The role Thomas F. Carter played in the birth of modern telecommunications has been largely overlooked.”He had a huge impact on the telecommunications industry-way beyond what I think people give him credit for,” said George Benson, chairman and chief executive officer of Wisconsin Wireless Communications Corp. “He produced an industry is what he did.”
What Carter did was muster the gumption to go up against the mother of all telecommunications companies: the American Telephone and Telegraph Company-Ma Bell. But that’s not really the remarkable part. What’s remarkable is that Carter-a short, square Texan businessman with white hair-managed to win.
“He was the David who slew Goliath,” said Mary Bradshaw, vice president of global enterprise market development for the Telecommunications Industry Association.
Carter’s story begins in the 1940s in North Texas. At the time he was selling and installing radios primarily for the petroleum industry. Carter spotted the need for a device that would let a Texan well site worker armed with a radio speak directly to company executives in their New York offices, cutting out the mistakes a radio operator could make. So Carter designed a coupler for radio communications that attached to AT&T’s network.
Carter called his invention the Carterfone, and by the early 1960s, he had built a business selling them around the country. He was doing just fine until AT&T stepped in.
At the time, AT&T’s telephone monopoly was complete and immutable. The company would not let any “foreign attachments” interconnect with its network-a decision that included everything from answering machines to shoulder rests. The Carterfone raised AT&T’s ire, and Carter was unable to negotiate any kind of deal with the company. So Carter took his case to court, filing an antitrust suit against AT&T in 1965. “Carter wasn’t thinking of grand schemes,” Bradshaw said. “He was just trying to use something that he had developed.”
“He was a strong believer in the American enterprise system,” said Don McKersie, now chairman of First Telecommunications Corp. McKersie met Carter in 1968 and the two soon became close friends. “He was a very dynamic individual.”
“It became a personal thing-he thought it was just wrong,” Benson said. “And he wouldn’t give up.”
For years, Carter fought AT&T tooth and nail-and it cost him. According to the Radio Club of America Inc., Carter sold his ranch, converted his assets into capital and saw his business shrink from 100 employees to one. His case ended up at the Federal Communications Commission.
“Some of it wasn’t very pretty, and we were hanging on by our fingernails,” said Stanley Blau, who worked with Carter during the FCC hearings and is now a venture capitalist.
AT&T’s argument was that the Carterfone-and, by extension, any foreign attachment-was harmful to its network. But AT&T executives were unable to provide any proof of their claims. So, in 1968, the FCC ended the decade-long struggle, rendering its historic and revolutionary Carterfone decision. The ruling allowed non-Bell equipment to interconnect with AT&T’s system. Ma Bell was forced to release her crushing grip on the network, freeing all types of entrepreneurs to begin competing with the once-unmovable telephone giant.
“All of the safeguards that are in place to protect the competitive network came from the Carter decision,” Bradshaw said. “It was a decision that really revolutionized the way the telephone industry operated.”
That year, the Supreme Court ruled against AT&T in a case involving local and long-distance calling. The moves created a living, breathing industry-full of thriving competition-out of what had been a staid and unchanging monopoly.
McKersie, who had worked for AT&T’s Michigan Bell for 27 years before the Carterfone decision, was one of the thousands of businesspeople who jumped at the chance the decision offered. The year the Carterfone decision became effective, McKersie quit his job and went into business selling phones himself. McKersie said he called Carter shortly after the FCC’s decision.
“You don’t realize what this is going to do to the industry worldwide,” he told Carter.
The effects of the Carterfone decision are too numerous to count. Fax machines, wireless modems and even the Internet are all grandchildren of the decision. Without the Carterfone decision, “users of the public switched network would not have been able to connect their computers and modems to the network, and it is likely that the Internet would have been unable to develop,” wrote Jason Oxman, counsel for advanced communications for the FCC’s Office of Plans and Policy in a July 1999 paper.
While millions of people have benefited from the Carterfone decision-either monetarily or otherwise-Carter himself was never really able to cash in on all his hard work. He scored about half a million dollars in the antitrust settlement and then went on to found the National American Telephone Association, but he was never a rich man. In 1975, he moved to Gun Barrel, Texas, with his wife, Helen, and ran a small radio business. He died in February 1991 at the age of 67.
“He basically worked his whole life to get this done, and he never really benefited monetarily-and he deserved it,” Benson said. “The rest of us ran around on his shirt tails.”
