As we speak, one giant telecommunications company, the cable/programming megalith Comcast, is poised to take over another, the NBC network of local stations, cable channels and even a movie studio. At the same time, two other giants, NewsCorp., owner of the Fox network, is in a cage death match with Cablevision, another distributor/programmer as three million customers fume at the loss of the World Series and other programming.
At the same time, the Federal Communications Commission, the federal agency supposedly in charge of such companies sits idly by, declining to get involved in the second and waiting for a signal from the Justice Department for the first. As infuriating as it is at the moment, readers of Tim Wu's masterful new book, The Master Switch: The Rise and Fall of Information Empires, will recognize the situations for what they are -- a normal part of what Wu calls "The Cycle" of media development in the U.S.
Wu is a superstar in the telecommunications world. He's an academic and an activist, a writer of legal papers and of popular work. He lectures classes and talks at conferences. Through it all, Wu has a way of presenting complex and important concepts in a clear and understandable way. That's a necessary talent for subjects as complicated as the ones in which he works.
Wu's eminently readable book is a history of the telephone network, the movie industry and broadcasting, all of them leading up to the history of today's combination of all of them -- the Internet. Those industries had innovative, entrepreneurial beginnings, promising great things for society. There is a rocky growth and development period as the technology becomes better, may encroach on other businesses and finally reaches critical mass. Into the chaos comes a "great mogul" to impose order -- to control the Master Switch to information and technology: "Markets are born free, yet no sooner are they born than some would-be emperor is forging chains." As Wu notes, the federal government is usually recruited to help out the mogul and his plans to gain control over the technology and product.
Wu's cycle has a backside also, in which another disruptive technology, or a public-spirited government, breaks up the mogul-driven business model, and the Cycle starts anew.
Wu has done his homework. The stories of the industries Wu tracks are fascinating. In today's corporate-driven movie business, we forget that there was a generation of outcasts who started movie studios, invented new technologies, took over theaters and made the industry their own, at least until other forces broke it up and new models took over. One industry leader could dictate that the time was not right for full-length movies, until a rebel arose to show longer films, and that rebel became part of the industry firmament. One of the early movie moguls was one Wilhelm Fuchs, a Jewish immigrant who later changed his name to Fox. Yes, that Fox.
Along the way, Wu collects all sorts of fabulous anecdotes, like the origin of today's studio and even logos, like the Paramount Pictures mountain, which was sketched by independent filmmaker William Hodkinson, who was soon lost to history.
AT&T has a major presence in the book, as it consolidates its hold not only on the telephone network, but tries to take over radio, even as it fought off a challenge from the then-dominant Western Union. AT&T settled a bitter dispute with the Radio Corporation of America, led by another mogul, David Sarnoff, to form the National Broadcasting Company. Wu comes down hard on the government-sanctioned monopoly of the Bell System, casting it as an inhibitor of technology.
The book is a wealth of anecdotes, like the story of magnetic tape and the answering machine. Discovered and invented first in the 1930s at AT&T's Bell Labs, they didn't come to fruition until the 1960s because AT&T executives believed answering machines would lead the public to abandon the telephone. As a result, the telecommunications sector became "a stagnant, oppressive industry under decades of AT&T rule," Wu writes: "The sector began to resemble a small-scale version of the planned economies of the Soviet Union."
Of more recent vintage is the great Apple divide between Steve Jobs, who wanted the closed, efficient system, and Steve Wozniak, who favored the open machine, as the early Apples were. Jobs took advantage of Wozniak's injuries from an airplane crash to turn the tinkerer-friendly Apple II into the line that became today's Mac, from the open machine to the closed, leading up to where we are now, in the Internet age.
Wu's is a story of the centralizers, like Apple, AT&T and the entertainment industry, against the decentralizers in today's industrial struggle, against Google and others who favor openness.
To wrap up his entertaining history, Wu ends with his policy prescription to present further abuse of information technology -- what he calls the Separations Principle. Those who "develop information, those who own the network infrastructure on which it travels, and those who control the tools or venues of access must be kept apart from one another," Wu writes. It follows logically from the mind of the man who coined the phrase "Net Neutrality" to describe the need for telecom networks to remain free from the favoritism of the network owners.
The concept of separating content from conduit is an old and important one. The late U.S. District Judge Harold Greene, who oversaw the legal case, which broke up the old AT&T, warned early on about the dangers of having a company, like AT&T or one of the Bell companies created by the break-up, offering information services and owning the network. In 1982, Greene wrote, "there is a real danger that AT&T will use its control of the interexchange network to undermine competing publishing ventures." Here is one that might sound familiar to today's audience: "AT &T could discriminate against competing electronic publishers in a variety of ways. It could, for example, use its control over the network to give priority to traffic from its own publishing operations over that of competitors."
He made the same argument for keeping the Bell companies out of the market:
Here, too, the Operating Companies could discriminate by providing more favorable access to the local network for their own information services than to the information services provided by competitors, and here, too, they would be able to subsidize the prices of their services with revenues from the local exchange monopoly.
Greene wanted to allow the Bell companies to allow their networks to transmit information services, but not for the Bell companies to offer them on their own -- to offer gateway services, but not the information behind the gateway. He was afraid of the many games the companies could play from transmission preference, to cross-subsidy, to network design.
It's not fashionable to talk about "common carrier" services -- the idea that some businesses serve an essential function so that they operate in a non-discriminatory way. Opponents of Net Neutrality, usually those who favor the big telecom companies, complain that the idea is old-fashioned in today's Internetworked world. Wu notes that the phrase is old-fashioned -- it has been around since the 15th century, and for good reason. The harms to the public, to innovation and to society, are greater with industrial and centralized control than without it.
Wu suggests it might be possible to achieve that separation through a combination of government-wide enforcement and the gradual acceptance of corporations to the new norm. Will his idea work in preventing the Cycle from taking over the Internet? His pessimism shines through when he wrote about the "dark underbelly" of our Information economy that depends more and more on the Internet -- leaving us "more vulnerable to centralization, not less."
He ends with a warning that we ignore at our peril:
Let us, then, not fail to protect ourselves from the will of those who might seek domination of those resources we cannot do without. If we do not take this moment to secure our sovereignty over the choices that our information age has allowed us to enjoy, we cannot reasonably blame its loss on those who are free to enrich themselves by taking it from us in a manner history has foretold.
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