AT&T regulated monopoly and the transistor

Tom's debunking of the basic-research transistor myth. Bell Labs' 1925 statistical projection showed mechanical switch failure rates would collapse the phone system by the 1950s; transistor development was applied research justified within the 6% regulated-profit framework.

Regulatory. Utilities and the rate base. Anybody know what a rate base is for a utility? A regulated monopoly. We don't have two companies that deliver electricity to your home, we have one. In the old days we had something called American Telephone and Telegraph — we actually still do, but it was a regulated monopoly in the old days. In a regulated monopoly the regulators in the government will actually set the profitability of the company. People used to think, wasn't it foresightful for AT&T to run Bell Laboratories and spend all this money on basic research. Well that's a load of bull. AT&T had a promise from the regulators that they could make six percent profit on whatever they could justify spending, and they could justify spending on a huge research facility. They did a lot of great basic research, but almost all of it was aimed at improving the productivity and the reliability of the telephone system.