AuthorJeffrey Lehman, Shirelle Phelps

Page 448

The transmission of words, sounds, images, or data in the form of electronic or electromagnetic signals or impulses.

From the introduction of the telegraph in the United States in the 1840s to the present-day INTERNET computer network, telecommunication has been a central part of American culture and society. What would we do without telephone, radio, broadcast television, CABLE TELEVISION, satellite television, fax machines, cellular telephones, and computer networks? They have become integral parts of our everyday lives. And as telecommunication technology advanced, the more complicated the TELECOMMUNICATIONS industry became. As a result, federal and state governments attempted to regulate the pricing of telecommunication systems and the content of transmitted material. The Telecommunications Act of 1996 (Pub. L. No. 104-104), however, deregulated much of the telecommunication industry, allowing competition in markets previously reserved for government-regulated monopolies.


The first telegraph system in the United States was completed in 1844. Originally used as a way of managing railroad traffic, the telegraph soon became an essential means of transmitting news around the United States. The Associated Press was formed, in 1848, to pool telegraph expenses; other "wire services" soon followed.

Many telegraph companies were formed in the early years of the business, but by 1856 Western Union Telegraph Company had become the first dominant national telegraph system. In 1861, it completed the first transcontinental line, connecting San Francisco first to the Midwest and then on to the East Coast. As worldwide interest increased in applications of the telegraph, the International Telegraph Union was formed, in 1865, to establish standards for use in international communication. In 1866, the first transatlantic cables were completed.

The telegraph era came to an end after WORLD WAR II, with the advent of high-speed transmission technologies that did not use telegraph and telephone wires. By 1988, Western Union was reorganized to handle money transfers and related services.

Telephone Systems

The invention of the telephone in the late nineteenth century led to the creation of the American Telephone and Telegraph Company (AT&T). The company owned virtually all telephones, equipment, and long-distance and local wires for personal and business service in the national telephone system. Smaller companies seeking a part of the long-distance telephone market challenged AT&T's MONOPOLY in the 1970s.

In 1982, the U.S. JUSTICE DEPARTMENT allowed AT&T to settle a lawsuit alleging antitrust violations because of its monopolistic holdings. AT&T agreed to divest itself of its local operating companies by January 1, 1984, while retaining control of its long-distance, research, and manufacturing activities. Seven regional telephone companies (known as the Baby Bells) were given responsibility for local telephone service. Other companies now compete with AT&T to provide long-distance service to telephone customers.

Page 449

In an effort to spur competition, however, the Telecommunications Act of 1996 allowed the seven regional phone companies to compete in the long-distance telephone market. The act also permitted AT&T and other long-distance carriers, as well as cable companies, to sell local telephone service.

Local telephone rates are regulated by state commissions, which also work to see that the regional telephone companies provide good maintenance and services. In addition, the use of a telephone for an unlawful purpose is a crime under state and federal laws, as is the WIRETAPPING of telephone conversations.

In 2002, the U.S. Supreme Court issued two rulings that had a significant impact on large regional telephone companies. The first was Verizon Communications v. FCC 535 U.S. 467, 122 S.Ct. 1646, 152 L. Ed. 2d 701, which had beginnings in the 1990s. Under the 1996 Telecommunications Act, multiple local exchange carriers (LECs) are allowed to compete in the same market. Incumbent LECs, or ILECs, are those that already have a presence in a market. Competing LECs (CLECs) are providers that want to enter an ILEC's market. The ILECs are required to share their telecommunications network with the CLECs for a GOOD FAITH negotiated price (47 U.S.C.A. Secs. 251?52). They must form a written agreement; if there are points of contention in the agreement, they must be submitted for binding ARBITRATION to the state utility commission. That decision may be appealed to a federal district...

To continue reading

Request your trial