Alexander Graham Bell and Elisha Gray raced to invent the telephone.
In the 1870s, two inventors Elisha Gray and Alexander Graham Bell both independently designed devices that could transmit speech electrically (the telephone). Both men rushed their respective designs to the patent office within hours of each other, Alexander Graham Bell patented his telephone first. Elisha Gray and Alexander Graham Bell entered into a famous legal battle over the invention of the telephone, which Bell won.
The telegraph and telephone are both wire-based electrical systems, and Alexander Graham Bell's success with the telephone came as a direct result of his attempts to improve the telegraph.
When Bell began experimenting with electrical signals, the telegraph had been an established means of communication for some 30 years. Although a highly successful system, the telegraph, with its dot-and-dash Morse code, was basically limited to receiving and sending one message at a time. Bell's extensive knowledge of the nature of sound and his understanding of music enabled him to conjecture the possibility of transmitting multiple messages over the same wire at the same time.
Although the idea of a multiple telegraph had been in existence for some time, Bell offered his own musical or harmonic approach as a possible practical solution. His "harmonic telegraph" was based on the principle that several notes could be sent simultaneously along the same wire if the notes or signals differed in pitch.
Info From : inventors.about.com