Happy Relationships Blog

Tim Kellis, Author of "Equality: The Quest for the Happy Marriage"

Conflict resolution is one of the most important skills for couples to learn so they may have a successful relationship.  The objective is what is referred to as civil disobedience or non-violent communication, where it is okay to disagree on a problem, just be civil about it.

The most insightful examples we have are our corporate conflicts because both parties have to remain civil in their debates.  We have an excellent example with the history of AT&T, where the company grew in power to the point where it had to be broken up by the trustbusters.

Example #2: AT&T Corp.

We have another excellent example of the logical difference between the government and industry with the story of AT&T, one that I am intimately familiar with. The breakup of AT&T that occurred in 1984 was called the “Modified Final Judgment” against the company because the “Final Judgment” actually occurred in the fifties with compromises on both sides.

In fact, the government and AT&T had been fighting since the twenties as the telecommunications industry finally reached critical mass and it became obvious AT&T had a monopoly on the industry. By the time of the breakup, AT&T had an army of attorneys fighting the government. AT&T’s tradition of control over the telecom industry dates back to the very first day.

In an ironic twist of capitalistic history, Alexander Graham Bell had submitted his very first patent application for the telephone on the same day as someone else. Bell was a teacher of the deaf who had been studying the physics of sound for years. He came up with the idea of developing a device that would send the human voice over electric wires, in competition with the then current technology for communication, the telegraph. After all, AT&T is short for American Telephone and Telegraph Company, a name from days long past.

So the fate of the future of our telecommunications industry lay in a time stamp. Bell had submitted his applications only hours before the other application and time and date stamps are put on each application as it is submitted. Bell learned his lesson early. He would use patent infringement as a key tool in stifling competition throughout his career. He simply continued developing.

Bell wasn’t even sure voice communications would work. He actually offered all of his patents to Western Union, the company that controlled the telegraph industry, for all of $100,000. And in one of the worst investment decision in history, Western Union turned him down. In the company’s entire ego about telegraph, management could not see any use in voice communications. Analogous to IBM’s failure to see the potential of a personal computer for everyone, Western Union could not see why the country needed more communications. After all, the telegraph handled all of the country’s communications needs.

Bell’s logic was a simple one. He knew the most efficient communications network was one that was uniform, standard, and he was going to provide it. The Bell System has been fighting competitors with this notion ever since, until it’s breakup in 1984. In the early days an independent phone system sprung up to compete with the Bell System. In some cities you used to actually have two different phones in your house, one for calls to areas where service was provided by Bell and one to make calls in areas where the service was provided by the local independent phone company.

In its simplicity, Bell’s logic makes sense. The problem is this concept also stifles innovation. AT&T’s culture was that the only inventions that were going to be used in the Bell System would be those that were developed in-house. Consequently, the company missed some significant inventions.

One of the most significant inventions in the early days of the industry was actually not invented within the heralded Bell Labs that were set up as the development arm of the Bell System. A caretaker from Kansas City invented the telephone switch used today to route telephone calls. The wife of his only competitor in town was the local telephone operator, and he was worried that his competitor’s wife was redirecting calls to his competitor. This caretaker, in an effort to eliminate the need of having someone manually connect calls, invented the Strodger Switch.

In the early days of an industry, though, it is important to get the “product to market” as quickly as possible. Significant profits occur when an industry reaches critical mass, which of course occurs when the penetration rate of a particular product reaches significant levels. For example, today the penetration rates of different products such as the telephone, televisions, automobile, refrigerator, etc. are greater than ninety percent, which means that it is common sense to have such products.

The Bell System was extremely successful. Critical mass didn’t occur for the telephone until the twenties, and by that time AT&T had control of telecommunications service in almost all of the major cities. The company provided everything. The company had a development arm, a manufacturing arm, a local phone service arm, and a long-distance service arm. AT&T also understood the notion of critical mass.

The most significant telecommunications service is the local service and AT&T priced its local and long distance service so the company made more money on long distance. So that local service could be more affordable, it was company policy to use the profits of its long distance service to subsidize it local service. As the disagreement between AT&T and the government continued throughout the twentieth century, the company followed the concept of our democratic system, and that is to make the best decision for the marketplace, the masses.

Market share is the second most significant indicator for individual companies. Critical mass, or penetration rates, determines the success of an industry, but market share determines the success of a particular company. AT&T controlled the three components of the telecom industry. The company dominated the manufacturing of the telecom equipment, all the way down to the components used in the equipment, dominated long distance service, and dominated local service.

By the time of the breakup, the Bell System employed a million people! But the company took this notion too far. One of the best examples of a monopoly without logic was the case of the little plastic add-on that was developed to hook onto the phone so the voice is directed into the telephone. Using ridiculous logic, AT&T claimed this little piece of plastic interfered with the Bell System. Somehow, clipping something onto the outside of the phone did something to the electrical transmission of a phone call. There are numerous other court cases that led to the dismantling of the Bell System, but the most successful one was the company that put the final nail into the coffin of the Bell monopoly.

The undoing occurred in the late seventies when a startup telecom company received approval to transmit telephone calls between St. Louis, Missouri and Chicago, Illinois using wireless equipment. The company, Microwave Communications Inc., would grow into MCI and become the largest competitor to AT&T’s long distance service. AT&T probably didn’t see the dawning of wireless telecommunications service, an industry that wouldn’t begin until the early eighties.

Nevertheless, it took eighty years for the telecom industry to mature to the point where AT&T took its power too far. Interestingly, the carrot for AT&T breaking up was allowing it to enter into the computer industry, something it was prohibited from doing. AT&T would go on to fail miserably in its attempt to enter the computer industry. After the breakup of AT&T in 1984 competition developed against all of the entities within AT&T. Today we have competition in the telecom equipment market, long distance service, and local service with the advent of wireless communications, even the components business.

But the logic between Corporate America and our democratic government is that companies must do what makes the most sense for the masses. Uncontrolled power is not allowed. Stifling innovation, squeezing competitors out of business through predatory pricing, etc. are not allowed by our government and our democratic way of life.

This same concept holds true for relationships as well. The negative relationships are those relationships where one or both people in the relationship struggle for market share in the decision making process. The positive relationship is where both parties understand the two different perspectives, similar to the different perspectives between our government and corporations, and compromises are worked out logically to the everyday problems that occur. If we are going to succeed in our relationships then we must keep the different perspectives on the plane of disagreements, and not let them disintegrate onto the plane of arguments. We must use logic to solve our problems.

We also have another great lesson with the story of AT&T, and the lesson is also a wonderful example for our objective of the positive relationship, and that is the disagreement between AT&T and the government was a very difficult and arduous one for determining an appropriate solution. After all, AT&T was doing a wonderful job of providing telephone service to the masses.

In fact, the company’s success was because it had built such a foolproof network. Telephone service does not go down when there are power outages (unless the consumer is using a cordless phone) because the power source comes from the phone company. Telecom service rarely goes down at all. Local service was very affordable. Turning up the service was a no-brainer; you simply plugged the phone jack in and you’re up. Install time for new service is actually very short. In some third world countries you can wait for years for service. Also, repair time is relatively short for service troubles. People complain the phone companies give them multi-hour windows for the arrival of the repair personnel but in third world countries they may not show up for months. From many different perspectives AT&T was providing a valuable service for an affordable price.

The problem was the company had grown too large and was stifling competition, not even allowing someone outside of the company to sell a little piece of plastic to clip onto the phone. Also the company would turn out to be vulnerable with its position of only providing phone service. Wireless and data communications was right around the corner. The government decided it was in the best interest of the industry, the masses, for AT&T to be split up so that each entity would have to stand on its own. Ironically, competition arouse for all of the sub entities except the local service, the entity that already had very low pricing.

Our democratic way of life depends on equality in the marketplace. People are allowed to compete on a level playing field and when the field becomes unequal we need to move the direction of the industry back to a more competitive, objective, equal environment.

Relationships are also equally complex. The two in the relationship come from completely different backgrounds, different lives. In both situations assets and liabilities are present. No one is perfect, contrary to what some people believe about themselves. Mistakes occur. Recognizing the mistakes is not what solves the problems in the relationship but finding the solution solves the problem.

The government didn’t simply determine AT&T’s power but set out a solution that was best for both sides. When we enter into the complexity of a relationship we should also recognize the significance in the difference between problem identification, faultfinding, and problem solving.

by Tim Kellis
HappyRelationships.com/

Tim Kellis, author of \\\"Equality: The Quest for the Happy Marriage\\\"  Renowned Wall Street analyst Tim Kellis takes on what could be considered society’s biggest problem today, divorce. The journey that led to him tackling such a significant issue was both personal and professional. After a successful career that eventually landed him on Wall Street Tim met what he thought was the girl of his dreams, only to see that relationship end with bitterness and anger. The journey included work with a marital therapist, and after he discovered the therapist wasn’t really helping decided to tackle the issue himself. Ambition and a strong aptitude for math helped lead Kellis to discover how to make relationships work. His math skills led directly to an engineering degree, nine years in the telecommunications industry, an MBA in finance, and finally on to Wall Street, where he became the very first semiconductor analyst to focus on the communications market. After publishing a 300-page initiation piece entitled Initiating Coverage of the Semiconductor Industry: Riding the Bandwidth Wave, Kellis became a leading semiconductor analyst at one of the biggest firms on Wall Street. The experience he gained as a Wall Street analyst provided an excellent backdrop for becoming an expert on relationships, and resulted in his relationship book entitled “Equality: The Quest for the Happy Marriage”. Read more from this author