The telecommunications industry, which consists of the telephone, computer, and cable TV industries, has its roots in the telephone industry.

Alexander Graham Bell invented the telephone in 1875. Bell, a speech teacher who studied electricity as a hobby, wanted to develop a harmonic telegraph so that two or more telegraphic messages could be sent over a single wire at the same time. By chance, the essential principles of the telephone were discovered.

The telephone earned praise when it was demonstrated at the Centennial Exposition in Philadelphia in June 1876, but it did not gain widespread support until 1877, when Bell gave a number of public demonstrations of his invention. By 1892, Chicago and New York were linked by long-distance telephone lines, and by 1915 it was possible to make a telephone call between New York and San Francisco.

The Bell System was once a giant corporation supervising the work of local operating companies. American Telephone and Telegraph Company (AT&T), the parent corporation, was the subject of a successful antitrust suit by the U.S. Department of Justice. Effective January 1, 1984, the local companies, organized into seven regions, were divested (separated from the control of AT&T) and given autonomy over local phone service. Independent companies were meanwhile offering competitive long-distance call packages, taking some business away from AT&T. The partial deregulation of the industry, dating from the late 1960s, and the AT&T divestiture of January 1984, led to major changes in the telecommunications industry. The regional Bell operating companies (known as RBOCs, and also Baby Bells) were allowed to enter new markets, such as computers and software, that formerly were restricted to them. Likewise, markets within the telephone industry were opened up to companies that previously had not been allowed to operate in them. Hence, the divestiture of AT&T paved the way for companies to explore new transmission methods and to invest in technologically advanced equipment that today provides many new services and products.

Common telephone services today are the result of technology advances and include features such as call waiting, three-way calling, call tracing, automatic number identification or caller ID, voice messaging, and audio conferencing. Long-distance calls can also be connected much more quickly than in the past, with satellites making it possible to connect overseas calls in a matter of seconds. Voice processing equipment allows callers to access computers and, through the use of touch-tone telephones, communicate with them. Banks, utility companies, and businesses use voice response systems to route calls and allow people to request information and place orders without the need to talk to a person.

A significant change in the last few decades is advanced technology in wireless communications. For over a century, the telephone industry relied primarily on wires to transmit and receive sound. Cellular technology, which relies on low-powered radio transmissions rather than wire transmission, existed as far back as the 1930s, when mobile radios were first used by law enforcement and fire fighting personnel. In 1982, the Federal Communications Commission (FCC) allowed non-telephone companies to receive cellular licenses, which allowed them to use specified radio frequencies, and by 1983, the first commercial cellular mobile telephone came out. Telephone users eagerly embraced cellular telephones and their use became widespread.

Wireless technology includes the use of microwave radio systems and satellite communications systems. Telecommunications providers use earth stations, such as satellite dishes, to send and receive video, data, telephone, and fax information to and from a satellite. The number of earth stations and cell sites (used in cellular technology) expands every year.

In 1996, the Telecommunications Act was passed, which deregulated the telecommunications industry. It contained changes to existing laws that allow cable TV companies to offer telephone service and telephone companies to enter into the cable TV business, abolishing many of the restrictions that in the past prevented companies from operating within certain markets.

The computer industry is closely linked to the telephone industry. Although telephone lines allow for the delivery and integration of many services provided by computers via the Internet, cable providers have largely replaced telephone providers in this area, offering broadband connections via modems. Telephone companies, such as AT&T, T-Mobile, and Verizon, though, are the main providers of mobile Wi-Fi data signals that support smartphones, tablets, and other mobile computing devices.

Recent additions to the telecommunications industry are companies specializing in voice over Internet protocol (VoIP) services. These include Skype, Vonage, and Zoom. These services allow users to make phone calls from computing devices via the Internet without a direct landline or cellular connection, though some form of Internet connection is required. These provide an inexpensive or sometimes free alternative to traditional telephone services.