Southern New England Telephone Company

On 27 April 1877, Alexander Graham Bell gave a demonstration of his new invention, the telephone, at Skiff's Opera House in New Haven, Connecticut. This presentation piqued the interest and ingenuity of George Coy, a civil war veteran and manager for the Atlantic and Pacific Telegraph Company. On 3 November 1877, George Coy was awarded a Bell telephone franchise for New Haven and Middlesex counties. The New Haven Telephone District was created in 1878. After a long history of mergers and growth, on 5 January 1998, a transaction was announced that would merge the Southern New England Telecommunications Corporation and SBC Communications Inc., of San Antonio, Texas. On 26 October, after approval from stockholders, the FCC and CDPUC, the merger was officially completed. Although operating headquarters remained in Connecticut and the SNET name was retained, the company had officially come to the end of its days as an independent telecommunications service provider.

On January 28, 1878, George Coy and Morris Tyler opened the New Haven District Telephone Company, which is now known as the world's first commercial exchange. It had 21 customers in New Haven, Connecticut. On February 21 the new company published the world's first classified telephone directory. The directory listed 50 customers. By 1882, SNET had been reorganized several times, had over 3500 customers, and holdings in Massachusetts, which were sold in the 1880s. The remainder of the 1880s was a period of very little growth and expensive equipment upgrades resulting in a period of severely limited company earnings. In 1899, the Connecticut Legislature recognized the monopolistic nature of the telephone business and passed laws creating barriers to the entrance of new companies. In 1911, this law was replaced by a Public Utilities Commission, which had the power to regulate rates and services for SNET and other utilities. With this help the company grew rapidly throughout the first years of the twentieth century. SNET had difficults during both World Wars but business grew rapidly during the post-war years. On 5 January 1998, a transaction was announced that would merge the Southern New England Telecommunications Corporation and SBC Communications Inc., of San Antonio, Texas. On 26 October, after approval from stockholders, the FCC and CDPUC, the merger was officially completed. Although operating headquarters remained in Connecticut and the SNET name was retained, the company had officially come to the end of its days as an independent telecommunications service provider.

On January 28, 1878, George Coy and Morris Tyler opened the New Haven District Telephone Company, which is now known as the world's first commercial exchange. It had 21 customers in New Haven, Connecticut . On February 21 the new company published the world's first classified telephone directory. The directory listed 50 customers.

The company reorganized several times over the next few years, seeking to raise money with larger capitalization to expand its territory and broaden franchise rights with the Bell Company in Boston . During this time, the company took over the pioneering exchanges in Hartford, Meriden and Bridgeport and began to build and promote toll lines. It is also of note that during this period the first woman operator in Connecticut, Marjorie Gray, was hired in Bridgeport . In 1880, the company was reorganized as the Connecticut Telephone Company with Marshall Jewell as its president.

Within the next two years, the company was running 24 exchanges connected by toll lines and had over 3500 customers. A subsidiary company, the Inter State Telephone Company, had begun construction of a line between Boston and New York. And in 1882, the company was reorganized, yet again, as the Southern New England Telephone Company .

SNET sold off its Massachusetts holdings in the 1880s for much needed capitol and made the decision to limit its operations to Connecticut.

The remainder of the 1880s was a period of very little growth and expensive equipment upgrades resulting in a period of severely limited company earnings. In 1899, the Connecticut Legislature recognized the monopolistic nature of the telephone business and passed laws creating barriers to the entrance of new companies. In 1911, this law was replaced by a Public Utilities Commission, which had the power to regulate rates and services for SNET and other utilities. With this help the company grew rapidly throughout the first years of the twentieth century.

During World War I, SNET suffered shortages of material and employees as resources were diverted to the war effort. In 1918, the federal government assumed control of all telephone and telegraph companies. Before the companies were returned a year later, the government had instituted the first nationwide rate increase in an effort to cover costs of operation. SNET was left with a large backlog of service requests at the war's end.

Business picked up again in the 1920s as the conversion to dial service, which eliminated the need to go through an operator, was begun. But expansion was again halted when the stock market crashed in 1929 and the Great Depression ensued. The 1930s saw the first net loss of telephones since 1894.

World War II brought many of the same problems as the first World War. Over 740 SNET employees entered the military. During the war, only 4 party residence service was available, leaving the company with a backlog of 60,000 customers waiting for private service. In addition, inflation and high income taxes left the company's financial stability in question at the war's end. In 1947, SNET applied for, and was granted, its first rate increase in 20 years.

During the post-war years the economy, and the telephone business, grew rapidly. 500,000 phones were in service in 1945 and by 1956 the one million mark was surpassed. The conversion to the dial system was completed in 1953 and in 1956 an improved dial system called “crossbar” was implemented. By 1970 there were two million telephones in service. At this time the company underwent a concerted effort to centralize service for increased efficiency and simplified long-distance services.

In 1974, SNET's corporate parent, AT&T, was sued by the federal government to break up the Bell System monopoly on the telephone industry. In a 1982 settlement AT&T was required to spin off its local telephone companies to shareholders. The local telephone companies were prohibited from engaging in any other business except local exchange service until January 1984. Because SNET was only 22% owned by AT&T at the time of the agreement, the company was not required to comply with this ruling. In response, on 1 January 1983, SNET established the Sonecor Systems Division in order to take advantage of their special status. This subsidiary would distribute equipment made by a variety of different manufacturers.

In 1986, SNET reorganized its corporate structure once again to reflect its new diversified nature. The newly formed holding company would be able to better manage the new divisions and would now be called the Southern New England Telecommunications Corporation . In 1988, SNET formed a partnership with NYNEX to offer cellular service and in 1989 sold their share of Lightnet for $365 million dollars to Williams Communications . By the end of the decade, SNET had more then doubled its 1980 income level.

In 1991, amidst economic recession, SNET received its first rate increase in 10 years. During this year the company also established a new subsidiary, SNET Paging, Inc. which would offer paging service to Connecticut, Rhode Island and Boston.

The next seven years were a period of new product and service introductions for the company, including SNET 800 CustomLink (800 numbers for residence customers) and Smartlink, which included services such as Caller ID. In 1993, SNET announced plans to invest 4.5 billion dollars in I-SNET, a statewide, interactive information super highway, and launched SNET America, which would offer national and international long distance calling. The introduction of SNET Internet came in 1995 and in 1996, SNET led the industry with the introduction of one-second billing. In 1997, J.D. Power and Associates rated SNET as the number one rated long-distance company in America. And in that same year SNET Americast, a cable television service, was launched. In addition, the acquisition of Woodbury Telephone Company, the only other independent telephone company in Connecticut, was completed.

On 5 January 1998, a transaction was announced that would merge the Southern New England Telecommunications Corporation and SBC Communications Inc., of San Antonio, Texas . On 26 October, after approval from stockholders, the FCC and CDPUC, the merger was officially completed. Although operating headquarters remained in Connecticut and the SNET name was retained, the company had officially come to the end of its days as an independent telecommunications service provider.

On 27 April 1877, Alexander Graham Bell gave a demonstration of his new invention, the telephone, at Skiff's Opera House in New Haven, Connecticut . This presentation piqued the interest and ingenuity of George Coy, a civil war veteran and manager for the Atlantic and Pacific Telegraph Company . On 3 November 1877, George Coy was awarded a Bell telephone franchise for New Haven and Middlesex counties. This franchise stipulated that the Bell Company would own thirty-five percent of Coy's enterprise. This relationship was maintained for most of the history of the company.

Using carriage bolts, teapot lids and wire, Coy improvised a crude switchboard with 8 lines, each of which could serve up to 8 customers. Coy enlisted the financial backing of Herrick Frost, a prominent businessman, and Walter Lewis, superintendent of the New Haven Clock Company . On 15 January 1878, with the help of a young lawyer, Morris Tyler, the New Haven District Telephone Company was incorporated. On 28 January of that same year, the first commercial exchange was opened in New Haven with 21 customers. On 11 February the new company published the world's first classified telephone directory. The directory listed 50 customers.

The company reorganized several times over the next few years, seeking to raise money with larger capitalization to expand its territory and broaden franchise rights with the Bell Company in Boston. During this time, the company took over the pioneering exchanges in Hartford, Meriden and Bridgeport and began to build and promote toll lines. It is also of note that during this period the first woman operator in Connecticut, Marjorie Gray, was hired in Bridgeport. Despite this expansion, competition was so fierce Coy and Frost were compelled to sell controlling interest in the company to financier Jay Gould who in turn, used the company in a bid to gain control of Western Union . By the end of 1879, Western Union had conceded the telephone business to Bell in exchange for an agreement that the Bell companies would stay out of the telegraph business. Because of this settlement, Gould lost interest in the fledgling Telephone Company. In the meantime, Coy and Frost had approached Marshall Jewell, a former state governor, Postmaster General, ambassador, and chairman of the Republican National Committee to help raise money to, once again, raise capitol by reorganizing the company. In 1880, the company was reorganized as the Connecticut Telephone Company with Marshall Jewell as its president. A portion of the funds raised were used to buy out Gould's share, thus making the company wholly controlled by Connecticut investors again.

Within the next two years, the company was running twenty-four exchanges connected by toll lines and had over 3500 customers. A subsidiary company, the Inter State Telephone Company, had begun construction of a line between Boston and New York. And in 1882, the company was reorganized, yet again, as the Southern New England Telephone Company . Much expansion was envisioned for the company.

Two developments soon put a damper on the intended growth. The widespread introduction of electricity caused interference on the telephone lines. The problem necessitated a costly solution - the connection of every customer with “metallic circuits”: two copper wires rather then a single iron one. This also required the replacement of every switchboard. The second development was the failure of the New York-Boston line. The line was sold to the newly incorporated long-distance company, American Telephone & Telegraph . SNET also sold off its Massachusetts holdings for much needed capitol and made the decision to limit its operations to Connecticut .

The remainder of the 1880s was a period of very little growth and expensive equipment upgrades resulting in a period of severely limited company earnings. Problems were compounded by the Blizzard of 1888, which took down many wires and poles in the outlying areas. However, the 1890s ushered in a period of strong growth as the American economy began to expand rapidly. The number of telephones nearly tripled to just over 15,000 as rates were reduced and an advertising campaign began. Debts were paid off and dividends to shareholders were reinstated. During this time, Bell Company patents ran out and competition again became fierce. In 1899, the Connecticut Legislature recognized the monopolistic nature of the telephone business and passed laws creating barriers to the entrance of new companies. In 1911, this law was replaced by a Public Utilities Commission, which had the power to regulate rates and services for SNET and other utilities. With this help the company grew rapidly throughout the first years of the twentieth century.

During World War I, SNET suffered shortages of material and employees as resources were diverted to the war effort. Operators were hard to find and 50 men were sent to the Army Signal Corps . In 1918, the federal government assumed control of all telephone and telegraph companies. Before the companies were returned a year later, the government had instituted the first nationwide rate increase in an effort to cover costs of operation. SNET was left with a large backlog of service requests at the war's end.

Business picked up again in the 1920s as the conversion to dial service, which eliminated the need to go through an operator, was begun. But expansion was again halted when the stock market crashed in 1929 and the Great Depression ensued. The 1930s saw the first net loss of telephones since 1894. The dividend was reduced, sales efforts were stepped up, and lay-offs were only avoided by reducing work schedules. Also, in 1938 SNET saw one of its worst natural disasters. The Hurricane of '38 knocked out nearly a third of the telephones in the region and left 62 of 79 central offices without power. With the help of other Bell companies, SNET was able to reconnect all of its customers in 23 days.

World War II brought many of the same problems as the first World War. Over 740 SNET employees entered the military. During the war, only 4 party residence service was available, leaving the company with a backlog of 60,000 customers waiting for private service. In addition, inflation and high income taxes left the company's financial stability in question at the war's end. In 1947, SNET applied for, and was granted, its first rate increase in 20 years.

During the post-war years the economy, and the telephone business, grew rapidly. 500,000 phones were in service in 1945 and by 1956 the one million mark was surpassed. The conversion to the dial system was completed in 1953 and in 1956 an improved dial system called “crossbar” was implemented. By 1970 there were two million telephones in service. At this time the company underwent a concerted effort to centralize service for increased efficiency and simplified long-distance services.

In 1974, SNET 's corporate parent, AT&T, was sued by the federal government to break up the Bell System monopoly on the telephone industry. In a 1982 settlement AT&T was required to spin off its local telephone companies to shareholders. The local telephone companies were prohibited from engaging in any other business except local exchange service until January 1984. Because SNET was only 22% owned by AT&T at the time of the agreement, the company was not required to comply with this ruling. In response, on 1 January 1983, SNET established the Sonecor Systems Division in order to take advantage of their special status. This subsidiary would distribute equipment made by a variety of different manufacturers. In August 1983, SNET announced a artnership with CSX, a railroad holding company, to build a network of fiber optic cables, called Lightnet, which was planned to link 43 cities in 24 states along the railroad right-of-ways. In February 1984, AT&T announced the sale of its SNET shares. A relationship that had lasted over a hundred years had ended.

In 1986, SNET reorganized its corporate structure once again to reflect its new diversified nature. The newly formed holding company would be able to better manage the new divisions and would now be called the Southern New England Telecommunications Corporation . In 1988, SNET formed a partnership with NYNEX to offer cellular service and in 1989 sold their share of Lightnet for $365 million dollars to Williams Communications . By the end of the decade, SNET had more then doubled its 1980 income level.

In 1991, amidst economic recession, SNET received its first rate increase in 10 years. During this year the company also established a new subsidiary, SNET Paging, Inc. which would offer paging service to Connecticut, Rhode Island and Boston.

The next seven years were a period of new product and service introductions for the company, including SNET 800 CustomLink (800 numbers for residence customers) and Smartlink, which included services such as Caller ID. In 1993, SNET announced plans to invest 4.5 billion dollars in I-SNET, a statewide, interactive information super highway, and launched SNET America, which would offer national and international long distance calling. This year also saw the beginning of an effort to downsize in order to reduce operating costs. Two thousand five hundred people were slated to leave the company by 1995. The introduction of SNET Internet came in 1995 and in 1996, SNET led the industry with the introduction of one-second billing. In 1997, J.D. Power and Associates rated SNET as the number one rated long-distance company in America. And in that same year SNET Americast, a cable television service, was launched. In addition, the acquisition of Woodbury Telephone Company, the only other independent telephone company in Connecticut, was completed.

On 5 January 1998, a transaction was announced that would merge the Southern New England Telecommunications Corporation and SBC Communications Inc., of San Antonio, Texas . On 26 October, after approval from stockholders, the FCC and CDPUC, the merger was officially completed. Although operating headquarters remained in Connecticut and the SNET name was retained, the company had officially come to the end of its days as an independent telecommunications service provider.