employee Professor Wickham Skinner of the course for the next century" ∎
76 BELL TELEPHONE MAGAZINE 1983 NO. 3-4 THE IMAGE BANK/MYRIAD COMMUNICATION