Beginning with competing patent applications for the invention of the telephone in 1876, the history of telecommunications in the United States is a history of technological advances closely followed by legal maneuvering intended to secure exclusive business rights. Alexander Graham Bell's application for a patent on the telephone was filed only hours before Elisha Gray's application. The award of the patent to Bell and his financial backers rather than to Western Union, the purchaser of Gray's rights, played a large role in determining the future course of the telecommunications industry in the United States. The Bell organization evolved into the American Telephone and Telegraph Company (AT&T), the leading telecommunications company in the world for over 100 years.
The management of the Bell System never lost sight of the importance of technological advances as both a source of new business opportunities and protection from competition through the patent laws. The Bell Laboratories subsidiary of AT&T was a source of unparalleled technological advances over the years and is arguably responsible for the commanding position in the world occupied by the U.S. telecommunications industry today, but Bell Labs also built the technological foundation for a legal wall around the company's businesses.
By 1980 the telecommunications sector of the U.S economy exceeded the size of the agricultural sector. The common carriers in the telecommunications industry were earning annual revenues in excess of $60 billion, and were on their way to revenues exceeding $100 billion by the end of the decade. Investment in new telecommunications plant and