Baby Bells

  

There was Ma Bell. Wife of Alexander Graham Bell. Named after that thing that rings. They um...got busy and had kids. The Baby Bells.

In fact, it was a monopoly that the U.S. made split up. RBOCs, or Regional Bell Operating Companies.

Related or Semi-related Video

Finance: Are monopolies evil? Should the...28 Views

00:00

Finance allah shmoop our monopolies Evil Should they be regulated

00:07

Should they be illegal Alright well big question Here are

00:11

monopolies evil And as bill gates used to say well

00:15

not a few own one Well okay bill was just

00:18

a little bit evil or maybe a lot depending on

00:21

whether or not you came from silicon valley So the

00:23

common wisdom among most voting public kind of people is

00:27

that monopolies are bad evil and awful Why Because they

00:32

can charge anything they want for whatever their product is

00:36

They have no competition Keep him honest Well microsoft via

00:40

their windows operating system was the greatest monopoly in history

00:44

Sorry they're rockefeller And for a long time that company

00:47

had massive profit margins until the internet more or less

00:51

became the operating system along with all the tools needed

00:54

for it And it was all more or less free

00:57

ish Wealthy interviewee it took to maintain the windows monopoly

01:00

along with regulatory friction eventually killed microsoft's monopoly and well

01:05

that was that But for a while microsoft had someth

01:08

fifty percent net profit margins about five times the margins

01:13

of even the best s and p five hundred companies

01:16

Worth noting coca cola and pepsi have what is called

01:19

a duopoly The two of them together would be essentially

01:24

a monopoly of soda but well they more or less

01:28

collude on pricing and terms and elbow out any would

01:31

be third editor so their margins are high about twenty

01:35

five percent or about half of what monopoly profit margins

01:38

give so that's the quote bad stuff unquote a monopoly

01:42

brands unfair advantage But if you were a shareholder of

01:45

microsoft in the eighties and the first half of the

01:48

nineties well you'd be just tickled Have you owned one

01:50

hundred shares of that awesome monopoly in nineteen eighty four

01:54

and held them fifteen years Well your original investment of

01:58

one hundred dollars would have turned into thousands like six

02:01

seven eight thousand dollars So what's so bad about making

02:05

hundreds of times your money Oh and here's another thing

02:08

to think about it and t the big t on

02:11

the big board Well t was the big monopoly before

02:14

microsoft and it owned local and long distance carriage of

02:18

phone calls for half a century Give or take it

02:21

had obscene profits in large part by virtue of the

02:24

us government granting them federal licenses to operate in various

02:29

areas in whatever form they needed Teo you know wire

02:32

our country But a number of good things came from

02:35

this monopoly one thing being that a teen t never

02:37

cut its dividend like most of the other companies did

02:40

during the great depression A lot of families lived on

02:43

that and not cutting that dividend literally saved the lives

02:46

of those families like hundreds of thousands of americans who

02:50

lived on it for luxuries like eat food and rent

02:53

so on Additionally is part of the monopoly handshake Att

02:56

and t was required to wire rural america These guys

03:01

remote farmers like if even one home existed forty miles

03:06

from pretty much nowhere a teen t had to spring

03:09

wires on poles all the way down to dead ends

03:12

ville and get that home wired and that served the

03:15

country well when farms became factories and well a whole

03:18

country could talk to each other without monopoly level profits

03:21

gained from more dense population areas Well att and t

03:25

never would've had the money or desire to spend a

03:28

few hundred thousand dollars it cost to connect that loan

03:31

Farmhouse in the boonies to the grid Why was that

03:34

so important Well eventually that loan farmhouse made it with

03:37

another farmhouse and there were two of them and then

03:40

five and then twenty and then three hundred and yes

03:42

having ubiquitous connectivity of every living human being in the

03:46

country said something about the u s of a that

03:49

we took care of all of our people whether city

03:52

slicker a redneck and allowed everyone to share in the

03:55

opportunities provided by a fancy new technological marvel called the

03:59

telephone So our monopolies good bad lukewarm Well hard to

04:03

say so Uh maybe monopolies are like pineapples sometimes good

04:07

like in a fruity tropical drink and sometimes terrible like

04:10

on a pizza Yeah we're just saying you have to

04:12

peel off the skin maybe it's better if you do

04:15

that and don't bother sending in an angry pineapple pizza

04:18

related letter we've got a special place for those in 00:04:21.049 --> [endTime] a shmoop h q huh

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