The digital age also influenced the telephone. At Bell Labs in 1948, around the same time the transistor was being invented, mathematician Dr. Claude Shannon, a distant relative of Thomas Edison, published a paper called "A Mathematical Theory of Communication", which promoted the concept of communicating in binary code. Dr. Shannon's paper formed the basis of the entire digital communications revolution, from cell phones to the Internet.

It took 15 years for AT&T to act on Dr. Shannon's ideas. In November 1963, Ma Bell introduced Touchtone service, which enabled calls to be switched digitally and, later, enabled all manner of automated menus and functionality that eliminated the need for human operators. The new digital networks initiated the replacement of the rotary phone dial with push-button numerical keypads, even though the act of calling someone is still referred to as "dialing".

After Federal Superior Court Judge Harold H. Greene presided over the dismantling of AT&T in 1984, consumers were allowed to buy their own telephone instead of renting it from the phone company. The result was a wave of new designs and functions for the home phone by dozens of manufacturers that made Alexander Graham Bell's invention a true consumer electronics product more than 100 years after it had been invented.

In the mid-1990s, the concept of CallerID – the ability to see a name and phone number of the calling party on a small screen – gained popularity. This development occurred at about the same time that digital answering machines, able to record messages on a chip, began to replace decade-old tape-based units.

Americans were freed from their phones in the 1970s with the introduction of cordless models that used low-power, low-frequency radio waves to transmit calls from the base to the handset and back again. But the real cordless breakthrough was the exploitation of higher bandwidth 900-MHz, 2.4-GHz and 5.8-GHz frequencies thanks to a World War II technology called spread spectrum, co-invented by one of Hollywood's most glamorous stars, Hedy Lamarr.

The Austrian-born Lamarr was married to an arms merchant and learned about radio-controlled weapons. After fleeing both her husband and Austria prior to the war, she became a movie star but remained interested in helping her adopted country defeat the Nazis. Together with orchestra leader George Antheil, Lamarr proposed a frequency-hopping radio-controlled torpedo system that would be impervious to Nazi radio jamming, applying for and receiving U.S. patent #2,292,387 for the idea. Lamarr and Antheil gave their patent to the Navy, but the technology was not exploited during the war.

In the late 1950s, Sylvania's Electronic Systems Division devised an electronic version of the frequency-hopping technology and applied it to the problem of securing military communications, later using it during the 1962 Cuban Missile Crisis. Lamarr and Antheil's patent expired in the late 1950s, but frequency-hopping, now called spread spectrum, remained a highly classified military technology. The most well-known military usage of spread spectrum is the Global Positioning Satellite (GPS) system that now guides both military weaponry and consumers who have lost their way.

Consumer telephone makers also adopted spread spectrum technology, resulting in cordless phones with 10 times the range of previous cordless models and eliminating most interference and potential eavesdropping. But as much as the cordless phone freed consumers in their homes, they began to desire completely mobile wireless communications, phones they could take with them wherever they roamed on the planet.