Telephony was initially a local technology, as the early battery-powered instruments could only communicate a few miles. So unlike the telegraph, telephones were initially used only for communication between people in the same city. Small telephone networks began to be established in business centers, serving communication between businesses, but wealthy businessmen and doctors soon saw the value of having instruments at home as well.

Unlike the European experience, where telephony (like telegraphy) was seen as an extension of post-office service, US telephone companies were private enterprises. Within a few years of Alexander Graham Bell’s invention in 1876, telephone exchanges existed in most major cities and many smaller towns in the United States, operating under licenses from what Bell and his investor partners established as the American Bell Telephone Company. After most of the Bell patents expired in 1894, telephone companies sprang up even in small towns, and in cities of any size it was not uncommon to have competing companies—a development spurred by invention of the automatic exchange in 1892. Old advertisements will sometimes highlight two different phone numbers for the same business, saying things like “Phone Main 6200 or Automatic 4882.” This 1910 map shows how the Bell companies had concentrated on business centers of the East, and how sparse service—and especially connection to nearby towns—was across the West.

Beginning in 1907, the Bell System’s Thomas Vail sought to bring much of the nation’s phone service under control of a single enterprise, carefully structured to avoid antitrust problems. Regional operating companies provided local phone service, but typically purchased all equipment from the Bell System’s Western Electric subsidiary, and used AT&T Long Lines Division for long-distance connections. Competing local phone companies soon disappeared, but some important pockets were served by General Telephone or other independent companies rather than Ma Bell. Though Bell eventually controlled 80 percent of American phones, they only controlled 30 percent of the geographic area. After 1949, the Rural Electrification Admistration began to support expansion of rural telephone coöperatives to provide service in sparsely settled areas—the only significant involvement of government in US telephone service.

This landscape shifted dramatically after the 1984 breakup of the Bell System, as the regional “Baby Bells” first became independent of the Bell System, then combined with each other and with General Telephone to confront the growth of mobile phone service in a drastically different antitrust environment.