GTE

GTE Corporation, formerly General Telephone & Electronics Corporation (1959-1982)^[1] was the largest independent telephone company in the United States during the days of the Bell System.

Originally founded in 1929 as Associated Telephone Utilities, it went bankrupt in 1933 during the Great Depression, and reorganized as General Telephone in 1934.^[1] In 1991 it acquired the third largest independent, Continental Telephone (ConTel).^[2] They also owned Automatic Electric, a telephone equipment supplier similar in many ways to Western Electric, and Sylvania Lighting, the only non-communications-oriented company under GTE ownership. GTE provided local telephone service to a large number of areas of the U.S. through operating companies, much like how American Telephone & Telegraph provided local telephone service through its 22 Bell Operating Companies.

The company also acquired BBN Planet, one of the earliest Internet service providers, in 1997. That division became known as GTE Internetworking, and was later spun off into the independent company Genuity (a name recycled from another Internet company GTE acquired in 1997) as part of the GTE-Bell Atlantic merger that created Verizon.

GTE operated in Canada via large interests in subsidiary companies such as BC TEL and Quebec-Téléphone. When foreign ownership restrictions on telecommunications companies were introduced, GTE's ownership was grandfathered. When BC Tel merged with Telus (the name given the privatized Alberta Government Telephones (AGT)) to create BCT.Telus, GTE's Canadian subsidiaries were merged into the new parent, making it the second-largest telecommunications carrier in Canada. As such, GTE's successor, Verizon Communications, was the only foreign telecommunications company with a greater than 20% interest in a Canadian carrier, until Verizon completely divested itself of its shares in 2004.^[3]

In the Caribbean, CONTEL purchased several major stakes in the newly independent countries of the British West Indies (Namely in Barbados, Jamaica, and Trinidad and Tobago).^[4][5][6]

Prior to GTE's merger with Bell Atlantic, GTE also maintained an interactive television service joint-venture called GTE mainStreet (sometimes also called mainStreet USA) as well as an interactive entertainment and video game publishing operation, GTE Interactive Media.^[7][8][9]

History

GTE's heritage can be traced to 1918, when three Wisconsin public utility accountants (John F. O'Connell, Sigurd L. Odegard, and John A. Pratt) pooled $33,500 to purchase the Richland Center Telephone Company, serving 1,466 telephones in the dairy belt of southern Wisconsin. In 1920 the three accountants formed a corporation, Commonwealth Telephone Company, with Odegard as president, Pratt as vice-president, and O'Connell as secretary. Richland Center Telephone became part of Commonwealth Telephone, which quickly purchased telephone companies in three nearby communities. In 1922 Pratt resigned as vice-president and was replaced by Clarence R. Brown, a former Bell System employee.

By the mid-1920s Commonwealth Telephone had extended beyond Wisconsin borders and purchased the Belvidere Telephone Company in Illinois. It also diversified into other utilities by acquiring two small Wisconsin electrical companies. Expansion was stepped up in 1926, when Odegard secured an option to purchase Associated Telephone Company of Long Beach, California and proceeded to devise a plan for a holding company, to be named Associated Telephone Utilities Company. An aggressive acquisition program was quickly launched in eastern, midwestern, and western states, with the company using its own common stock to complete transactions.

During its first six years, Associated Telephone Utilities acquired 340 telephone companies, which were consolidated into 45 companies operating more than 437,000 telephones in 25 states. By the time the stock market bottomed out in October 1929, Associated Telephone Utilities was operating about 500,000 telephones with revenues approaching $17 million.

In January 1930 a new subsidiary, Associated Telephone Investment Company, was established. Designed to support its parent's acquisition program, the new company's primary business was buying company stock in order to bolster its market value. Within two years the investment company had incurred major losses, and a $1 million loan had to be negotiated. Associated Telephone Investment was dissolved but not before its parent's financial plight had become irreversible, and in 1933 Associated Telephone Utilities went into receivership.

General Telephone

The company was reorganized that same year and resurfaced in 1935 as General Telephone Corporation, operating 12 newly consolidated companies. John Winn, a 26-year veteran of the Bell System, was named president. In 1936 General Telephone created a new subsidiary, General Telephone Directory Company, to publish directories for the parent's entire service area.

Like other businesses, the telephone industry was under government restrictions during World War II, and General Telephone was called upon to increase services at military bases and war-production factories. Following the war, General Telephone reactivated an acquisitions program that had been dormant for more than a decade and purchased 118,000 telephone lines between 1946 and 1950. In 1950 General Telephone purchased its first telephone-equipment manufacturing subsidiary, Leich Electric Company, along with the related Leich Sales Corporation.

By 1951, General Telephone's assets included 15 telephone companies operating in 20 states. In 1955 Theodore Gary & Company, the second-largest independent telephone company, which had 600,000 telephone lines, was merged into General Telephone, which had grown into the largest independent outside the Bell System. The merger gave the company 2.5 million lines. Theodore Gary's assets included telephone operations in the Dominican Republic, British Columbia, and the Philippines, as well as Automatic Electric, the second-largest telephone equipment manufacturer in the U.S. It also had a subsidiary, named the General Telephone and Electric Corporation, formed in 1930 with the Transamerica Corporation and British investors to compete against ITT.^[10]

In 1959 General Telephone and Sylvania Electric Products merged, and the parent's name was changed to General Telephone & Electronics Corporation (GT&E). The merger gave Sylvania - a leader in such industries as lighting, television and radio, and chemistry and metallurgy - the needed capital to expand. For General Telephone, the merger meant the added benefit of Sylvania's extensive research and development capabilities in the field of electronics. Power also orchestrated other acquisitions in the late 1950s, including Peninsular Telephone Company in Florida, with 300,000 lines, and Lenkurt Electric Company, Inc., a leading producer of microwave and data transmissions systems.

In 1960 the subsidiary GT&E International Incorporated was formed to consolidate manufacturing and marketing activities of Sylvania, Automatic Electric, and Lenkurt, outside the United States. During the early 1960s the scope of GT&E's research, development, and marketing activities was broadened. In 1963 Sylvania began full-scale production of color television picture tubes, and within two years it was supplying color tubes for 18 of the 23 domestic U.S. television manufacturers. About the same time, Automatic Electric began supplying electronic switching equipment for the U.S. defense department's global communications systems, and GT&E International began producing earth-based stations for both foreign and domestic markets. GT&E's telephone subsidiaries, meanwhile, began acquiring community-antenna television systems (CATV) franchises in their operating areas.

In 1964 GT&E president Leslie H. Warner orchestrated a deal that merged Western Utilities Corporation, the nation's second-largest independent telephone company, with 635,000 telephones, into GT&E. The following year Sylvania introduced the revolutionary four-sided flashcube, enhancing its position as the world's largest flashbulb producer. Acquisitions in telephone service continued under Warner during the mid-1960s. Purchases included Quebec Telephone in Canada, Hawaiian Telephone Company, and Northern Ohio Telephone Company and added a total of 622,000 telephone lines to GT&E operations. By 1969 GT&E was serving ten million telephones.

In March 1970 GT&E's New York City headquarters was bombed by a radical antiwar group in protest of the company's participation in defense work. In December of that year the GT&E board agreed to move the company's headquarters to Stamford, Connecticut.

After initially proposing to build separate satellite systems, GT&E and its telecommunications rival, American Telephone & Telegraph, announced in 1974 joint venture plans for the construction and operation of seven earth-based stations interconnected by two satellites. That same year Sylvania acquired name and distribution rights for Philco television and stereo products. GTE International expanded its activities during the same period, acquiring television manufacturers in Canada and Israel and a telephone manufacturer in Germany.

In 1976 newly elected chairman Theodore F. Brophy reorganized the company along five global product lines: communications, lighting, consumer electronics, precision materials, and electrical equipment. GTE International was phased out during the reorganization, and GTE Products Corporation was formed to encompass both domestic and foreign manufacturing and marketing operations. At the same time, GTE Communications Products was formed to oversee operations of Automatic Electric, Lenkurt, Sylvania, and GTE Information Systems. In 1979, another reorganization soon followed under new president Thomas A. Vanderslice. GTE Products Group was eliminated as an organizational unit and GTE Electrical Products, consisting of lighting, precision materials, and electrical equipment, was formed. Vanderslice also revitalized the GT&E Telephone Operating Group in order to develop competitive strategies for anticipated regulatory changes in the telecommunications industry.

In 1979, GTE purchased Telenet to establish a presence in the growing packet switching data communications business. GTE Telenet was later included in the US Telecom joint venture.

1980s

GT&E sold its consumer electronics businesses, including the accompanying brand names of Philco and Sylvania in 1980, after watching revenues from television and radio operations decrease precipitously with the success of foreign manufacturers. Following AT&T's 1982 announcement that it would divest 22 telephone operating companies, GT&E made a number of reorganization moves.

In 1982 the company adopted the name GTE Corporation and formed GTE Mobilnet Incorporated to handle the company's entrance into the new cellular telephone business. In 1983 GTE sold its electrical equipment, brokerage information services, and cable television equipment businesses. That same year, Automatic Electric and Lenkurt were combined as GTE Network Systems.

GTE became the third-largest long-distance telephone company in 1983 through the acquisition of Southern Pacific Communications Company. At the same time, Southern Pacific Satellite Company was acquired, and the two firms were renamed GTE Sprint Communications Corporation and GTE Spacenet Corporation, respectively. Through an agreement with the Department of Justice, GTE conceded to keep Sprint Communications separate from its other telephone companies and limit other GTE telephone subsidiaries in certain markets. In December 1983 Vanderslice resigned as president and chief operating officer.

In 1984 GTE formalized its decision to concentrate on three core businesses: telecommunications, lighting, and precision metals. That same year, the company's first satellite was launched, and GTE's cellular telephone service went into operation; GTE's earnings exceeded $1 billion for the first time. In 1986, GTE acquired Airfone Inc., a telephone service provider for commercial aircraft and railroads, and Rotaflex plc, a United Kingdom-based manufacturer of lighting fixtures.

Beginning in 1986 GTE spun off several operations to form joint ventures. In 1986 GTE Sprint and United Telecommunication's long-distance subsidiary, US Telecom, agreed to merge and form US Sprint Communications Company, with each parent retaining a 50 percent interest in the new firm. That same year, GTE transferred its international transmission, overseas central office switching, and business systems operations to a joint venture with Siemens AG of Germany, which took 80 percent ownership of the new firm. The following year, GTE transferred its business systems operations in the United States to a new joint venture, Fujitsu GTE Business Systems, Inc., formed with Fujitsu Limited, which retained 80 percent ownership.

In April 1988 after the retirement of Theodore F. Brophy, James L. "Rocky" Johnson was promoted from his position as president and chief operating officer to CEO and chairman of GTE. Under his leadership, GTE divested its consumer communications products unit as part of a telecommunications strategy to place increasing emphasis on the services sector. The following year GTE sold the majority of its interest in US Sprint to United Telecommunications and its interest in Fujitsu GTE Business Systems to Fujitsu.

In 1989 GTE and AT&T formed the joint venture company AG Communication Systems Corporation, designed to bring advanced digital technology to GTE's switching systems. GTE retained 51 percent control over the joint venture, with AT&T pledging to take complete control of the new firm in 15 years.

With an increasing emphasis on telecommunications, in 1989 GTE launched a program to become the first cellular provider offering nationwide service and introduced the nation's first rural service area, providing cellular service on the Hawaiian island of Kauai. The following year GTE acquired the Providence Journal Company's cellular properties in five southern states for $710 million and became the second largest cellular-service provider in the United States.

1990s

In 1990 GTE reorganized its activities around three business groups: telecommunications products and services, telephone operations, and electrical products. That same year, GTE and Contel Corporation announced merger plans that would strengthen GTE's telecommunications and telephone sectors.

Following action or review by more than 20 governmental bodies, in March 1991 the merger of GTE and Contel was approved. Over half of Contel's $6.6 billion purchase price, $3.9 billion, was assumed debt. In April 1992, James L. "Rocky" Johnson retired after 43 years at GTE, remaining on the GTE board of directors as Chairman Emeritus. Charles "Chuck" Lee was named to succeed Johnson. Lee's first order of business was reduction of that obligation. He sold GTE's North American Lighting business to a Siemens affiliate for over $1 billion, shaved off local exchange properties in Idaho, Tennessee, Utah, and West Virginia to generate another $1 billion, and divested its interest in Sprint in 1992. In 1994, he sold its GTE Spacenet satellite operations to General Electric in 1994 and sold Contel of Maine to Oxford Networks, which placed the company into a newly created subsidiary, Oxford West Telephone.

The Telecommunications Act of 1996 promised to encourage competition among local phone providers, long distance services, and cable television companies. Many leading telecoms prepared for the new competitive realities by aligning themselves with entertainment and information providers. GTE, on the other hand, continued to focus on its core operations, seeking to make them as efficient as possible.

Among other goals, GTE's plan sought to double revenues and slash costs by $1 billion per year by focusing on five key areas of operation: technological enhancement of wireline and wireless systems, expansion of data services, global expansion, and diversification into video services. GTE hoped to cross-sell its large base of wireline customers on wireless, data and video services, launching Tele-Go, a user-friendly service that combined cordless and cellular phone features. The company bought broadband spectrum cellular licenses in Atlanta, Seattle, Cincinnati and Denver, and formed a joint venture with SBC Communications to enhance its cellular capabilities in Texas. In 1995, the company undertook a 15-state test of video conferencing services, as well as a video dialtone (VDT) experiment that proposed to offer cable television programming to 900,000 homes by 1997. GTE also formed a video programming and interservices joint venture with Ameritech Corporation, BellSouth Corporation, SBC, and The Walt Disney Company in the fall of 1995.

Foreign efforts included affiliations with phone companies in Argentina, Mexico, Germany, Japan, Canada, the Dominican Republic, Venezuela and China. The early 1990s reorganization included a 37.5 percent workforce reduction, from 177,500 in 1991 to 111,000 by 1994. Lee's fivefold strategy had begun to bear fruit by the mid-1990s. While the communication conglomerate's sales remained rather flat, at about $19.8 billion, from 1992 through 1994, its net income increased by 43.7 percent, from $1.74 billion to a record $2.5 billion, during the same period.^[11]

Merger with Bell Atlantic

Bell Atlantic merged with GTE on June 30, 2000, and named the new entity Verizon Communications. The GTE operating companies retained by Verizon are now collectively known as Verizon West division of Verizon (including east coast service territories). The remaining smaller operating companies were sold off or transferred into the remaining ones. Additional properties were sold off within a few years after the merger to CenturyTel, Alltel, and Hawaiian Telcom. On July 1, 2010, Verizon sold many former GTE properties to Frontier Communications.^[12] As of 2011 the GTE logo/trademark is still maintained on the sitemap page of Verizon.com.

References

External links

• GTE.com (Archive)
• Corporation Encyclopædia Britannica GTE Corporation
• http://www.hmdb.org/Marker.asp?Marker=18777 -Birthplace of GTE Wisconsin state historical marker, Richland Center, Wisconsin