Project Management – Group 6

Presented By:
Abhinav Sinha (61)
Abhishek Abhiranjan (62)
Giri Shankar (76)
Manish Kumar (87)
Mohit Goel (89)
Praveen Sivanandan (97)
 Introduction
Telephone was first introduced to Americans in
1876. It ushered US in a new era of
communication, commerce, and social
interaction.

It started with the invention of telegraph and

then, a brilliant mistake by Graham Bell, led to
one of the greatest inventions for mankind.
 Dawn of Telecommunication
• Started around 1830 with introduction of telegraph machines which allowed
quick and comprehensible communication across long distance.

• Telegraphs were the first instance of use of electromagnetism which helped

usher in the era of electricity.

• Around 1850, America had around 23000 miles of telegraph lines, more than
nations railroad tracks.

• In 1860, consolidation of telegraph industry happened. Western Union and

American telegraph company emerged as the leaders.

• Consolidation killed the courier services, which were done on Pony.

• Associated press utilized the power of telegraph to become nations first

telegraphic news company

• In 1866, transatlantic telegraph cables were laid between US and England.

• Graham bell arrives to US from Scotland in 1871, he in due time took

telegraphic communication to the next level.
 Bell’s Harmonic Telegraph
• Bell learnt about electricity after reading the book of a German scientist Helmholtz,
who produced vowel sounds using electrified tuning forks.

• Book was in German, hence bell misinterpreted the text, he thought Helmholtz has
successfully transmitted sounds over telegraph lines. Here Bell got the idea.

• Bell tried unsuccessfully Helmholtz’s idea, hence began creating and testing his own
theories.

• Bell started working on Harmonic telegraph, which can send and receive multiple
messages at the same time.

• Idea was to have a pair of tuning fork at both sender and receiver end and each fork will
pick up the message sent by its pair at the opposite end. This will help in messages not
getting mixed up.

• Bell rejected the idea of someone uttering words at sender end, which will travel as
current to receiver end where harp would vibrate to produce speakers message in
musical tones.
 A Neck- to- Neck Race
• Studying Human Ear, Bell found that a tiny membrane could accurately
reproduce the sound, which led him to think that why couldn’t the human
voice also be transmitted and received over electrical wires?

• Bell hired Thomas A. Watson as his full time assistant to help him in
experimenting his ideas.

• Another company Western Electric Company was also working on similar

idea, so the first to patent the telephone idea will get the profits for patent
period.

• Well Known scientist Joseph Henry suggested that instead of Harmonic

Telegraph Bell should focus on Telephone, which was strongly opposed by
investors funding Bell.

• But Bell continued to focus on Telephone instead of Harmonic Telegraph.

• Finally on March 10, 1876, Bell and Watson were able to successfully create
the first prototype of the working telephone and became the inventor of this
innovative new technology.
 A Cloud of Suspicion
• Bell filed for patent of Harmonic Telegraph and Telephone on Feb 14, 1876. But
major focus in the patent was on Harmonic Telegraph.

• On the same day old time rival Elisha Gray of Western electric company too
filed a caveat for telegraphic machine on the same day in patent office.

• But patent office gave exclusive right of patent to Bell. The reason for the same
was not cleared by patent office. People anticipated it to be because of Bell’s
powerful friends financial backers.

• It is also said that Bell actually stole the idea of Telephone from Elisha Gray.

• Award of patent followed decade’s worth of court proceedings and more than
600 lawsuits.

• But Bell made working telephone device before than Elisha Gray. Thus in the
eyes of history, Alexander Graham Bell— with the help of his assistant, Thomas
A. Watson— was, is, and will remain the inventor of the telephone.
 THE INTERNATIONAL
CENTENNIAL EXPOSITION
• Alexander Graham Bell was awarded his patent for the telephone on March 7, 1876.
Then Bell and his team of investors started on the process of introducing telephone to
America.

• A great opportunity to achieve this was the International Centennial Exposition, an

international fair hosted by Philadelphia that included some of the day’s greatest
scientific luminaries, such as Lord Kelvin and Joseph Henry.

• Although the scientific experts and dignitaries who witnessed Bell’s demonstration of
his telephone that day were overwhelmed with wonder for this “talking telegraph,”
many ordinary people who tried it out throughout the Centennial’s summer- long
exhibit were less impressed. The device used was Bell’s magneto transmitter.

• The vast majority of Americans could not wrap their minds around the paradigm shift
that a telephone conversation represented.

• Making improvements in the telephone technology, very first telephone call in history
was conveyed over outdoor wires.
 Bell Telephone Company
• In Feb 1877, Bell’s invention became more secure when Bell was issued a
second patent for operations of the telephone.

• On July 9,1877 Bell Telephone Company was formed.

• Bell had a dream of wiring entire America with telephone lines, but the
company was severely cash strapped.

• As demand outstripped supply, the making of equipment and

establishment and maintenance of phone services had to be outsourced.

• Company started leasing out equipment instead of one time sale that
enabled steady stream of income as the customers started viewing phone
service as a benefit to them. This was a masterstroke.
 Creating a Monopoly
• As Bell Telephone began to enjoy a modest success in late 1870s, it started
facing problems due to economic depression and aggressive entrance into
telephone business by Western Union.

• The only way for Bell Telephone to survive and compete was to sue
Western Union for patent infringement, which it did in September 1878.
This put even more pressure on the already cash strapped company.

• Company decided to reorganize to capitalize on its current strengths and

expand its influence beyond its solid core. Company split into 2
companies: the New England Telephone Company and a new Bell
Telephone Company.

• Theodore N Vail was hired as general manager to ensure company’s

survival but also its growth into a dominant corporation and an industry
monopoly.
 Building a National Network
• Vail focussed on two primary aspects: aggressively fight Western Union’s patent
infringement , beat it on the technology front and focus on research and
development.

• He also sought to raise the courage and spirits of Bell Telephone’s field agents,
who were trying to establish competing telephone exchanges nationwide.

• New England Telephone and Bell Telephone were reunited and rechristened the
National Bell Telephone Company to raise desperately needed funds and ward off
threat from Western Union.

• Meanwhile Western Union itself faced the threat of being taken over by a rival
telegraph company and conceded defeat. This allowed Bell Telephone to expand
and flourish.

• Within 2 years of settlement with Western Union, the company began to turn a
profit. Rather than complacently enjoying its current sole possession of the
telephone field, Vail was determined that Bell Telephone had to plan for the day
when it would not be alone in the effort to wire America.

• Vail’s overarching visionary goal was to create a unified national phone network
based on the advent of strong and reliable long- distance, coast- to- coast service.
This was in sync with Bell’s dream to wire entire America.
Building a National Network Contd.
• To achieve his vision, he focused on upgrading the telephone equipment,
manufacturing, and infrastructure to improve service, reliability, and sound
quality; extending telephone service to as much remaining “virgin territory”
(localities not yet wired for telephone service) as possible; & consolidating the
quasi- independent local service providers under Bell’s control and influence.

• The equipment had evolved from Watson’s earlier one- piece magneto-
transmitter/ receiver into a three- piece, wall- mounted apparatus.

• Telephone circuits were changed from one wire to metallic circuits to copper ones
that greatly improved sound quality.

• Bell Telephone acquired the Western Electric Manufacturing Company and it

became the sole supplier of equipment to its parent company.

• AT&T was born that was dedicated exclusively to the building and operating of
long- distance phone lines.

• It helped expand Bell’s territory and increased control over local service providers
since they needed a license from Bell with rights to get into the telephone
business.
 The Industry Transformed
• In 1969, on account of frequent service breakdowns (because of maxed out system
capacity and poorly maintained telephony infrastructure), the Govt. opened the
market by allowing entry of independent players like Sprint, MCI, which became
threats to AT&T within next few years. The Govt. also allowed GTE (telephone
manufacturers independent of AT&T) to make and sell phone equipment to
AT&T/Bell customers that would be compatible with the Bell network.

• Meanwhile, Bell Labs began to develop Fibre-optic cables for digitized

communication but AT&T could not capitalize on it. Consequent to the settlement
of its lawsuit with the Govt., AT&T was diminished radically as it had to give up 22
regional Bells, which reorganized to become seven independent telephony
companies. AT&T’s assets fell from $150 billion to $34 billion!

• Sprint established an all-fibre-optic phone network in 1987 – 2 years before AT&T

announced its intention to replace its microwave and coaxial cable network with
fibre-optic cables.

• AT&T established the first cellular phone system in USA in 1983, which sowed the
seeds of mobile telephony revolution in the 21st century.
 The Industry Transformed Contd...
• The cellular phone market attracted many more players and became a highly
competitive one. Sprint and Verizon offered stiff competition in the local and long
distance markets as well as the cellular market. T-Mobile, Alltel, Cingular, Nextel
were the other service providers. Phone manufacturing market was now crowded
by Sony, Panasonic, GE, Nokia, LG, Motorola, Samsung, Siemens, BlackBerry, etc.

• After several rounds of restructuring, AT&T finally emerged as three distinct

companies in 2000. One company focused on cellular telephony; the second
focused on broadband, internet and cable television; and the third remained as
AT&T and focused on local and long-distance telephony. In 2005, AT&T agreed to
be purchased by SBC Communications (the former Southwestern Bell) for $16
billion. But, then, SBC rechristened itself as AT&T Inc. In 2007, AT&T became the
exclusive carrier and distributer of iPhone.

• AT&T is still the largest communications company in the world. It offers cellular
service to 70 million customers, and it remains the leading provider of long-
distance and local wire- based phone service. It is the USA’s largest provider of
broadband.