The weather's continuing to be a thorn in my side. Over the weekend we had temperatures close to 70 degrees, then thunderstorms on Monday, and now it looks like a blizzard here. I know this is Pennsylvania, where the forecasts are made up and the seasons don't matter, but it's getting to be a bit much.
This post has been a tricky one to write - not because it's a delicate topic or anything, but because there's just so much information that it's a real challenge to distill it all into an easy-to-follow article. I don't remember Ma Bell; the major event of this post took place when I was a small child. So in order to understand the life's work of the man in this week's quest, I first had to do a lot of reading about that whole situation.
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| The marker stands on the north corner of Wilkes-Barre's Public Square. |
AT&T was the telephone company. That seems funny to us today, with all the different cell phone companies competing for our attention; but back in the ancient days of landlines, there was only AT&T and you either had it or you didn't. That's right, it was a bona fide monopoly, which makes me wonder why "the telephone company" wasn't one of the utilities in the board game of the same name. That's not to say that it was a monopoly the entire time, however; in 1894, Bell's patent expired and a whole bunch of other, much smaller telephone companies came on the scene. But AT&T was firmly of the opinion that a single national telephone company was the way things ought to be, and that the single national telephone company ought to be them, so they set about buying out all those much smaller companies, such as the Western Union telegraph people.
Now, as you probably know, monopolies are illegal (unless you're playing that game). AT&T knew it too, so they did some dancing outside the courtroom in 1921 in which they promised to stop buying up all the little phone companies in exchange for not being in legal hot water. What they did instead was to allow competitors to connect to the Bell telephone system, and charge these smaller companies a small license fee for their use of the system. At the same time, customers could really only use Bell-produced telephone equipment, because if they wanted to use a kind of telephone not made by Bell, they had to buy the equipment, pay Bell to rewire it so it could connect to their system, and then pay a monthly service charge. It was, of course, much cheaper to just use a Bell telephone.
AT&T was running things, telephone-wise, and everybody knew it. They even spread into Canada and the Caribbean, and they were making it next to impossible for their smaller competitors to do much of anything, even with a 1950s antitrust settlement which restricted AT&T to 85% of the market share of the industry. And this was the setting when a young upstart named William McGowan got involved.
McGowan was born in Ashley, Luzerne County, in 1927; he was one of five children of Andrew and Catherine (Evans) McGowan. After a stint in the military he attended King's College, then went to Harvard Business School, where it's said that he arrived with enough money for his first year's tuition and a conviction that he'd earn a scholarship to finish his education. He did, too, graduating in 1954. By the late 1960s he was already a millionaire, having made a fortune on Wall Street by rescuing failing companies and turning them into successes. Then a mutual friend introduced him to John Goeken, a mobile radio salesman from Illinois, who had a problem. Goeken wanted to create a microwave system between Chicago and St. Louis, which would let him expand his radio service, but the FCC was balking because AT&T didn't like it. Goeken was on the verge of bankruptcy.
Well, AT&T didn't like Goeken's plan, but his new friend Bill sure did. He figured out that Goeken's plan would eventually allow the company to compete with AT&T as a long-distance telephone service provider. Nobody had ever thought to try such a thing, which - as Bill said in a much later interview - "made the idea all the more irresistible." So he bought half interest in Goeken's company for the princely sum of $50,000, and changed its name to MCI Communications Corp. (MCI stood for Microwave Communications Incorporated.)
By 1970, Bill had gotten the FCC to agree to let MCI provide phone service along the requested route, but there was a catch. In order to provide the long-distance service, MCI would need to be able to connect to local phone networks, and all of those were owned by subsidiaries of AT&T. And to probably nobody's surprise, AT&T was not keen to allow MCI to connect to the network, unless they were willing to shell out an awful lot of money. Bill wasn't having it, so in 1974, MCI filed a lawsuit against AT&T on the grounds that they were violating antitrust laws.
It took six years for the lawsuit to actually make progress. A lot of things happened in those six years; one of these was the creation of MCI's Execunet service, which allowed their customers to bypass AT&T's long-distance provisions by connecting calls through MCI's computers. It was much cheaper than AT&T's long-distance service, and it was approved by the FCC. AT&T was not best pleased, and complained to the FCC, who then directed MCI to stop offering the service. MCI appealed the order and won, with a federal court decreeing that any carrier had as much right to offer long-distance calling as AT&T themselves did.
The suit against AT&T finally reached the courts in 1980, and MCI produced a lot of evidence of AT&T's intentions to destroy any company that gave them competition regarding long-distance calling. MCI won the case, although AT&T's appeal lowered the amount of compensation they were to receive. Moreover, the case results prompted the federal government to file their own suit against AT&T; to avoid another trial, AT&T settled out of court (again) and agreed to break up their monopoly into smaller companies, known as "baby Bells," and stop controlling local phone service.
It was a victory, but it came at cost for MCI, which was not prepared to compete with AT&T on such a scale; they lost millions. Worse, our friend Bill was feeling the strain of the entire campaign, and in 1986 he suffered a massive heart attack. He received a heart transplant the following year, and while convalescing, he began researching the prospect of artificial organs to relieve the shortage of viable donor organs. Bill and his wife, Sue Ling Gin, would later donate $1 million to the University of Pittsburgh Medical Center to establish the McGowan Center for Artificial Organ Development - today known as the McGowan Institute for Regenerative Medicine.
But meanwhile, he still had MCI to save. After nearly a year of recuperation, Bill was back in the saddle and ready to resume the fight. Under his leadership, the company worked to improve the quality of their service and products, to increase its corporate customer base, and to digitize its phone network. By 1987 it was turning a profit again, providing phone service to significant customers like the Pentagon and IBM, and was soon once again the country's second-largest long-distance calling provider. The company would later merge with WorldCom, and is today part of the Verizon network.
Bill stepped down as CEO in 1991, satisfied that he had broken the AT&T monopoly and restored MCI to its success. He suffered another heart attack the following year, and this time did not survive. He and Sue, who had married in 1984, had no children; she died in 2014, and both are buried in St. Mary's Cemetery in Hanover Township, Luzerne County.
In addition to the McGowan Institute, Bill's legacy continues in a number of places. Shortly before his death, he established the William G. McGowan School of Business at his alma mater, King's College. DePaul University in Chicago and the Rochester Institute of Technology also have buildings named in his honor, and the National Archives in Washington, D.C. is home to the William McGowan Theater. But most of all, he'll always be remembered as the man who defeated the biggest Monopoly champion in the country.
Sources and Further Reading:
Author unidentified. "The William McGowan Story." University of Pittsburgh Medical Center, McGowan Institute for Regenerative Medicine, date unknown.
Unidentified contributor. "William G. McGowan, Monopoly Buster." Entrepreneur.com, October 10, 2008.
Brooks, John. Telephone: The First Hundred Years. Harper & Row, 1976.
William G. McGowan at FindAGrave.com
William G. McGowan at the Historical Marker Database
Except where indicated, all writing and photography on this blog is the intellectual property of Laura Klotz. This blog is written with permission of the Pennsylvania Historical and Museum Commission. I am not employed by the PHMC. All rights reserved.
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