Thomas F. Carter Of Carter Electronics: Calling For Competition

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The moon rises over Gun Barrel City, Tex., stretching the shadow of the 300-foot radio tower that passes for a skyline in this town of 2,100. In a ranch house a stone's throw from the guy wires, 60-year-old Tom Carter reaches behind his easy chair to turn down the volume on the mobile-radio scanners he monitors most waking hours of the day.

"Say, Tom," a neighbor calls into the living room. "Didja' hear that a CPA moved into Judd's old office?" "Good news," says Carter, getting up to poke at the logs in the fireplace. "We sure could use one."

"Yeah, well, those telephone boys are fixing to charge him $800 to get hooked up. Can you compete?"

"Believe I can," he says with a smile. "Tell him I'll come 'round next week to talk to him about some of the other equipment available."

Not everyone in Gun Barrel City knows it, but Tom Carter was the first to win the right to compete against American Telephone & Telegraph Co. Had he not filed the antitrust action that, in 1968, convinced the Federal Communications Commission to allow the interconnection of non-Bell apparatus with the Bell System's phone lines, Americans might still be getting everything -- from telephone handsets to answering machines and computer modems -- from AT&T. Carter's legal battle gave birth to a $3-billion industry, in which some 2,500 companies manufacture, sell, supply, lease, install, and service this so-called interconnect equipment. But, truth to tell, the fellow never set out to be a communications crusader. Carter was merely a businessman who, having been cornered, chose to come out fighting.

"It was self-preservation, pure and simple," he drawls. "AT&T and the Bell companies were trying to keep me from selling my product. I didn't think it was fair to let them run me out of business."

In 1959, Carter had a 13-year-old electronics company in Dallas that supplied two-way mobile-radio systems, and 100 employees making, selling, and installing them throughout Texas and parts of Oklahoma. He also had a patent pending on the Carterfone, a device that allowed mobile-radio customers to patch into the phone system. No longer did oil-company secretaries have to serve as go-betweens in communications between drillers in the fields and their suppliers across town. By setting the telephone receiver into the Carterfone's cradle -- which, in turn, was hard-wired into the mobile-radio base station -- the user could speak directly to anyone who had a phone. Carter was selling the gizmos about as fast as he could make them.

"But the phone companies were harassing my customers -- threatening to cut off their phone service unless they quit using the Carterfone," Carter recalls. He paid a visit to the FCC, where he learned it could take an antitrust case to get AT&T off his back -- and those of his customers. Hoping to avoid such action, Carter went to AT&T headquarters in New York City with a proposition: If the corporate brass would let his customers pay a dollar a month to use the Carterfone, he would drop plans to sue. The offer was refused -- which still amuses Carter no end. "If they'd taken that dollar," he chortles, "don't you know they wouldn't have competition today!"

Through a decade of agency hearings and court trials, Carter stood virtually alone against AT&T. The major electronics corporations that supplied AT&T -- many of whom have since become telecommunications-industry mainstays -- refused him backing of any kind. "The universal comment was, 'You're whistlin' Dixie -- you can't win," he recalls. "Then they'd tell me to go out the back door. But there was moral support from a half dozen companies that aided Carter in forming what is now the North American Telecommunications Association (NATA). And a handful of independent oilmen and ranchers -- satisfied customers of the Carterfone -- paid their own expenses to testify in Carter's behalf.

AT&T's lawyers and corporate officers regarded the Carter contingent's unpolished testimony with obvious mirth. But, when it counted most, it was AT&T that looked foolish. The hearing examiner gaped in disbelief when one of the monolith's star witnesses testified that a person could speak into a telephone receiver held at arm's length, or shout at it from across the room. However, to interpose any device -- even a power megaphone held half a house away from the receiver -- would damage the network and was, in his opinion, illegal. When AT&T was asked to detail that damage, no evidence was produced. "Those lawyers just looked at each other," Carter says. "And the judge near to rose up out of his chair. I mean, he was some disturbed."

It wouldn't have surprised many had Carter seen the lawsuit through, collected the treble damages awarded in successful antitrust actions, and gone on to head the most influential company in this new industry. Witness MCI Communications Corp. and the position of prominence to which chief executive officer Bill McGowan brought it after participating in the next blow to AT&T's monopoly: the creation of a $30-billion market for competitive long-distance services. But Carter chose to settle the case in 1968 for a guarantee of access to the network and $500,000 -- which barely covered his expenses. For years afterward, he dug deep into his own pockets to lobby against state and federal initiatives that might have hindered the growth of the interconnect industry. Never did he seriously entertain thoughts of making it big in telecommunications, he says now. All he ever wanted was to tinker with his mobile radios.

"I was beat," he explains, "mentally, physically, and financially. You think 10 years in court is fun? It sure wasn't. I had ulcers, and I was on tranquilizers."

But more stress awaited him in Dallas. Thanks to some "fancy stepping and maneuvering" during Carter's absence, his electronics business was floundering. When Carter and his stockholders could reach no agreement as to which direction to take the company, Carter sold out. The remainder of the Carterfone stock was sold to Cable & Wireless Ltd., a British company, shortly thereafter.

Now Carter is retired, and enjoys living "where you know everybody and his dog." He is a commissioner of the local hospital district, he chairs the industrial committee for the Cedar Creek Lake Chamber of Commerce, and serves as something of an honorary communications director for the county. Sure, he sells a few telephone systems and operates a mobile-radio network from the tower in his backyard -- "but that's just a hobby."

The Carterfone isn't made anymore, but there are 3,500 out there somewhere -- and they are still in demand. Just recently a man from Richmond, Va., called Carter to ask how to install a Carterfone he had bought secondhand. Carter rummaged through boxes of old papers and equipment before managing to scrounge up a single, rumpled instruction booklet. It went out in the next day's mail, with the inventor's compliments.

Last updated: Apr 1, 1984




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