It's 1974. Platform shoes are the height of urban fashion. Disco is just getting into full stride. The Watergate scandal has paralyzed the U.S. government. The new Porsche 911 Turbo helps car lovers at the Paris motor show briefly forget the recent Arab oil embargo. And the American Telephone & Telegraph Co. is far and away the largest corporation in the world
AT&T's US $26 billion in revenues--the equivalent of $82 billion today--represents 1.4 percent of the U.S. gross domestic product. The next-largest enterprise, sprawling General Motors Corp., is a third its size, dwarfed by AT&T's $75 billion in assets, more than 100 million customers, and nearly a million employees.
AT&T was a corporate Goliath that seemed as immutable as Gibraltar. And yet now, only 30 years later, the colossus is no more. Of the many events that contributed to the company's long decline, a crucial one took place in the autumn of that year. On 20 November 1974, the U.S. Department of Justice filed the antitrust suit that would end a decade later with the breakup of AT&T and its network, the Bell System, into seven regional carriers, the Baby Bells. AT&T retained its long-distance service, along with Bell Telephone Laboratories Inc., its legendary research arm, and the Western Electric Co., its manufacturing subsidiary. From that point on, the company had plenty of ups and downs. It started new businesses, spun off divisions, and acquired and sold companies. But in the end it succumbed. Now AT&T is gone.
The company--still a telecom giant but more focused on the corporate market--agreed to be acquired by one of the Baby Bells, SBC Communications Inc. of San Antonio, in a deal valued at $16 billion. In a few months, AT&T's famous ticker symbol--T, for telephone--will disappear from the New York Stock Exchange listings, and the company that grew out of Alexander Graham Bell's original telephone patents will officially cease to exist.
Should we mourn the loss? The easy answer is no. Telephone providers abound nowadays. AT&T's services continue to exist and could be easily replaced if they didn't.
But that easy answer ignores AT&T's unparalleled history of research and innovation. During the company's heyday, from 1925 to the mid-1980s, Bell Labs brought us inventions and discoveries that changed the way we live and broadened our understanding of the universe. How many companies can make such a claim?
The oft-repeated list of Bell Labs innovations features many of the milestone developments of the 20th century, including the transistor, the laser, the solar cell, fiber optics, and satellite communications. Few doubt that AT&T's R&D machine was among the greatest ever. But few realize that its innovations, paradoxically, contributed to the downfall of its parent. And now, through a series of events during the past three decades, this remarkable R&D engine has run out of steam.