Wisconsin Bell, Inc. Business Information, Profile, and History
Milwaukee, Wisconsin 53202
History of Wisconsin Bell, Inc.
Wisconsin Bell, Inc., is the legal name of what has publicly been known as Ameritech Wisconsin since 1993. The largest provider of local telephone service in the state of Wisconsin, Wisconsin Bell focuses its attention on larger population centers, leaving less populous areas to Wisconsin's many small, independent telephone companies.
Wisconsin Bell was founded in 1882 as the Wisconsin Telephone Company by Charles H. Haskins, Benjamin K. Miller, and Harry C. Haskins. Charles Haskins, who had written a book on principals of electricity, became intrigued by the potential of the telephone shortly after its invention in 1876. The following year he created Milwaukee's first telephone exchange with 15 customers.
With Charles Haskins serving as its first president, Wisconsin Telephone set up its headquarters on Broadway in Milwaukee and installed its first switchboard in a building across the street. Customers contacted the switchboard by spinning a magneto crank attached to their telephones. Despite this primitive equipment, the company began stringing together its territory (which included the Upper Peninsula of Michigan and all of Wisconsin except Douglas and Grant Counties) with telephone wires. In 1883 the firm installed its first aerial telephone cable in Milwaukee. By the end of the 1880s 60 Wisconsin cities and towns had telephone service, with yearly telephone rates averaging $50 a year.
Wisconsin Telephone was part of the Bell system, with a license from Alexander Graham Bell's American Bell Telephone Company. When Bell's patents expired in the early 1890s, independent telephone companies were created and Wisconsin Telephone experienced its first serious competition. The company fought it, led by new president Henry Payne and aided by its exclusive access to the Bell system's long-distance lines. Customers of rival companies who wanted to make long-distance calls had to go to a Wisconsin Telephone office to do so. Despite the competition, Wisconsin Telephone grew to nearly 20,000 customers by 1900.
Technical improvements appeared continuously throughout the telephone industry. Wisconsin Telephone began using dry-core, paper-insulated cable in 1894, replacing its less reliable cotton and paraffin cables. The firm already had long-distance service to Chicago, and after a Chicago-New York line opened in 1892 Wisconsin Telephone customers were able to call New York. In 1896 Wisconsin Telephone installed the first dial telephone system in the United States at Milwaukee City Hall.
With the rapid growth of the U.S. telephone, electrical, and railroad systems, states began to regulate public utilities. Independent telephone companies accused the Bell system of being a monopoly; partly as a result of that the Wisconsin legislature gave the state's Railroad Commission regulatory power over telephone companies. However, getting rate increases approved was far easier than it is today and regulation did not seem to hurt the company--it began buying up competitors, and its rate of growth actually increased. Meanwhile, the firm improved its infrastructure. It laid underground cables and conduits, rewired subscriber stations, and beefed up inspection of long-distance lines. To encourage use of its long-distance services, Wisconsin Telephone created a plan for businesses much like the "800" services. By 1910 the firm had over 100,000 telephones in service.
This growth necessitated structural changes within the company. In 1910 the plant, traffic, and commercial departments were given separate managers. The following year the Bell system organized its companies by region. Wisconsin Telephone became part of the Central Group along with four other Bell companies, encompassing parts of Illinois, Indiana, Ohio, and Michigan. This arrangement lasted for 11 years before the companies were left entirely on their own again. To keep up with growth, the company also built three more central offices in Milwaukee during the 1910s.
Service quality went down from 1916 to 1918 as many of Wisconsin Telephone's employees were given military leave to fight in World War I. Immediately after the war new buildings or additions to central offices were made throughout the firm's territory, including Appleton, Madison, and Eau Claire.
A string of intense winter storms hit Wisconsin during the 1920s, causing numerous service disruptions. One storm in February 1922 knocked out communications between Milwaukee and the Appleton and Eau Claire district headquarters. Repairs took two months. Despite these difficulties the firm continued to grow, reaching 9,000 employees in 1929. It reorganized again, this time into commercial, plant, and traffic departments, and began a large construction campaign.
The Great Depression hit the company hard. The numbers of telephones in service and calls being made plummeted. Between 1929 and 1931 the firm cut back by about 2,000 stations and put many of its employees on a staggered work schedule to avoid massive layoffs. Even so, the number of employees dropped to 5,800 by 1933. In 1932 the Wisconsin Public Service Commission reduced the firm's exchange rates by 12.5 percent. Wisconsin Telephone filed suit, claiming the rate reduction was arbitrary, and litigation continued throughout the 1930s. The firm also got into a conflict over its taxes with the Wisconsin Tax Commission and ended up having to pay $1.4 million in back taxes in 1936.
The firm was trying to convert its entire territory to dial telephones but was slowed down by these losses of revenue. It did create public relations departments at its offices throughout Wisconsin to examine customer complaints and attitudes. In 1939 the firm also helped lay the first coaxial cable in the United States between Stevens Point and Minneapolis, allowing for more reliable service. By this point the firm was recovering from the Great Depression, and the number of phones in service had reached 377,000, more than in 1930. In 1940 alone Wisconsin Telephone connected 17,000 more telephones, a record increase.
With the outbreak of World War II in 1941, Wisconsin Telephone, and the entire U.S. telephone system, adopted special security measures and cooperated with the Office of Civil Defense. Because military needs had a higher priority than civilian needs, equipment and supply shortages developed. Over 2,000 employees were hired to help meet growing military communications needs. By 1944 the firm's supply of telephones had been used up, and nearly 20,000 calls for service could not be met. Employee turnover soared, and many operators and service people were inexperienced. Wisconsin Telephone overturned its policy of ending a woman's employment when she got married and rehired about 650 former employees.
By the end of the war in 1945 the firm was behind by 28,500, and it took two years to catch up. As a result, the firm had 12,000 employees that year, the highest in its history. In 1946 and 1947 the firm experienced labor problems. Local calls could only be made from company offices during a month-long strike in April 1947. The following month the firm increased its payroll by $2.5 million per year.
The firm boomed during the 1950s, a decade of unprecedented telephone use, installing 420,000 telephones, constructing 83 buildings, and laying out $286 million for construction. The company continued modernizing, doing away with most of its remaining hand-crank telephones. To further increase demand for telephones, a station wagon was painted to depict different colors of telephone desk sets and driven around the firm's territory. In 1957 the firm's one-millionth telephone was installed in the office of Wisconsin Governor Vernon Thomson. Wisconsin Telephone also issued its first long-term debt ($30 million worth of 35-year debentures) to help pay for its record construction budget of $47 million.
In the 1960s the entire Bell system began offering a greater variety of telephones, and Wisconsin Telephone made money selling products like the Princess phone. That same year, Wisconsin Telephone installed its first outdoor walk-up coin phones. In 1964 it began offering touch-tone telephones, and in 1965 it began the WATS service, which allowed businesses to call out of their immediate area for a package price.
Competition was increasing in the telecommunications industry, and Wisconsin Telephone founded a marketing department in 1961 to help it sell new services, particularly to businesses. The firm established a Direct Distance Dialing Bureau in 1963 to allow long-distance calls without operator assistance. In 1968 the firm was hit by its first strike since 1947. The 18-day strike resulted in a $6 million settlement. By the end of the decade Wisconsin Telephone had 1.7 million phones in service and was spending about $80 million a year on construction.
The energy crisis of 1973 caused Wisconsin Telephone to decrease heating in its buildings, run a Milwaukee shuttle bus for its employees, and shrink the firm's fleet of vehicles. Meanwhile, communications technology continued to improve. Wisconsin Telephone expanded its use of electronic switching stations. These stations, brought out by AT&T in 1966, connected phone calls automatically and with great speed. They helped make possible the vast increases in the volume of telephone traffic in the 1970s and 1980s. With these increases in traffic came increased rates. In 1981, for example, the firm won approval for a $42.7 million annual rate increase.
In 1983 the firm, along with the entire Bell system, went through the most important reorganization in its history. Charges that AT&T was a monopoly that suppressed competition dated to the early years of the Bell system. However, in 1974, the U.S. Justice Department, goaded by some of AT&T's competitors, filed an antitrust lawsuit asking for the dismemberment of the company. Litigation lasted for years and finally resulted in an agreement that AT&T would break up the Bell system. This occurred on January 1, 1984, when Wisconsin Telephone became part of Ameritech, a new regional Bell operating company that also included Illinois Bell, Indiana Bell, Michigan Bell, and Ohio Bell. Partly to herald this event, Wisconsin Telephone changed its name to Wisconsin Bell in 1983.
Meanwhile, advances in telecommunications technology accelerated, and with them business opportunities. In 1983 Wisconsin Bell announced it would jointly offer interactive CATV services with Telenational Communications. In 1985 Wisconsin Bell began the process of buying digital central office switches from Siemens Public Switching Systems. These switches made a variety of new services possible.
In 1986 Wisconsin Bell built, with AT&T, an advanced government communications system. The sophisticated digital network linked 50,000 employees at 1,800 state and local government locations. AT&T built the spine, and Wisconsin Bell supplied local access. These advances did not necessarily make jobs more secure. In 1986 the firm offered early retirement to 263 managers, or 11 percent of its management staff of 2,333.
Other services stemming from technology advances followed. In 1988 the firm installed 350 pay phones able to read long-distance calling cards. This let customers make long-distance calls without using a mound of change. Sensing opportunity in the proliferation of telephone-answering machines, the firm began testing its own voice-mail message service in 1989. By 1988 Wisconsin Bell was using computerized systems to track maintenance for its fleet of 1,800 vehicles.
In 1989 Wisconsin Bell became the first of the Ameritech Bells to use only electronic switches. The firm's last electromechanical switches were replaced by digital switches made by Siemens. Of Wisconsin Bell's 1.6 million telephone lines, between 25 and 30 percent went to digital switches; the rest used analog switches.
Not all of Wisconsin Bell's technology advances centered on telephones and their switches. By 1990 many larger telephone cables used sophisticated temperature and humidity regulating systems. To keep air-core cables dry and operating efficiently, compressed dry air was pumped through them. Otherwise, minute amounts of rain or groundwater crept into defects in the cable sheath and caused shorts. A complex system of microprocessors and manifolds kept the air flowing. Revenue for 1990 came to $1.06 billion.
In September 1993 Ameritech retired the Wisconsin Bell brand name. Bills for local telephone service appeared bearing the Ameritech name at the top, instead of Wisconsin Bell. Consumers no longer encountered the name Wisconsin Bell because the firm was referred to in its telephone books, the press, and in marketing efforts simply as Ameritech or Ameritech Wisconsin. The company's legal name remains Wisconsin Bell, however. The same type of name change was carried out at the other state Bells in the Ameritech group, so that Ameritech could promote the Ameritech name.
The change did not affect Wisconsin Bell's rates or services, but it did reflect Ameritech strategies that had a potentially huge effect on Wisconsin Bell and its local phone service. By 1993, revenue had only increased to $1.13 billion since 1990. The local phone business was a steady source of revenue but did not grow quickly. Ameritech had its eye on the long-distance market, which was far more lucrative, as well as on other profitable communications services such as cable television. Ameritech proposed giving up its local telephone monopoly, allowing direct competition in its markets, in exchange for access to the long-distance market. Throughout the mid-1990s Wisconsin Bell watched as neighbor Illinois Bell, the chosen laboratory for the first such market experiment, negotiated regulatory and legislative hurdles, trying to work out the details of this market change.
As a result, in the mid-1990s Wisconsin Bell was a well-run company with a steady stream of revenue. However, its market seemed likely to change in the coming years, with more risks but also more potential for profit and growth.
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