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How the Bell System Missed the Internet 1

by in Telecom

Colin here. One of the more fascinating twists and turns in corporate history is how the Bell System missed developing the internet. What follows is the story of ACS in 8 parts (in 8 days). It could have owned the internet, except for NIH (Not Invented Here.)

In the mid 1970s I worked at Bell Laboratories in Holmdel New Jersey on a project called “Advanced Communications System” (or ACS.) This was a project destined to become what the internet is today. The Bell System sunk a billion dollars into its development…it was the largest privately financed engineering project in the history of mankind. The Bell System knew how important data was to become and it set out to build a vast data network.

I joined the project mid-way in a special capacity. Officially I worked at Bell Labs to coordinate the acceptance testing of the system before its roll-out across America. But unofficially I was to report back to AT&T Long Lines, which was the division funding the entire thing. Officially I reported to a manager at Bell Laboratories, but unofficially I reported to a senior vice president at AT&T. And, this was no ordinary vice president; it was Billy Oliver.

Billy Oliver was the Steve Jobs of the Bell System He is the man who invented and rolled out 800 service as an automated way to eliminate Zenith and Enterprise calling. He was the man who championed the 4ESS system. He funded the 3B computer that became the processing backbone of the Bell System and which was specifically designed to run Unix. Billy Oliver really was Steve Jobs…Bell’s all-powerful visionary. He was good at politics, trusted, a very capable engineer and comfortable with multi-billion dollar budgets within the world’s largest corporation.

(See See 1989 Alexander Graham Bell Medal: See Development History of 4ESS:

In the early 1970s Billy Oliver noticed how data was increasing as the fastest growing source of call traffic. The percentage growth of phone calls doing data was unbelievable. And, the Bell System was getting strangled by corporations ordering private lines crisscrossing the United States. AT&T hated private lines because they consumed a dedicated channel and they required lots of engineering time to install. Every time a new dedicated point-to-point data circuit was installed, a channel was removed from the shared network. Dedicated channels bypassed the company’s automated circuit testing systems, and when they went down they were difficult to debug. Worse, we couldn’t reliably deliver consistent channel quality, especially to smaller cities. The analog network was just not designed for data.

Back then you could only push 9600 bits per second through a voice circuit. But if you used that same circuit is an all-digital mode it could pass 64000 bits per second…a 6-fold increase in capacity. We discovered that customers only utilized about 25% of the circuit bandwidth and thus they wasted 75%.
The math was compelling: a 6x improvement in throughput multiplied by a 4x improvement in bandwidth utilization was a 24x improvement. Adding in the ability to utilize circuits for residential traffic after hours this meant about a 36-fold economic benefit from a switched data network.

More importantly was getting data off the PSTN public network. It was strangling the network. Voice circuits are designed to carry roughly 6 minutes of traffic per peak hour. But a data circuit might be dialed up and be left up all day. Instead of generating 30 minutes of traffic a day a data circuit would generate 480 minutes a day…sometimes even 1,440 minutes because some companies just left them up all the time. In areas where there was flat-rate service it was an economic catastrophe. A Central Office like the 1ESS could handle 100,000 calls an hour if they were 6 minute calls. But if the calls were nailed up (which was the term for a data connection that would just be left up) the network junctors would block at very high rates and call capacity would decrease 10-fold or more. Data was devouring the public phone network.

Billy Oliver very much understood these numbers and an imperrative effort was made to build a high capacity data network that would parallel the analog voice network. This problem was so urgent that the largest engineering budget ever in the Bell System (and probably of any company in history) was authorized.

This project was to be called “Advanced Communications System” or ACS. It was to be developed at Bell Laboratories in Holmdel New Jersey. (Which was the birthplace of the Morris system and the 1ESS, by the way.) Thus, the laboratory in 1B5 was born.

I was flown up to meet with some professors at MIT and Harvard and then to meet with folks at BBN. MIT and Harvard had connections to the ARPANet which was being developed by BBN. So it was a parallel effort that perhaps we could tap into.

Users at Harvard and MIT were enthusiastic about their ARPANet connections. I was impressed that the AP newswire could be received and articles meeting pre-selected keywords could be saved into a user’s read file. Users were also exchanging electronic mail messages…between disparate systems. Within the Bell System some people had email, but only similar, compatible systems could talk and addressing was a nightmare. (To address an email message you routed it like a step-by-step switch, specifying each hop, so your email address might be billy!rudolph!bedmin!attll!btl. This was called “bang addressing and used the UUCP protocol.)

But at Harvard and MIT people could send emails to anybody, anywhere, on any system. You didn’t need a connection directly to the recipient’s computer system. Messages would pass through cooperating organizations and circuits. A path would be automatically found. At that time, the ARPANet ran at speeds of 9600 bits per second between the few switches, but there were plans to upgrade to 64 kilobit circuits once the BBN butterfly was completed.

Next…The problem with ARPANet…It doesn’t scale…


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  • Charles Sauer

    URI to #2 is missing

  • bpgoldman

    This is fascinating, because even though I started working as a contractor on NET 1000 in 1981, it was on the front end system (division 4), so I really knew very little about what was going on in the other parts of the project. My group built handlers to allow connections to 3270 terminals, ASCII terminals, etc. The front end system was an IBM Series/1, which I had some prior experience on, and when I got to Holmdel, I realized that some managers or engineers had decided they didn’t like the memory management system of the S/1, so they replaced it with a homegrown MMS. This had the effect of disabling most of the debugging features of the S/1, so the engineers had to build a debugging package too. This was typical of the arrogance of Bell Labs, and the tyranny of the NIH philosophy.

  • CEH

    I found this quite interesting, My first job in the field was working on ACS in Holmdel in the test lab on the 5th floor in 1981. It was very enlightening to see the view from above as opposed to our view “in the trenches”. The configuration was quite interesting with groups of VAX 11/780s and IBM Series/1 machines along with the 3b20s. I am even familiar with the “mysterious” 11/70 downstairs, but then it was not part of a “fake” ACS. I came back to Holmdel a few years later and the lab had become a computer center – the name ACS was unknown (or unacknowledged) then. I still have a couple of pictures taken in the lab, so there is a little bit of proof of its existence.

    Thanks for the article.

  • Sarah F.

    Very interesting perspective. Thanks for writing this. It was good to think about Billy Oliver again.

    My first Bell Labs assignment was also in BDN / ACS (1978-1982). On a depressing note, the technical and mgmt issues were even more profound than described here. There was a project reset in 1978-9, because the early line cards were requiring manually applied Freon to keep them working. The principal programmer for the underlying process-process comm utilities was faking his code reviews. The application language was COBOL. By 1981 or 1982, the system test folks were required to lie. The code compile time was >12 hrs. The management tactics to retain employees were barbaric. It was a great place to be from. Every project after that looked like up.

    BTW my recollection is of the vision is much more customer-focused vision, where the plan was to give every business user in the country access to email, spreadsheet, inventory mgmt, calendar & contacts, etc. etc. The technology (hdw, sw and proj mgmt) just wasn’t up to it.

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Colin Berkshire is a highly technical HR executive in the Pulp and Paper Industry. Colin has an engineering and voice background, and is currently on assignment in Asia. NOTE: Colin does not respond to comments, and does not Tweet.

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