Improving Telephone Services

Despite the divestiture of most of its foreign interests, AT&T was active in improving services to its American customers by developing international telephone services. Bell System engineers had been experimenting with transatlantic voice transmission by radio since 1915. The research and development activities of AT&T were boosted in 1925 by the establishment of Bell Laboratories as the company’s dedicated research department. In 1927, AT&T launched a commercial telephone service between New York and London, using two-way radio. While international radiotelephone services expanded over the next ten years, capacity was limited and call quality was adversely affected by signal interference. These problems were removed only in the 1950s and 1960s when transoceanic telephone cables were installed. AT&T installed a transatlantic cable in 1956. Meanwhile, AT&T expanded the capacity for long-distance calls within the United States by adopting microwave technology. The first long-distance microwave telephone relay linked NewYork and Chicago in 1950. A year later, AT&T introduced direct long-distance dialing, which was available to 90 percent of American telephone subscribers by 1964. Another method of international and long-distance telephone transmission became available from 1962, when AT&T launched Telstar, the world’s first commercial communications satellite.

AT&T also played a pioneering role in the development of mobile telephony. AT&T engineers recognized early on that limited capacity was a major impediment to the expansion of mobile phone use. They proposed a cellular solution in 1947, thirty years before such systems actually came into being. AT&T revived this proposal in the early 1970s when the Federal Communications Commission (FCC) invited proposals for a new mobile phone service to operate in an ultra–high frequency band around 800 MHz. The FCC’s decision was delayed by the instigation of antitrust proceedings against AT&T in 1974, but AT&T was granted a trial license in 1977 and began its first public trial, in Chicago, in 1978. Commercial licenses were awarded in 1982 when AT&T was in the process of being restructured.