120 Engineering Ethics: An Industrial Perspective
THE BACK STORY
THE HISTORY OF BELL LABORATORIES
In 1876, Alexander Graham Bell invented the telephone; his invention
resulted in two issued patents. With two partners, Bell formed a company in
1877 that later became American Telephone and Telegraph (AT&T). When
Bell’s second patent expired in 1894, competing telephone companies
entered the market. By 1904 more than 6000 companies offered telephone
service in localities through the United States. However, because networks
from these companies were not interconnected, subscribers to different
companies could not call each other.To address this lack of interconnection,
the U.S. government accepted AT&T’s proposal in 1913 that telephone
service would be operated most efficiently as a monopoly providing univer-
sal service. Under this agreement, called the Kingsbury Commitment,AT&T
agreed to connect noncompeting independent telephone companies to its
network and to divest its controlling interest in Western Union Telegraph. In
1956, AT&T further agreed to restrict its activities to its national telephone
system (both local and long distance service) and government work. On
January 1, 1984, as the settlement of an antitrust suit brought by the U.S.
government in 1976, AT&T divested itself of the wholly owned Bell operat-
ing companies that provided local exchange service. On September 3, 1996,
AT&T voluntarily separated out Lucent Technologies as a publicly traded
systems and equipment company. Lucent kept the Bell Laboratories name
(AT&T, 2004).
Although AT&T officially established Bell Telephone Laboratories as
its research and development (R&D) subsidiary in 1925, the roots of
telephone research can be traced back to 1885. Managers of the AT&T
engineering department formed a research department to investigate
the physics of electromagnetic propagation on long distance lines. This
new department was headed by Hammond Hayes, one of Harvard’s first
physics PhDs. In 1899, George Campbell developed the theory of load-
ing coils, which reduced the rate at which a transmitted telephone signal
weakened. This practical invention doubled the maximum transmission
distance of open lines, allowing the long distance network to extend
from New York to Denver by 1911. In 1915, using the first practical
electronic amplifier, developed by Harold Arnold, AT&T opened its
first transcontinental telephone lines (Lucent, 2004).
From its inception, Bell Telephone Laboratories, which later became
known as Bell Laboratories or Bell Labs, was a special place. During its
years as a regulated monopoly, the amount of profit AT&T could earn was
Ch10-P088531.qxd 2/22/06 11:47 AM Page 120
2002: Bell Laboratories Scientific Fraud 121
fixed by law. As AT&T’s R&D arm, Bell Labs was treated as part of the
cost of maintaining and upgrading the network, with R&D expenditures
written off as a business expense. In essence, Bell Labs was a nationally
supported laboratory, financed by every phone booth coin and phone bill
monthly payment.
Bell Labs hired only the best and brightest and provided an environ-
ment for them to excel. Alfred Cho, co-inventor of the molecular beam
epitaxy (MBE) machine and a research director in 1991, stated that “in
the old days, we went out and hired the best people we could, turned
them loose in a large room and said, ‘Show us what you can do.This
provided the climate for good science and good technology. His MBE
machine, an ultra–high-vacuum crystal growth device able to create one
atomic layer at a time and an indispensable piece of equipment for the
semiconductor industry, was the result of a 12-year research project
(Crease, 1991). This environment produced six Nobel prizes in physics
shared by eleven scientists (Lucent, 2004):
1937: wave nature of matter
1956: transistor
1977: improved understanding of local electronic states in solids
1978: radio astronomy (discovery of background radiation remaining
from the “big bang” explosion)
1997: optical trapping
1998: fractional quantum Hall effect
During the monopoly, this passion for excellence applied to devel-
opment as well as research. Engineers were recruited from top universi-
ties, with the entry-level engineering position requiring a Master’s
degree and technician position requiring a Bachelor’s degree. Products
to be developed were specified for optimum performance and high reli-
ability under an extremely wide range of operating conditions without
cost constraints. When appropriate, new research technologies were
incorporated into proposed products. Products whose specifications
were validated through extensive testing were deployed in the tele-
phone network. Robert Lucky, executive director of communications
research until 1992 and inventor of adaptive equalization (for correction
of telephone channel distortion), recently reminisced about the “golden
years” before divestiture in reflections for IEEE Signal Processing
magazine. He recalled how, during the AT&T antitrust trial, he found
himself explaining to Judge Greene “the importance of research at Bell
Labs and our guiding religion of trying to create the best telephone
network for the country irrespective of economic gain to the company
Ch10-P088531.qxd 2/22/06 11:47 AM Page 121

Get Engineering Ethics now with the O’Reilly learning platform.

O’Reilly members experience live online training, plus books, videos, and digital content from nearly 200 publishers.