Presentation on theme: "Bell Labs: Research, Development, and Innovation in a Monopoly"— Presentation transcript:
1 Bell Labs: Research, Development, and Innovation in a Monopoly Sheldon Hochheiser, ‘73Archivist and Institutional Historian, IEEEFormer Corporate Historian AT&TTitle version 12/01
2 Bell Telephone Laboratories: the top industrial research lab of the 20th Century. Three of Bell Lab’s eleven Nobel Laureates: Clinton Davisson (1937) (l) William Boyle and George Smith (r) (2009)
3 Some major Bell Labs innovations The Vacuum Tube Amplifier (1915)Electrical Sound Recording (1924)Broadband Coaxial Cable (1929)The Transistor (1947)The Solar Cell (1954)Transoceanic telephone cables (1956)Communications Satellites (1962)Touch-Tone Telephones (1963)Electronic Switching (1965)Information Theory (1948)Digital Transmission Systems (1962)Charged-Coupled Device (1969)Unix (1971)Bell Lab, Murray Hill NJ, 1959
4 Science and Technology in Corporate America Why “Research and Development”?The institutionalization of R&D.In-house R&D as a business strategy.Offense and defense.Owning a collection of patents.Taking the long view.Incremental improvements.
5 The Context: The Innovative Monopoly AT&T was for most of the 20th century a U.S. sanctioned monopoly.AT&T General Departments.AT&T Long Lines.Western Electric.Local Bell Operating Companies.Bell Labs.It is a cliché that monopolies don’t innovate; AT&T did.The Bell SystemAT&T logo, 1939
6 AT&T: A company and industry founded on innovation Bell’s PatentAlexander Graham Bell, 1876
8 Switching Innovations Local Exchange, Oakland 1888Early multiple switchboardCharles Scribner of Western Electric–inventor of the multiple switchboard; holder of 500 patents.Serving more subscribers required ever more sophisticated switchboards.
9 AT&T Long distance routes, 1892 There were parallel improvements in both transmission and telephone instruments.
10 The First Competitive Era YearPer 1000populationTelephones(1000s)Population18944.128519107,63582.2190017.51,356191510,524103.9190548.84,127192013,273123.4Telephones in use, U.S.,The telephone spread rapidly after Bell’s patents expired in Over 6,000 independent telephone companies started within the decade. Bell’s market share dropped from 100 % to 50%, but the size of its subscriber base increased 700 %.The First Competitive Era/ Theodore Vail
11 AT&T advertising brochure, 1895 1000 miles and backAT&T advertising brochure, 1895
12 Loading Coils.Loading Coils, placed on the line according to mathematics worked out by AT&T’s George Campbell in 1899, reduced attenuation, making longer lines possible.Theory independently developed by Prof. Michael Pupin at Columbia.AT&T bought Pupin’s patent rights, rather than litigate.Can be used to either allow longer lines or use of thinner wire on existing lines.New York-Denver line, 1911—the technical limit of a loaded line.Loading Coils, 1899
13 Theodore Vail Theodore Vail returned as President of AT&T in 1907. Vail campaigned to convince the American government and public that the telephone was a natural monopoly, which should be run by AT&T.He suggested that since competition was not appropriate for the telephone, regulation was the correct substitute.Theodore Vail, President AT&T,
14 Ad, One Policy, One System, Universal Service AT&T advertisement, 1908
16 ImplicationsThe Bell System embraced a service ethos, as did its regulators.The Bell system was regulated by multiple agencies; interstate services ( Long Lines) by the federal government; intrastate services (local telephone operations) by the states.One principle on both levels was “rate of return.”Hence, R&D expenditures could be rolled into the rate base.AT&T provided the United States with the best and most extensive telephone service in the world.And thus the monopoly was maintained
17 John J. CartyVail decided in 1908 that a transcontinental telephone line was AT&T’s highest technical priority.Vail focused R&D expenditures on this area.AT&T’s chief engineer was John J. Carty, who back in the 1880s had made some of the key innovations that made early long distance lines possible.Carty knew that a 3000 mile telephone required a scientific breakthrough—a way to amplify the electrical signalCarty announced the goal. publicly in 1909.John J. Carty, Chief Engineer AT&T,
18 Carty asked Dr. Robert Millikan of U Carty asked Dr. Robert Millikan of U. Chicago to recommend a bright young physicist. Millikan sent him one of his students, Dr. Harold Arnold, who began work in in 1911 in the Western Electric Engineering Dept.Harold ArnoldDr. Harold Arnold.
19 The AudionLee de Forest, 1907, inventor of the Audion, the three element vacuum tube, which he used as a radio wave detector. It could do a small amount of amplification. He brought it to AT&T’s attention in 1912.
20 The Audion and the high-vacuum tube repeater Audion and high-vacuum tube repeaterThe Audion and the high-vacuum tube repeater
21 Transcontinental Telephone Service, 1915 Last pole, transcontinental telephone, Wendover UT, June 17, 1914Bell opens transcontinental telephone service, New York, January 25, 1915
22 Lesson Learned: Bringing research in-house paid off. Vail at the transcontinental opening, Jekyll Island, GA, 1915.
23 The Vacuum Tube Had Many Applications Condenser MicrophonesLoudspeaker SystemsRadioElectrical Sound RecordingSound Motion PicturesHearing AidsQuartz ClockTelevisionRadarAir-to-Ground 2 way radio, 1918
24 Bell Labs established as a separate subsidiary, 1925 463 West St., New York City, Bell Labs Headquarters
25 Universal Mission, Universal Service Telephone installation, Atlanta, 1925
26 We found ourselves [after recovering from the interruptions of the World War] once more on the track so we could go on about our business which is furnishing telephone service to the people of this country. I did a lot of thinking as to where we were to go from here. It seemed to me that on the technical side of the business that we hadn’t anywhere near reached the limit of what we could do. If we were to look forward and try to picture the technical millennium, it might be something like this: You would be able to pick up a telephone and talk to anybody anywhere just as quickly as you can talk to anyone across the street by telephone today, and do it for a very reasonable cost-- AT&T President Walter Gifford, 1928
27 Walter Gifford, President AT&T, 1925-1948. We pioneered again in having research and development carried on in a central organization. This insured progress in spite of the fact that competition in the usual sense of the word—such competition which is assumed to be essential to progress—has been largely absent.--Walter Gifford, 1939Walter Gifford, President AT&T,
28 Research and Development Research and Development is not always a linear process.Bell Labs undertook fundamental research in areas where a breakthrough might lead to applications.Bell Labs also undertook more focused development projects to directly improve the telephone system.Bell Labs set technical standards for the Bell System.Absent competition, Bell Labs and AT&T took the time to get a innovation right (as an engineer would define right), and put innovations in place is a measured way to insure robustness, and to protect depreciation.Bell Labs did government R&D.Telephones, and 1939
29 Innovation: The Transistor The transistor inventorsJohn Bardeen, William Shockley, Walter Brattain, 1948
30 Problems to be solvedElectromechanical automatic switches were building-sized machines with tens of thousands of moving parts that needed maintenance and wore out.Vacuum tubes amplifiers gave off heat, were somewhat fragile, and wore out.Were there in the long term better solutions?A small portion of a Panel Switch, Chicago, 1938.
31 Mervin Kelly, Bell Labs Vice President for Research, started the solid state research program, 1936.
32 Russell Ohl, inventor of the p-n junction diode (1940)
51 First digital transmission system, T-1, Chicago, 1962
52 A strand of optical fiber, as used in the first generation of fiber-optic transmission systems, 1980s.
53 Universal Service Achieved Year%192035.0195775.7192941.6196280.3193331.3196990.0194242.2198096.2194651.4Percent of households with telephone service,By the end of the 1960s, both AT&T and the Federal Communications Commission had come to believe that the long agreed goal of Universal Service had been achieved.
54 The PicturephoneAdvertisement, Picturephone commercial field trial, 1970
55 Why did the Picturephone fail? CostA networked technology discourages early adoptionAT&T never thought to ask if people wanted to be routinely seen when on the telephone.It proved to be a new service, rather than an extension of telephony.
56 What Makes for a successful Industrial R&D Lab? A corporate culture that values innovationSteady adequate fundingWillingness to undertake a long viewGood management that canSelect projects with high potential payoffBalance the needs and interests of the corporation to those of its researchers.Knowing the right amount of “rope.”Balance of research and development
57 Decline and Fall of the Monopoly Microwave towerMicrowave relay tower, Adams TX, 1967Technological innovations weakened the logic of natural monopoly.
58 MCI Building, Washington, 1978 Would-be competitors arose to exploit the newer technologies, the changing regulatory and political climate, and the American body politic’s dislike of monopolies.
59 Prediction of doomWith a 1982 agreement to settle the 3rd Anti-trust suit brought against AT&T, the monopoly ended, and a new era in telecommunications began.
60 Eight Companies Out of One. The new AT&T: Long Lines, Western Electric and Bell Labs.Regional Bell Operating Companies, 1984.
61 Coda: Bell Labs after the Monopoly Bell Labs/Lucent US Headquarters, Murray Hill NJ, 1997.