From National Bell to AT&T

The National Bell Telephone Company was formed in Boston in 1877. Hubbard, Sanders, Bell, and Watson were the founding partners. The telegraph company, Western Union, also entered the telephone business, having acquired the rights to Gray’s patent and the U.S. rights to Thomas Alva Edison’s improved telephone mouthpiece. While a series of telephone patent disputes were not finally settled in Bell’s favor until 1893, Western Union decided to sign over its patent rights to National Bell in 1879, in return for a share of profits. National Bell was renamed the American Bell Telephone Company and gained a monopoly on telephone services until the expiry of Bell’s patents in 1894. In Britain, where Edison held the rights to his improved mouthpiece, American Bell and Edison joined forces to form the United Telephone Company.

Further restructuring followed as American Bell sought to optimize the management of its expanding business. In 1882, the Western Electric Manufacturing Company was set up in Boston to manufacture telephones for American Bell. The American Telephone and Telegraph Company was registered in New York as a subsidiary of American Bell in 1885. At first, AT&T was solely responsible for American Bell’s long-distance telephone services, complementing the Bell Telephone System’s control of local telephone services, but it assumed the role of the parent company in 1899. This move gave the company more flexibility in dealing with the renewed competition that followed the expiry of the original patents, as New York’s corporate laws were more permissive than those of Massachusetts were.