The Early Stages of the 19th-Century Telephone

Bell Telephone Company

The commercialization of the telephone moved quickly. Gardiner Hubbard, who had helped fund Bell's research expenses, started the Bell Telephone Company in July 1877. The company was named after the phone's creator, but Bell himself was not involved in the management of the company. Watson was, though, overseeing the manufacturing of the first phones. Bell had 10,000 phones operating in service by the middle of 1878.

Western Union, the telegraph message company, started the American Speaking Telephone Company in December 1877 to form Bell's first competitor. Noted inventor Thomas Edison developed a carbon-button transmitter for the company's phones. Bell filed suit against Western Union in September 1878, arguing Western Union had infringed on the Bell patents. Bell won its case and reached an agreement with Western Union that saw Western Union relinquish its company in exchange for 20 percent of Bell's rental revenues over the ensuing 17 years, according to the Telephony Museum. Bell revamped its company after the deal, calling itself the American Bell Telephone Company.

Initially, phones were connected through a single exchange, according to the Telephony Museum. Phone lines were controlled through manual switching boards operated by teenage boys, though they were eventually replaced by a largely female workforce of operators. Almon Strowger invented the first automatic telephone in 1891, allowing callers to dial a number with push buttons that would provide a direct connection to another phone, bypassing operators at switchboards.

The patents that the Bell company held on the telephone technology expired in 1893 and 1894, opening the doors for new companies to enter the market. According to the Telephony Museum, hundreds of small telephone companies were founded in the immediate aftermath of the patents' expiration, largely in less-populated areas that Bell had ignored. By the close of the century, Bell had 800,000 phones in service and the combined independent entities had 600,000 phones in operation.