several decades. The concern is that without substantial renewed investment in fundamental, long-term telecommunications research, the United States will eventually consume its own intellectual “seed corn” and thus run out of new ideas within the next decade or perhaps even sooner. Chapter 3 examines further some of the implications of curtailed research investment.


For roughly a century, the U.S. telecommunications infrastructure was largely defined by the Bell System, a telephony monopoly regulated under a series of consent decrees that gave it the right to operate, maintain, and expand the U.S. telephone system. The chief research and development arm of the Bell System, Bell Laboratories, was created in 1925, following demonstration in 1915 of the feasibility of coast-to-coast long-distance service and realization of the importance of a viable research and development laboratory to effective deployment. Successful nationwide implementation of long-distance service required, for example, a device with sufficient gain to offset the signal losses in the 3000-mile stretch of the U.S. transcontinental cable. The development of the vacuum tube amplifier for use in telephone circuits, which started in the 1910s, took many years of fundamental research and required extremely close cooperation between the research community that had originally invented the vacuum tube technology and the development community that introduced the vacuum tube amplifier into the telephone network.

Bell Laboratories relied heavily on managers who understood the benefits to the company (and society) of fundamental research and were able to provide a work environment that fostered world-class research in virtually every aspect of telecommunications technology. Stable funding for research was provided via a tax levied on the service revenues of most of the Bell operating companies, an approach approved by state regulators. The revenue from the services tax was more than sufficient to fund unfettered investigations over almost 6 decades into almost every aspect of telecommunications, from basic materials (and the associated physics and chemistry) to large-scale computing and networking platforms and systems. Over time, Bell Laboratories’ support for basic science and engineering led to major advances in telephony spanning terminals, switching, transmission, services, and operations. Out of the Bell System research program also came many world-famous innovations, including the transistor, information theory, the laser, the solar cell, communications satellites, and fiber-optic communications. Perhaps the most notable benefit of the research was the creation of the semiconductor industry as a result of the mandatory public licensing of Bell’s patent for the transistor. In addition, research in basic science at Bell Labs was recognized by six Nobel prizes for strides in quantum mechanics, solid-state physics, and radio astronomy.

A number of other companies were also involved at the time in developing new telecommunications technologies and equipment. The work of companies like GTE Automatic Electric, TRW Vidar, and Northern Telecom, along with Bell’s own Western Electric, pushed telephony forward through advances in handset design and digital switching, for example.

Bell Labs also served as an important nucleus for the broader telecommunications research community: in the predivestiture era, university researchers and telecommunications research leaders from around the world commonly spent summers or sabbaticals at Bell Labs, where they could conduct exploratory research that could not have been undertaken elsewhere.

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