At the start of the 20th century, many basic features of telephone technology were in place. By then, the human voice was captured by a method that would remain standard for many decades: In the microphone, sound waves pressed carbon granules together, changing their electrical resistance and imposing an analogous pattern of variations on a current passing through them. The signal was carried by a pair of copper wires rather than the single iron or steel wire of the dawn years. Copper's electrical resistance was only a tenth as much, and random noise was dramatically reduced by using two wires instead of completing the circuit through the ground, as telegraphy did. In cities, unsightly webs of wires were minimized by gathering lines in lead pipes about 2 inches in diameter. The early cables, as such bundles were called, held a few dozen pairs; by 1940 about 2,000 could be packed into the pipe.

As other countries caught the telephone contagion, their governments frequently claimed ownership, but the private enterprise model prevailed in the United States, and a multitude of competitors leaped into the business as the original Bell patents expired. At the turn of the 20th century, the Bell system accounted for 856,000 phones, and the so-called independents had 600,000. Corporate warfare raged, with AT&T buying up as many of the upstarts as possible and attempting to derail the rest by refusing to connect their lines to its system. Two decades later AT&T secured its supremacy when the U.S. Senate declared it a "natural monopoly"—one that would have to accept tight governmental regulation.

During these years, all the contenders experimented with sales gimmicks such as wake-up calls and telephone-delivered sermons. Price was a major marketing issue, of course, and it dropped steadily. At the beginning of the century, the Bell system charged $99 per thousand calls in New York City; by the early 1920s a flat monthly residential rate of $3 was typical. As the habit of talking at a distance spread, some social commentators worried that community ties and old forms of civility were fraying, but the telephone had unstoppable momentum. By 1920 more than a third of all U.S. households were connected. Most had party lines, which generally put two to four households on the same circuit and signaled them with distinctive rings. Phone company publications urged party line customers to keep calls brief and not to eavesdrop on their neighbors, but such rules were often honored only in the breach.