____________

Notes

 

 

 

Chapter 1. From the Telegraph to Hypercommunications

  1. U.S. Bureau of the Census, Historical Statistics of the United States, Colonial Times to 1970 (Washington, D.C.: Government Printing Office, 1975), 2:716.

  2. See Paul A. Baran and Paul M. Sweezy, Monopoly Capital (New York: Monthly Review Press, 1966), 219, 220; Alfred D. Chandler, Giant Enterprise: Ford, General Motors, and the American Automobile Industry (New York: Harcourt, Brace and World, 1964), 3–20; Charles H. Hession and Hyman Sardy, Ascent to Affluence (Boston: Allyn and Bacon, 1969), 520–23.

  3. Daniel Bell, “The Disunited States of America,” TLS, June 9, 1995, 17.

  4. James R. Beniger, The Control Revolution (Cambridge: Harvard University Press, 1986), 7, 8.

  5. Alfred D. Chandler, The Visible Hand (Cambridge: Harvard University Press, 1977), 18.

  6. The best discussion of information costs remains George J. Stigler, The Organization of Industry (Homewood, Ill.: Richard D. Irwin, 1968), 171–88.

  7. Richard B. Duboff, “The Telegraph and the Structure of Markets in the United States, 1845–1890,” in Research in Economic History, vol. 8, ed. Paul Uselding (Greenwich, Conn.: JAI Press, 1982), 257–65.

  8. See Beniger, Control Revolution, 278–87; James H. Madison, “Communications,” in Encyclopedia of American Economic History, ed. Glenn Porter (New York: Charles Scribner’s Sons, 1980), 1:335–43; Richard N. Current, The Typewriter and the Men Who Made It (Urbana: University of Illinois Press, 1954).

  9. See Richard Schmalensee, The Control of Natural Monopolies (Lexington, Mass.: Lexington Books, 1979); Leonard Waverman, “The Regulation of Intercity Telecommunications,” in Promoting Competition in Regulated Markets, ed. Almarin Phillips (Washington, D.C.: Brookings Institution, 1975), 232, 233.

10. Peter W. Huber, Michael K. Kellogg, and John Thorne, The Geodesic Network II: 1993 Report on Competition in the Telephone Industry (Washington, D.C.: Geodesic Company, 1992), p. 3.44.

11. Details are provided in Charles H. Ferguson and Charles R. Morris, Computer Wars (New York: Times Books, 1993), 17, 18; “The Third Age,” Economist, September 17, 1994, Survey, 3, 4.

12. Friedrich A. Hayek, Law, Legislation, and Liberty (Chicago: University of Chicago Press, 1973), 1:15.

13. Walter Lippmann, The Public Philosophy (Boston: Little, Brown, 1955), 101.

14. The concept I am advancing is different from but similar to the idea of social learning advanced in Peter A. Hall, “Policy Paradigms, Social Learning, and the State,” Comparative Politics, April 1993, 275–96.

15. John Maynard Keynes, The General Theory of Employment, Interest, and Money (London: Macmillan, 1936), 383.

16. Thomas S. Kuhn, The Structure of Scientific Revolutions, 2d ed. (Chicago: University of Chicago Press, 1970), 92.

17. On the path to such changes in public philosophy, see Margaret Thatcher, The Path to Power (New York: HarperCollins, 1995), 50–52; and Margaret Thatcher, The Downing Street Years (New York: HarperCollins, 1993), 7, 680–87.

18. See Michael E. Porter and Victor E. Millar, “How Information Gives You Competitive Advantage,” Harvard Business Review, July–August, 1980, 149–60.

19. See Richard S. Rosenbloom and Michael A. Cusumano, “Technological Pioneering and Competitive Advantage: The Birth of the VCR Industry,” California Management Review, Summer 1987, 51–76.

20. Kim B. Clark and Takahiro Fujimoto, Product Development Performance (Boston: Harvard Business School Press, 1991) 35.

21. Joseph Schumpeter, Capitalism, Socialism, and Democracy, 3d ed. (New York: Harper & Row, 1950), 132.

22. See R.H. Coase, “The Nature of the Firm,” Economica 4 (New Series, November 1937): 404.

23. Joe Bain, Price Theory (New York: John Wiley, 1952), 50–53; United States v. E.I du Pont de Nemours, 351 U.S. 377 (1956).

24. David Hume, A Treatise of Human Nature (1739; reprint, London: Penguin Books, 1969), 553.

25. R.H. Coase, “The Federal Communications Commission,” Journal of Law & Economics 2 (October 1959): 1–40. See also R.H. Coase and Nicholas Johnson, “Should the Federal Communications Commission Be Abolished?” in Regulation, Economics, and the Law, ed. Bernard H. Siegan (Lexington, Mass.: D.C. Heath, 1979), 41–56.

26. United States v American Telephone and Telegraph, Civil Action 74–1698, Defendants’ Third Statement of Contentions and Proof (1980): 1:60, 61.

27. Simon Nora and Alain Minc, The Computerization of Society (Cambridge: MIT Press, 1980), 19, 20.

28. Fritz Machlup, The Production and Distribution of Knowledge in the United States (Princeton: Princeton University Press, 1962).

29. Beniger, Control Revolution, 25.

30. See Robert Britt Horwitz, The Irony of Regulatory Reform: The Deregulation of American Telecommunications (New York: Oxford University Press, 1989); and Alan Stone, Wrong Number: The Breakup of AT&T (New York: Basic Books, 1989).

Chapter 2. The Rise of AT&T

  1. There is an enormous literature on the disputes concerning the invention of the telephone. The most important sources upon which I rely are David A. Hounshell, “Elisha Gray and the Telephone: On the Disadvantages of Being an Expert,” Technology and Culture 16 (April 1975): 133–61; Lloyd W. Taylor, “The Untold Story of the Telephone,” American Physics Teacher 5 (1937): 250; Fred De Land, The Invention of the Electric Speaking Telephone, in AT&T Archives, Box 1098; William Aitken, Who Invented the Telephone? (London: Blackie and Son, 1939), chaps. 1–14; George B. Prescott, Bell’s Electric Speaking Telephone (New York: D. Appleton & Co., 1884); Robert V. Bruce, Bell: Alexander Graham Bell and the Conquest of Solitude (Boston: Little, Brown, 1973); and W. James King, “The Telegraph and the Telephone,” in The Development of Electrical Technology in the Nineteenth Century, Paper 29, Bulletin 228 (Washington, D.C.: United States National Museum, 1962), 312–18.

  2. The most important legal materials are Telephone Cases, 126 U.S. 863 (1887), and The Deposition of Alexander Graham Bell in the Suit Brought by the United States to Annul the Bell Patents (Boston: American Bell Telephone Co., 1908); John E. Kingsbury, The Telephone and Telephone Exchanges: Their Invention and Development (New York: Longmans, Green, 1915), Chap. 5; Charles H. Swan, Narrative History of the Litigation on the Bell Patents, 1878–1896, in AT&T Archives, Box 1098. See also American Bell Tel. Co. v. American Cushman Tel. Co., 35 F. 734 (N.D., Ill., 1888), and American Bell Tel. Co. v. People’s Tel. Co., 22 F. 309 (S.D., N.Y., 1884).

  3. Details on the Western Union battle are based on Rosario Joseph Tosiello, The Birth and Early Years of the Bell Telephone System, 1876–1880 (New York: Arno Press, 1979), 81–83, 484–91; Alvin F. Harlow, Old Wires and New Waves (1936; reprint, New York: Arno Press, 1971), 409–11; Robert W. Garnet, The Telephone Enterprise (Baltimore: Johns Hopkins University Press, 1985), Chap. 4; and Federal Communications Commission, Special Investigation, Dkt. 1, Exhibit 2096F, Financial Control of the Telephone Industry (1937), 13–29.

Gifford’s views are recorded in Affidavit of George Gifford, September 19, 1882, in AT&T Archives, Box 1006.

Details on Gould’s involvement are found in Maury Klein, The Life and Legend of Jay Gould (Baltimore: Johns Hopkins University Press, 1986), 276–82.

  4. R.H. Coase, “The Nature of the Firm,” Economica 4 (New Series, November 1937): 404.

  5. See Leonard S. Reich, The Making of American Industrial Research (Cambridge: Cambridge University Press, 1985), 144.

  6. Biographical material on Vail is based primarily on Albert Bigelow Paine, In One Man’s Life (New York: Harper & Row, 1921); although an example of the “hero worship” genre, it contains much factual information. On the business details, see Alan Stone, Public Service Liberalism (Princeton: Princeton University Press, 1991), 89–96.

  7. See Stone, Public Service Liberalism, 96–103; Garnet, Telephone Enterprise, 76–80.

  8. Harold C. Livesay and Patrick G. Porter, “Vertical Integration in American Manufacturing, 1899–1948,” Journal of Economic History 29 (September 1969): 495–96.

  9. See Garnet, Telephone Enterprise, 14–17, 138; Stone, Public Service Liberalism, 103–21.

10. Johnson County Home Telephone Co., 8 Mo. P.S.C.R. 637 (1919).

11. On patent policies, see F.C.C., Special Investigation, Dkt. 1, Exhibit 1989, Patent Structure of the Bell System, Its History and Policies and Practices Relative Thereto (1936). The conclusion on franchise battles is based on an examination of every issue of Telephony, then the leading independents’ trade journal, before 1920.

12. AT&T, 1907 Annual Report, 18.

13. AT&T, 1910 Annual Report, 32, 33.

14. As examples of the view of merchants on the undesirability of telephone competition, see the reports of the Merchants Association of New York opposing the grant of competing franchises. Telephone Competition from the Standpoint of the Public (New York: New York Telephone Co., 1906), in AT&T Archives, Box 1082; Special Telephone Committee, Merchants Association of New York, Supplemental Telephone Report, Further Inquiry into Effect of Competition (1905).

15. Stuart Daggert, “Telephone Consolidation under the Act of 1921,” Journal of Land & Public Utility Economics, 7: 27.

16. Stipulation/Contention Package, Episode 5, paragraphs 580–82, 615–73, United States v. AT&T.

17. R.H. Coase, “Discussion,” in A Critique of Administrative Regulation of Public Utilities, ed. Warren J. Samuels and Harry Trebing (East Lansing: Institute of Public Utilities, Michigan State University, 1972): 311–16.

18. James Q. Wilson, “The Politics of Regulation,” in The Politics of Regulation (New York: Basic Books, 1980), 370.

19. Pacific Telephone & Telegraph Co., 15 Cal. R.C.R. 993, 994 (1918).

20. See, for example, a leading scholarly work during the 1920s, Ellsworth Nichols, Public Utility Service and Discrimination (Rochester, N.Y.: Public Utility Reports, 1928), 479.

21. See Stipulation/Contention Package, Episode 4, paragraphs 31, 32, 39, 412, and Episode 5, paragraphs 505–10, 534–36, United States v. AT&T.

22. See A.H. Griswold, “The Radio Telephone Situation,” Bell Telephone Quarterly 1 (April 1922): 6–8; AT&T, 1918 Annual Report, 28.

23. The principal sources utilized for the discussion of the early history of radio are Hugh G.J. Aitken, Syntony and Spark-The Origins of Radio (New York: John Wiley, 1976); Hugh G.J. Aitken, The Continuous Wave: Technology and American Radio (Princeton: Princeton University Press, 1985); W. Rupert MacLaurin, Invention to Innovation in the Radio Industry (New York: Macmillan, 1949); Gleason Archer, History of Radio to 1926 (New York: American Historical Society, 1938); Hiram L. Jome, Economics of the Radio Industry (Chicago: A.W. Shaw, 1925); Federal Trade Commission, Report on the Radio Industry (Washington, D.C.: Government Printing Office, 1924); and Erik Barnouw, A Tower of Babel (New York: Oxford University Press, 1966).

24. William Peck Banning, Commercial Broadcasting Pioneer (Cambridge: Harvard University Press, 1946), 68.

25. The principal materials on the creation of the F.C.C, and the background are U. S. Senate, A Study of Communications by an Interdepartmental Committee (Washington, D.C.: Government Printing Office, 1934), known as the Roper Report; U.S. House of Representatives, Preliminary Report on Communications Companies (Washington, D.C.: Government Printing Office, 1934), known as the Splawn Report; U.S. House of Representatives, Committee on Interstate and Foreign Commerce, Federal Communications Commission, Hearings (Washington, D.C.: Government Printing Office, 1934); U.S. Senate, Committee on Interstate Commerce, Commission on Communications, Hearings (Washington, D.C.: Government Printing Office, 1929); Philip T. Rosen, The Modern Stentors (Westport, Conn.: Greenwood Press, 1980); G. Hamilton Loeb, The Communications Act Policy toward Competition: A Failure to Communicate (Cambridge: Harvard University Center for Information Policy Research, 1977).

Chapter 3. The Assault Begins

  1. 47 U.S.C, Para. 151(1970).

  2. See Ellis W. Hawley, The New Deal and the Problem of Monopoly (Princeton: Princeton University Press, 1966), part 4; David W. Lynch, The Concentration of Economic Power (New York: Columbia University Press, 1946), chaps. 1, 2, 7, and 9.

  3. The F.C.C.’s final report is Federal Communications Commission, Investigation of the Telephone Industry in the United States (Washington, D.C.: Government Printing Office, 1939). Other sources on which my summary is based are Arthur W. Page, The Bell Telephone System (New York: Harper & Row, 1941), 143–48; and AT&T, Brief of Bell System Companies on Commissioner Walker’s Report on the Telephone Investigation (1938), 248–56.

  4. “Wrong Number,” Business Week, March 28, 1936, 11.

  5. Hawley, The New Deal 387–88.

  6. United States v. Paramount Pictures, 334 U.S. 131 (1948).

  7. United States v. Pullman Co., 50 F. Supp. 123, 134 (E.D., Pa., 1943).

  8. For details of AT&T’s World War II effort, see M.D. Fagen, ed., A History of Engineering and Science in the Bell System: National Service in War and Peace, 1925–1975 (Murray Hill, N.J.: Bell Telephone Laboratories, 1978), part I. On postwar plans see “Item: Twelve Million New Telephones,” Fortune, June 1950, 81–86, 139–46.

  9. “Washington Outlook,” Business Week, December 18, 1948, 16.

10. Charles Zerner, “U.S. Sues to Force AT&T to Drop Western Electric Co.,” New York Times, January 14, 1949, 1, 3.

11. Complaint, United States of America v. Western Electric Co., Civil Action No. 17–49 (January 14, 1949), 68–72.

12. Answer, United States of America v. Western Electric Co., Civil Action No. 17–49 (April 24, 1949), paragraph 3.

13. See, generally, Alvin H. Hansen, The Postwar American Economy (New York: W.W. Norton, 1964).

14. U.S. House Committee on the Judiciary, Antitrust Subcommittee, Consent Decree Program of the Department of Justice Report (Washington, D.C.: Government Printing Office, 1959).

15. See, for example, International Salt Co. v. United States, 332 U.S. 392 (1947).

16. Some advertisements for such devices are found in “Foreign Attachments—1892–1894,” in AT&T Archives, Box 1212.

17. American Bell Telephone Co. to G.F. Hudson, June 19 1894, memorandum no. 249047, in AT&T Archives, Box 1212.

18. “Something Up to Date for All Telephone Receivers” (n.d.), in AT&T Archives, Box 1353.

19. “Danger Lurks in the Telephone,” in AT&T Archives, Box 1353.

20. See, for example, correspondence, H.K. McCann to J.D. Ellsworth, January 7, 1909, in AT&T Archives, Box 1353; and H.K. McCann to J.D. Ellsworth, February 27, 1909, in AT&T Archives, Box 1353.

21. See correspondence, L.G. Richardson to George V. Leverett, June 24, 1911, in AT&T Archives, Box 1353.

22. See, for example, Hush-A-Phone Corp., 20 F.C.C. 391, 413 (1955), and Cammen v. American Tel & Tel Co., 2 F.C.C. 351 (1936).

23. Pennsylvania PUC v. Bell Telephone Co. of Pa., 20 Pa. PUC 702, 706–7 (1940).

24. See, for details, Alan Stone, Wrong Number (New York: Basic Books, 1989), 94–100.

25. Ibid, pp. 101–18.

26. Hush-A-Phone Corp., 20 F.C.C. 391, 398 (1955).

27. Telecommunications Reports, May 20, 1949, 11, 12.

28. Hush-A-Phone Corp., 20 F.C.C. 391, 424 (1955).

29. Hush-A-Phone Corp. v. United States, 238 F. 2d 266 (D.C. Cir, 1956).

30. Ibid, 269.

31. For details on early microwave, see H.T. Friis, “Microwave Repeater Research,” Bell Systems Technological Journal, April 1948: 183–246.

32. For details, see Philco Corporation v. American Telephone & Telegraph Co., 80 F. Supp. 397 (E.D, Pa, 1948).

33. Television Charges and Regulations, 42 F.C.C. 1 (1949)

34. See Telecommunications Reports, December 5, 1947, 21, 22.

35. Telecommunications Reports, August 3, 1953, 24, 25.

36. Allocation of Microwave Frequencies Above 890 Mc, 27 F.C.C. 359, 412 (1959).

37. Telecommunications Reports, March 7, 1960, 13, 14; Allocation in Frequencies in Bands above 890 Mc, 29 F.C.C. 825 (1960).

38. See Stone, Wrong Number, 134–40.

39. Jonathan F. Galloway, The Politics and Technology of Satellite Communications (Lexington, Mass.: D.C. Heath, 1972), 23.

40. See Domestic Communications-Satellite Facilities, 22 F.C.C. 2d 86 (1970). “Domestic Communications Satellite Fight Opens. Ford Fund Offers Play,” Wall Street Journal, August 2, 1966, 9; “AT&T Drops Opposition to TV Networks Operating Own Communications Satellite,” Wall Street Journal, October 16, 1969, 9.

41. See Telecommunications Reports, September 26, 1966, 22, 23; Allocation of Microwave Frequencies above 890 Mc, 27 F.C.C. 359, 414 (1959).

42. See, for example, Electronic Detectors Inc. v. New Jersey Telephone Co., 62 PUR 3d 186 (1965).

43. Patti Hartigan, “At Home with Tom Carter,” On Communications, February 1985, 24; United States v. AT&T, Stipulation/Contention Package, Episode 42A, paragraph 177; and M.A. Adelman, The World Petroleum Market (Baltimore: esources for the Future, 1972), 30, 31, 201. This summary is drawn from the Record, vol. 2, Use of the Carterfone Device in Message Toll Telephone Service, F.C.C. Dkt. 16942 and 17073.

44. Carterfone, 14 F.C.C. 2d 571 (1968).

45. Ibid., 420, 423–24.

46. Ibid.

Chapter 4. MCI and the Long-Distance Challenge

  1. U.S. Bureau of the Census, Statistical Abstract of the United States: 1986 (Washington, D.C: Government Printing Office, 1985), 547, 548.

  2. United States v. AT&T, Civil Action no. 74–1698, D.D.C. (1974), Stipulation/Contention Package, Episode 5, paragraph 507, 509, 535, 536.

  3. U.S. Senate Committee on the Judiciary, Subcommittee on Antitrust and Monopoly, The Industrial Reorganization Act, part 6 (Washington, D.C: Government Printing Office, 1974), 4423.

  4. Roland Mueser, ed., Bell Laboratories Innovation in Telecommunications, 1925–1977 (Murray Hill, N.J.: Bell Telephone Laboratories, 1979), 39–41, 95–104, 125–29, 162–66.

  5. Bell Telephone Laboratories, 1971 Annual Report, 14.

  6. For details of the advances that Bell Labs made in the physical sciences, see S. Millman, ed., A History of Engineering and Science in the Bell System: Physical Sciences, 1925–1980 (New York: Bell Telephone Laboratories, 1983).

  7. See Bernard Schwartz, ed., The Economic Regulation of Business and Industry, vol. 4 (New York: Chelsea House, 1973), 2500.

  8. Illinois State Telephone Co. v. Illinois Commerce Commission, 73 PUR 3d 525, 527, 528 (1968).

  9. United States v. AT&T, Stipulation/Contention Package, Episode 21, paragraph 2.

10. William J. Baumol, Otto Eckstein, and Alfred E. Kahn, “Competition and Monopoly in Telecommunications Services,” in The Industrial Reorganization Act, part 2, 1342.

11. Microwave Communications, 18 F.C.C. 2d 979, 986, 991, 994 (1986).

12. Larry Kahaner, On the Line (New York: Warner Books, 1986), chaps. 3, 4. Although this book is an unabashed laud of MCI and completely undocumented, it does contain useful background information on the early development of MCI.

13. See Richard Vietor, Contrived Competition (Cambridge: Harvard University Press, 1994), 223–28.

14. Peter Huber, Michael Kellogg, and John Thome, The Geodesic Network II (Washington, D.C.: Geodesic Company, 1992), p. 3.44.

15. MCI’s statement on Series 11000 is reprinted in Telecommunications Reports, June 23, 1969, 14, 15. See generally Alan Stone, Wrong Number (New York: Basic Books, 1989), chap. 6, for more details.

16. Kahaner, On the Line, 40.

17. Microwave Communications, 18 F.C.C. 2d 953, 954 (1969).

18. Ibid., 959.

19. Ibid., p. 978.

20. See F.CC v. RCA Communications, Inc., 346 U.S. 86 (1952).

21. See Allocation of Frequencies above 890 Mc, 27 F.C.C. 359, 370 (1959).

22. Specialized Common Carrier Services, 29 F.C.C. 2d 870 (1971).

23. United States v. AT&T, Trial Record, 3713; Kahaner, On the Line, 67, 68.

24. United States v. AT&T, Stipulation/Contention Package, Episode 23, paragraph 52.

25. Ibid., paragraph 69.

26. Ibid., Episode 24, paragraph 22.

27. Ibid., paragraph 28.

28. AT&T—“Foreign Attachments” Tariff Revisions, 15 F.C.C. 2d 605, 609, 610 (1968)

29. Ibid., 608.

30. See Stone, Wrong Number, 184–94 and notes, for more details.

31. Ibid.

32. MCI Communications Corp. v. American Telephone & Telegraph Co., 369 F. Supp. 1004, 1029 (E.D., Pa., 1973).

33. MCI Communications Corp. v. American Telephone & Telegraph Co., 496 F. 2d 214, 221 (3d Cir., 1974).

34. Bell System Tariff Offerings, 46 F.C.C. 2d 413, 427 (1974).

35. Jimmy Carter, “Remarks on Signing S.1946 (Staggers Rail Act of 1980) into Law,” Weekly Presidential Documents, October 14, 1980, 2226.

36. United States v. AT&T, Stipulation/Contention Package, Episode 24B, AT&T Stipulation 75A.

37. See United States v. AT&T, Transcript of Testimony, 4006 and 4007; Stone, Wrong Number, 241–43.

38. Telecommunications Reports, June 23, 1980, 14.

39. MCI Communications Corp v. American Telephone & Telegraph Co., 708 F. 2d 1081 (7th Cir., 1983).

40. MCI Telecommunications Corporation, 60 F.C.C. 2d 25, 26 (1976).

41. See Steve Coll, The Deal of the Century (New York: Atheneum, 1986), 88, 89; United States v. AT&T, Defendants Third Statement of Contentions and Proof, vol. 1, 694.

42. MCI Telecommunications Corporation, 60 F.C.C. 2d 25, 36 (1976).

43. MCI Telecommunications Corp v. FCC, 561 F.2d 365, 378 (D.C. Cir., 1977).

44. MCI Telecommunications Corp v. FCC, 580 F.2d 590 (D.C. Cir., 1978).

45. See, for example, Competitive Carrier Rulemaking, 85 F.C.C. 2d 1, 22–24 (1980).

46. See Vietor, Contrived Competition, 219–23.

Chapter 5. The Biggest Case in History

  1. R.H. Coase, “The Nature of the Firm,” Economica 4 (New Series, November 1937): 404.

  2. On the complex issues raised by Coase’s theory of the firm, see Oliver E. Williamson and Sidney G. Winter, eds., The Nature of the Firm (New York: Oxford University Press, 1993).

  3. “Media Gets a Message from Justice,” Business Week, June 8, 1968, 110, 112.

  4. For an excellent description of the antitrust views, see Suzanne Weaver, Decision to Prosecute (Cambridge: MIT Press, 1977), 169, 170.

  5. Leslie Wayne, “AT&T’s New Challenge,” New York Times, February 4, 1982, D1, D8.

  6. Weaver, Decision to Prosecute, 170.

  7. “Trustbuster Hart Tilts with AT&T,” Business Week, August 4, 1973, 15, 16.

  8. Paul Weaver, “Unlocking the Gilded Cage of Regulatory Reform,” Fortune, February 1977, 180.

  9. International T&T Corp. v. General T&E Corp., 351 F. Supp. 1153, 1185–86 (D.Hawaii, 1972).

10. International T&T Corp. v. General T&E Corp., 518 F. 2d 913 (9th Cir., 1975).

11. Mitchell C. Lynch et al., “Fighting Bell,” Wall Street Journal, November 21, 1974, 1.

12. Telecommunications Reports, December 9, 1974, 8.

13. “Why the Justice Department Took AT&T to Court,” Business Week, November 30, 1974, 70.

14. “The Antitrust Lawyers Roll Up Their Sleeves,” Business Week, November 30, 1974, 69.

15. “The Potential Fallout from AT&T’s Defeat,” Business Week, June 30, 1980, 45.

16. Lawrence A. Sullivan, Handbook of the Law of Antitrust (St. Paul, Minn.: West Publishing Co., 1977), 77.

17. United States v. AT&T, Plaintiffs First Statement of Contentions and Proof, 515, 516.

18. United States v. AT&T, Complaint, 14, 15.

19. Editorial, “The Largest Antitrust Suit,” Wall Street Journal, November 22, 1974, 18.

20. “Statement by AT&T Chairman on Suit,” New York Times, November 21, 1974, 68.

21. United States v. AT&T, Answer, 12.

22. US. v. AT&T, 1976–2 Trade Cases, paragraph 61, 163, p. 70, 248 (D.D.C., 1976).

23. Peter M. Gerhart, “Report on the Empirical Case Studies Project,” in Report to the President and Attorney General, vol. 2, National Commission for the Review of Antitrust Laws and Procedures (Washington, D.C.: Government Printing Office, 1979), 22.

24. United States v. American Telephone & Telegraph Co., 416 F. Supp. 1314 (D.D.C., 1978).

25. U.S. v. AT&T Co., 1980–2 Trade Cases, paragraph 63, 533, p. 76, 859 (D.C. Cir., 1980).

26. MCI Communications Corp. v. American Telephone & Telegraph Co., 708 F. 2d 1081 (7th Cir., 1983).

27. See Alan Stone, Wrong Number (New York: Basic Books, 1989), 308–10, for more details.

28. Robert E. Taylor, “Activist Judge,” Wall Street Journal, December 30, 1983, 12. The decision is reported at United States v. American Telephone & Telegraph Co., 524 F. Supp. 1336 (D.D.C., 1981). For an analysis see Stone, Wrong Number, 310–13.

29. Information on AT&T’s changing strategy is based to some extent on Peter Temin and Louis Galambos, The Fall of the Bell System (Cambridge: Cambridge University Press, 1987), chaps. 6 and 7.

30. AT&T, 1978 Annual Report, p. 24.

31. U.S. v. American Telephone & Telegraph Co., 1980–81 Trade Cases, paragraph 63, 711, p. 77, 795 (D.D.C., 1981).

32. Telecommunications Reports, April 13, 1981, 4. For more details on the settlement see Stone, Wrong Number, chap. 10.

33. United States v. Western Electric, Modification of Final Judgment, Section II, 3.

34. United States v. American Telephone & Telegraph Co., 552 F. Supp. 131 (D.D.C., 1982).

35. U.S. v. Western Electric Co., Inc., 1983–2 Trade Cases, paragraph 65, 756, p. 69, 855 (D.D.C., 1983–2).

Chapter 6. Internationalization and Competition

  1. Tony Jackson, “Ringing Rapid Changes in Telecoms,” Financial Times, February 12, 1996, 24.

  2. Hugo Dixon, “Cable and Wireless Talks Collapse,” Financial Times, January 22, 1992, 17.

  3. “Scramble of the Titans,” Financial Times Survey: World Telecommunications, October 7, 1991, 21.

  4. Jack L. Hervey, “Foreign Trade and the U.S. Economy,” Chicago Fed Letter, March 1995, 1–3.

  5. John J. Keller, “A Scramble for Global Networks,” Business Week, March 21, 1988, 141.

  6. Kenichi Ohmae, “The Global Logic of Strategic Alliances,” in Collaborating to Compete, ed. Joel Bleeke and David Ernst (New York: John Wiley, 1993), 37. The concept of a global economy was first developed by Theodore Levitt, “The Globalization of Markets,” Harvard Business Review, May–June 1983, 92–102.

  7. Stephen P. Bradley, Jerry A. Hausman, and Richard L. Nolan, “Global Competition and Technology,” in Globalization, Technology and Competition (Boston: Harvard Business School Press, 1993), 17, 18.

  8. Ibid., 12.

  9. Michael Porter and Victor E. Millar, “How Information Gives You Competitive Advantage,” Harvard Business Review, July–August 1985, 149–60.

10. See, for example, J.Y. Bakos and E. Bryn Jolfsson, “When Quality Matters: Information Technology and Buyer-Supplier Relationships,” Massachusetts Institute of Technology, Center for Coordination Science Technical Report (1992).

11. “The Revolution Begins, at Last,” Economist, September 30, 1995, 15.

12. John J. Keller, “Spanning the Globe,” Wall Street Journal, October 4, 1991, R1.

13. See, for example, William Boston, “Newcomers Snap at Heels of Europe’s Phone Companies,” Reuters World Service, August 14, 1994; Matthias-Wolfgang Stoetzer, “New Telecommunications Services in Germany,” Telecommunications Policy 18 (1994): 522–37.

14. For details on Sprint’s early history, see Southern Pacific Communications Co. v. AT&T, 556 F. Supp. 825 (D.C., D.C., 1983).

15. Michael Lindemann, “Data Transmission Deal,” Financial Times, May 28, 1994, 2; William Boston, “Germany Takes New Steps to Open Telecommunications Markets,” Reuters European Community Report, May 27, 1994.

16. John Celentano, “Who’s Got the Money for Those Multimedia Networks,” Telephony, May 29, 1995, 32.

17. Keith Bradsher, “Science Fiction Nears Reality: Pocket Phone for Global Calls,” New York Times, June 26, 1990, 1; Edmund L. Andrews, “Motorola’s Network Attracts Few Investors,” New York Times, January 8, 1993, D3; Edmund L. Andrews, “Motorola Unit Has Funds for Sky Phone System,” New York Times, September 22, 1994, D3.

18. Bloomberg Business News, “Iridium, A Satellite Company, Now Looks Overseas for Financing,” New York Times, November 10, 1995, D5; George Black, “Survey of Mobile Communications,” Financial Times, November 27, 1995, 6; William Boston, “Vebacom, Stet in Iridium Cooperation,” Reuters European Business Report, March 26, 1996; Yumiko Okuno, “Communications Firms Reach for Stars,” Nikkei Weekly, April 15, 1996, 10; “Iridium Taps Chase, BZW to Arrange Final Financing,” Reuters, April 25, 1996. Peter Eistrom, “Iridium Is Crossed,” Business Week, April 14, 1995, 40.

19. François Bar, “Information and Communications Technologies for Economic Development,” note prepared for Berkeley Roundtable on the International Economy (May 1987), 1.

20. National Telecommunications and Information Administration, Telephone Areas Serviced by Bell and Independent Companies in the United States (Washington, D.C.: Government Printing Office, 1982), 77–114.

21. See Michael Carpentier, Sylvaine Farnoux-Toporkoff, and Christian Garric, Telecommunications in Transition (New York: John Wiley, 1992), 81, 82; Alfred L. Thimm, American Stake in European Telecommunications Policies (Westport, Conn.: Quorum Books, 1992), 16, 21.

22. On the European equipment industry, see Eli Noam, Telecommunications in Europe (New York: Oxford University Press, 1992).

23. On the early European history of telecommunications see, generally, A.N. Holcomb, Public Ownership of Telephones on the Continent of Europe (Boston: Houghton-Mifflin, 1911).

24. “Telecommunications Survey,” Economist, November 23, 1985, 20.

25. Information on Japanese telecommunications is primarily based on Jill Hills, Deregulating Telecoms: Competition and Control in the United States, Japan, and Britain (New York: Quorum Books, 1986), and Douglas W. Colber, “Reform of Japanese Telecommunications Law: Panacea or Placebo?,” Journal of International Law and Business 8 (spring 1987): 145–79.

26. Daniel I. Okimoto, Between MITI and the Market (Stanford: Stanford University Press, 1989), 73–76.

27. See Henry Scott Stokes, “Breakup? The View from Inside a Besieged NTT,” Scientific American, April 1990, 78; “Deregulation Lets Nippon Telephone Off the Hook,” Economist, August 6, 1983, 56; Robert Cottrell, “Competitive Forces Gather for Pickings,” Financial Times, October 23, 1984, 4.

28. European Commission, Growth, Competitiveness, Employment: The Challenges and Ways Forward into the Twenty-First Century (Luxembourg: Office for Official Publications of the European Communities, 1994), 9.

29. Ibid., 13.

30. Bangemann Group, Europe and the Global Information Society: Recommendations to the European Council (Brussels, May 26, 1994).

31. Commission of the European Communities, Europe’s Way to the Information Society: An Action Plan (Brussels, July 19, 1994).

32. Ibid., Section 3. The document is not paginated.

33. European Commission, Communication to the Council and the European Parliament: Green Paper on the Liberalization of Telecommunications Infrastructure and Cable Television Networks, Part One (October 25, 1994), 3.

34. The primary source for the history of international telecommunications is George A. Codding, Jr., and Anthony M. Rutkowski, The International Telecommunications Union in a Changing World (Dedham, Mass.: Artech House, 1982).

35. Paul A. David, “Some New Standards for the Economics of Standardization in the Information Age,” in The Economic Theory of Technological Policy, ed. P. Dasgulpa and P.L. Stoneman (London: Cambridge University Press, 1987).

36. At about 22, 300 miles high, a satellite orbits the Earth in twenty-four hours, which corresponds to the Earth’s rotational period. “Thus a satellite at this distance on an orbit going East to West above the equator will revolve about the Earth at the same speed as the Earth turns. Consequently the satellite is referred to as being in ‘geosynchronous’ orbit so that it appears relatively motionless from the Earth.” U.S. Department of Commerce, NTIA Telecom 2000: Charting the Course for a New Century (Washington, D.C.: Government Printing Office, 1988), 272.

37. The best source for the early history of communications satellites is Heather Hudson, Communications Satellites, Their Development and Impact (New York: Free Press, 1990).

38. See Stuart Z. Chiron and Lise A. Rehberg, “Fostering Competition in International Telecommunications,” Federal Communications Law Journal 38 (March 1986): 29–32.

39. Lawrence A. Adashek, “Public and Private Developments in the Communications Industry, 1991–1992,” Commlaw Conspectus 1 (1993): 145–47.

40. Monica Horten, “Backbone of the Worldwide Corporate Structure—Private Networks,” Financial Times, October 7, 1991, 17; Elisabeth Horwitt, “Undersea Fiber Link Up,” Computerworld, December 19, 1988, 14; Department of Commerce, NTIA Telcom 2000, 262, 263.

41. Michael Kenward, “Light Relief for Today’s Long Distance Telephone Links,” Financial Times, October 3, 1995, 28.

42. Irving Goldstein, “INTELSAT Transforming a Market Leader to Meet Changing Global Telecommunications,” Federal Communications Law Journal 39 (December 1994): 243.

43. Mention should be made of Inmarsat, the third of the international organizations devoted to telecommunications. It was created in 1979 to provide worldwide mobile satellite communications for the maritime community. Its activities have been uncontroversial.

44. Mary E. Thyfault, “Global Communications Get Real,” Information Week, November 13, 1995, 34.

45. Michael Y. Yoshino and U. Srinivasa Rangan, Strategic Alliances (Boston: Harvard Business School Press, 1995), 4.

46. Peter Lorange and Johan Roos, Strategic Alliances (Cambridge, Mass.: Blackwell, 1992), 17, 18.

47. “A Collect Call from Olivetti,” Financial Times, December 22, 1983, 12; Paul Betts, “AT&T Continuing Olivetti Talks,” Financial Times, October 7, 1983, 21; Guy de Jonquieres, “Moves toward Wider Collaboration,” Financial Times, January 14, 1985, 11.

48. Hudson Janisch, “Regulation and Competition: Foreign Ownership and Participation,” Seminar Paper, University of Toronto, May 16–20, 1995, 23, 24.

49. Mary Fagan, “BT Paying $4.3 Bn for Stake in US Operator,” Independent, June 3, 1993, 29; Lawrence Malkin, “Phone Firms’ Link Is Only a First Move,” International Herald Tribune, June 3, 1993; Carla Lazzareschi, “British Telecom to Buy 20% of MCI; Global System Seen,” Los Angeles Times, June 3, 1993, Al; Kevin Maney and John Schneidawind, “MCI Builds Global Alliance,” USA Today, June 3, 1993, IB; James Vicini, “Justice Agrees to British Telecommunications/MCI Deal,” Reuters World Service, June 15, 1994; Steven Lipin, “British Telecom and MCI Unveil $20.88 Billion Merger Agreement,” Wall Street Journal, Interactive Edition, November 4, 1996.

50. Eric Auchard, “AT&T Unisource Still Play Catch-Up,” Reuters, May 14, 1996.

51. “Experts Cast Doubt on Marriage of Unlikely International Partners,” Telecom Markets, June 23, 1994; “Sprint Sells 20% Stake in German-French Alliance for $4.2 Billion,” Common Carrier Week, June 20, 1994; Dan O’shea, “French and German Teleos Answer Sprint’s Plea for Help,” Telephony, June 20, 1994, 6.

Chapter 7. The Wireless Revolution

  1. See generally Hugh G. Aitken, Syntony and Spark (New York: John Wiley, 1976).

  2. W.J. Baker, A History of the Marconi Company (New York: St. Martin’s, 1971); Susan J. Douglas, Inventing American Broadcasting (Baltimore: Johns Hopkins University Press, 1987), chaps. 1–3.

  3. Hugh G. Aitken, The Continuous Wave: Technology and American Radio, 1900–1932 (Princeton: Princeton University Press, 1985), 12; Leonard Reich, The Making of Industrial Research (Cambridge: Cambridge University Press, 1985), 160–64.

  4. Gleason L. Archer, Big Business and Radio (New York: American Historical Co., 1939), 198–205; Erik Barnouw, A Tower in Babel (New York: Oxford University Press, 1966), 64–68.

  5. Tom Lewis, Empire of the Air (New York: HarperCollins, 1991), 89–107.

  6. Archer, Big Business and Radio, 112.

  7. On AT&T’s role in broadcasting, see Alan Stone, Public Service Liberalism (Princeton: Princeton University Press, 1991), chap. 8.

  8. See Christopher H. Sterling and John M. Kittross, Stay Tuned, 2d ed. (Belmont, Calif.: Wadsworth, 1978), 70, 71, 112–14; Lewis, Empire of the Air, 183, 184; Erik Barnouw, The Golden Web (New York: Oxford University Press, 1968), 55–69; William S. Paley, As It Happened (Garden City, N.Y.: Doubleday, 1979).

  9. The best source of information on the AT&T toll system is William Peck Benning, Commercial Broadcasting Pioneer (Cambridge: Harvard University Press, 1946).

10. The story of television’s growth is nicely told in Andrew F. Inglis, Behind the Tube (Stoneham, Mass.: Butterworth, 1990), chaps. 4 and 5. See also Joseph H. Udelson, The Great Television Race (University: University of Alabama Press, 1982).

11. The best source of information on FM’s development is D.H.V. Erickson, Armstrong’s Fight for FM Broadcasting (University: University of Alabama Press, 1973).

12. Erickson, Armstrong’s Fight for FM Broadcasting, 113–54, 204–11.

13. M.D. Fagen, ed., A History of Engineering and Science in the Bell System (New York: Bell Telephone Laboratories, 1975), chap. 5.

14. Details on the origins of the Federal Radio Commission are found in Laurence R. Schmeckebier, The Federal Radio Commission (Washington, D.C.: Brookings Institution, 1932).

15. See Stone, Public Service Liberalism, 275–83; Philip T. Rosen, The Modern Stentors (Westport, Conn.: Greenwood Press, 1980).

16. R.H. Coase, “The Federal Communications Commission,” Journal of Law & Economics 2 (October 1959): 1–40.

17. Ashbacker Radio Corp v. FCC, 326 U.S. 327 (1945); Johnston Broadcasting Co. v. FCC, 175 F. 2d 351 (D.C. Cir., 1949).

18. Federal Communications Commission, Annual Report to Congress, fiscal year ended June 30, 1954 (Washington, D.C: Government Printing Office, 1955), 5. On the early history of fixed services, see Dallas W. Smythe, The Structure and Policy of Electronic Communication (Urbana: University of Illinois Press, 1957), chap. 4.

19. Statement of Evidence of Automobile Manufacturers Association, Box 2227, p. 850 in F.C.C. Docket 11866, Above 890Mc.

20. D.L. Guill and P.R. Hartmann, “Matching Microwave to the Digital Network,” Telephone Engineer and Management, July 1, 1983, 50. See also Alan C. Walker, “Microwave Aims at the Local Loop,” Telephone Engineer and Management, July 1, 1983, 47.

21. Establishment of Policies and Procedures for the Use of Digital Modulation Techniques in Microwave Radio, 40 F.C.C. 2d 938 (1973). See also R.W. Sanders, “Microwave Keeps Up with the Times,” Telephone Engineer and Management, October 1, 1983, 72.

22. Alan Stewart, “Spectrum Based Communications,” Telephone Engineer and Management, October 15, 1984, 76.

23. Leonard Waverman, “The Regulation of Intercity Telecommunications,” in Promoting Competition in Regulated Markets, ed. Almarin Phillips (Washington, D.C.: Brookings Institution, 1975), 201–39.

24. Steven Flax, “The Latest Way to Foil the Phone Monopoly,” Fortune, April 16, 1984, 108. See also Bruce C. Netschert, “The Bypass Threat—and What to Do about It,” Telephony, July 18, 1983, 112–21.

25. Jim Brown, “RHBCs Cite Big Losses from Bypass,” Network World, May 9, 1988, 1.

26. Lisa Warner, “Wireless Technologies Creating Competition in the Local Exchange Market, Comm Law Conspectus, winter 1996, 69; Edmund L. Andrews, “Bell Units’ Rivals Gain at F.C.C.,” New York Times, May 10, 1991, Dl; Gary Slutsker, “Divestiture Revisited,” Forbes, March 18, 1991, 118; Robert S. Murray, “Local Carrier Access: The Battleground of the 1990s,” Telephony, January 8, 1990, 32.

27. Peter Huber, Michael K. Kellogg, and John Thorne, Yhe Geodesic Network II (Washington, D.C.: Geodesic Company, 1992), pp. 2.40, 2.41.

28. Steve Creedy, “Mandi Says Wireless Has Lucrative Future,” Pittsburgh Post-Gazette, August 21, 1996, CI2; Andrew Kupfer, “Can Cable Win Its Phone Bet?” Fortune, September 18, 1995, 175; Paula Roesler, “Microwave Mushrooms in the Cellular Network,” Telephony, December 2, 1991, 533; James E. Innes, “The Microwave Factor in Disaster Recovery,” Telephony, October 9, 1989, 38; Doug Docherty, “The Short Haul,” America’s Network, September 15, 1996, 1–4.

29. Mark D. Schneider, “Cellular Communications Service: Wireline Delivery or Delay,” Georgetown Law Journal, February 1984, 1183.

30. S. Millman, A History of Engineering and Science in the Bell System: Communications Sciences (AT&T Bell Laboratories, 1984), 234, 235.

31. Details on mobile radio history are found in “The ABCs of Cellular Radio,” Telephone Engineer and Management, May 15, 1983, 76.

32. Colin Leinster, “Mobile Phones: Hot New Industry,” Fortune, August 6, 1984, 108.

33. Stephen Booth, “Cellular Technology Strives to Keep Pace with Market Growth,” Consumer Electronics, November 1989, 35.

34. Leslie Brennan, “Say Hello to Car Phones,” Sales & Marketing Management, October 1986, 97; “A Survey of the Technologies, the Players, and the Prospects,” Cook Report (n.d.), 1; PCIA, 1994 PCS Market Demand Forecast, January 30, 1995, 2.

35. John J. Keller, “Will Cheaper Cellular Put a Phone in Every Pocket?” Business Week, December 5, 1988, 142.

36. F.CC v. Sanders Brothers Radio Station, 309 U.S. 470 (1940).

37. Land Mobile Service. Use of 806–90 MHz Band, 14 F.C.C. 2d 311, 312 (1968).

38. Land Mobile Service, Second Report, 46 F.C.C. 2d 752 (1974). A good study of the early history of cellular is John W. Berresford, “The Impact of Law and Regulation on Technology: The Case History of Cellular Radio,” Business Lawyer, May 1989.

39. John Oetting, “Cellular Mobile Radio—An Emerging Technology,” IEEE Communications Magazine, November 1983, 11.

40. Cellular Communications Systems, 86 F.C.C. 2d 469 (1981).

41. See, for example, United States v. Western Electric Co., 1986–1 Trade Cases, p. 166,987 (D.D.C., 1986); and most importantly, United States v. Western Electric Co., 797 F. 2d 1082 (D.C. Cir. 1982).

42. Cellular Lottery Rulemaking, 98 F.C.C. 2d 175 (1984).

43. Details on McCaw’s career are found in Fleming Meeks, “Would You Believe It—Craig McCaw Says He Is Risk Averse,” Forbes, March 1993, 78.

44. Robert Hof and Peter Coy, “Step One for Craig McCaw’s National Cellular Network.” Business Week, October 22, 1990, 108.

45. KLR Consulting, Inc., “Cellular Digital Packet (PCD): What Makes it Reliable,” [email protected], pp. 1–5; Brian Washburn, “CDPD—The Tower of Power,” America’s Network, August 15, 1996, 1–6.

46. Reshma Memon Yabub, “Flight Control: Airphones Lifting Communications to New Heights,” Chicago Tribune, April 25, 1994, C1; Michael Fitzgerald, “Document Faxing Goes Airborne—But Will It Fly?” Computerworld, February 7, 1994, 62.

47. On the newer cordless phones, see Chris O’Malley, “The Wireless World,” Popular Science, November 1995, 56; Mark Fleischmann, “Digital Cordless Phones Go Further,” Popular Science, January 1995, 48.

48. Thomas McCarroll, “Betting on the Sky,” Time, November 22, 1963, 57; Duane Stoltzfus, “Nextel Betting on Wireless Future,” Bergen Record, November 22, 1963, D1.

49. John Anderson, Director, Transportation and Telecommunications Issues, General Accounting Office, before U.S. House Commerce Committee, October 12, 1995.

50. Louis Kehoe, “MCI Invests %1.3 bn in Nextel,” Financial Times, March 1, 1994, 23; Laura Evenson, “Wireless Venture by MCI,” San Francisco Chronicle, March 1, 1994, B1.

51. See, for example, Fred Dawson, “Analysts Praise Nextels New Wireless Technology,” Multichannel News, September 12, 1994, 55; Barbara De Pompa, “It’s Quits for Carriers,” Information Week, September 12, 1994, 20.

52. “AT&T and McCaw Cellular Complete Largest Ever Telecom Merger,” AT&T News Release, September 20,1994.

53. John J. Keller, “AT&T Wireless Raises the Bar in Battle for New PCS Market,” Wall Street Journal, Interactive Edition, October 3, 1996, 1, 2; John J. Keller, “AT&T Steps Up Its Fight for Local Phone Markets,” Wall Street Journal, Interactive Edition, February 24, 1997, 1.

54. Ron Schneiderman, Wireless Personal Communications (Piscataway, N.J.: IEEE Press, 1994), 5.

55. Thomas A. Monheim, “Personal Communications Services: The Wireless Future of Telecommunications,” Federal Communications Law Journal 44 (March 1992): 336.

56. Amendment of the Commission’s Rules to Establish New Personal Communications Services, Notice of Inquiry, 5 F.C.C. Red. 3995 (1990).

57. Amendment of the Commission’s Rules to Establish New Personal Communications Services, Notice of Proposed Rule Making and Tentative Decision, 7 F.C.C. Red. 5676 (1992), n. 1.

58. See In the Matter of Implementation of Section 309J of the Communications Act—Competitive Bidding, Second Report and Order, 9 F.C.C. Red. 2348 (1994). An excellent history of the proceedings is Jennifer Pia Brovey, “Crossing the Line from Regulation to Implementation,” Comm Law Prospectus 2 (1994): 67.

59. Liza McDonald, “Bidding War for Wireless Tops %1 Billion,” Rocky Mountain News, September 25, 1996, 8B.

60. See Tom Nolle, “Overcoming Cellular Deja Vu,” America’s Network, September 15, 1996, 1–8; Patrick Flanagan, “Personal Communications Services: The Long Road Ahead,” Telecommunications On-Line, February 1996, 1–5.

61. See Chris Kraul, “The Cutting Edge: Down to the Wireless,” Los Angeles Times, May 20, 1996, D1; Alan Cane, “Survey of Mobile Communications,” Financial Times, November 27, 1995, 1; Qualcomm, CDMA Bulletin, winter/spring 1996; Qualcomm, The Complete CDMA Solution, 1996; Schneiderman, Wireless Personal Communications, 19–25.

Chapter 8. A Marriage Made in Heaven: Computers and Communications

  1. Excellent histories of computers and computing are too numerous to mention. Among others on which I have relied are Michael R. Williams, A History of Computing Technology (Englewood Cliffs, N.J.: Prentice-Hall, 1985); William Aspray, Computing before Computers (Ames: Iowa State University Press, 1990); Herman H. Goldstine, The Computer from Pascal to von Neumann (Princeton: Princeton University Press, 1972); and James W. Cortada, The Computer in the United States (Armonk, N.Y.: M.E. Sharpe, 1993).

  2. Thomas P. Hughes, Elmer Sperry: Inventor and Engineer (Baltimore: Johns Hopkins University Press, 1971), 146–47, 232–33.

  3. Details on Hollerith are found in Geoffrey D. Austrian, Herman Hollerith: Forgotten Giant of Information Processing (New York: Columbia University Press, 1982).

  4. In addition to the materials cited in note 1, see also S. Millman, ed., A History of Engineering and Science in the Bell System: Communications Sciences, 1925–1980 (New York: AT&T Bell Laboratories, 1984), chap. 9; Harry Wulforst, Breaking Through to the ComputerAge (New York: Charles Scribner’s, 1982), 43–48.

  5. Stan Augarten, Bit by Bit: An Illustrated History of Computers (New York: Ticknor and Fields, 1984), 101.

  6. Kenneth Flamm, Creating the Computer (Washington, D.C.: Brookings Institution, 1988), 33.

  7. See Texas Instruments, “First Commercial Silicon Transistor,” Industrial News Release, May 10, 1954, 1–3.

  8. Cortada, Computer in the United States, 76.

  9. Although written by consultants for IBM in legal matters, a good examination of IBM’s market share over time is Franklin M. Fisher, John J. McGowan, and Joan Greenwood, Folded, Spindled, and Mutilated (Cambridge: MIT Press, 1983), chap. 4.

10. Alvin J. Harman, The International Computer Industry (Cambridge: Harvard University Press, 1971), 9–13; Saul Rosen, “Electronic Computers: A Historical Survey,” Computer Surveys, March 1969, 7–36.

11. David Farber and Paul Baran, “The Convergence of Computing and Telecommunications Systems,” Science, March 18, 1977, 1169.

12. See United States v. AT&T, Defendants’ Third Statement of Contentions and Proof, vol. 2, 1276–89, and Plaintiffs Third Statement of Contentions and Proof, vol. 2, 1500–1505.

13. The principal source for the early history of the computer-communications interface is “Computer Services and the Federal Regulation of Communications,” University of Pennsylvania Law Review, December 16, 1967, 328–46.

14. New York Telephone Co., 44 PUR (NS) 265, 269–70 (1942).

15. R.M. Fano and F.J. Corbato, “Time Sharing on Computers,” Scientific American, September 1966, 129–40.

16. Computer Use of Communications Facilities, Tentative Decision, 28 F.C.C. 2d 291, 297(1970).

17. GTE Service Corporation v. F.C.C., 474 F. 2d 724 (7th Cir., 1973).

18. United States v. AT&T, Stipulation/Contention Package, Episode 42B, paragraphs 327, 330, 332.

19. Interstate and Foreign Message Toll Telephone Service et al, Recommended First Report and Order, 56 F.CC. 2d 593, 597 (1975).

20. Details on the development of the integrated circuit are found in T.R. Reid, The Chip: How Two Americans Invented the Microchip and Launched a Revolution (New York: Simon and Schuster, 1984); and Robert Noyce, “Microelectronics,” Scientific American, September 1977, 63–69.

21. See Kathleen K. Wiegner, “The Micro War Heats Up,” Forbes, November 26, 1979, 49.

22. “A Grab at Ma Bell’s Market,” Business Week, June 19, 1978, 92B.

23. N.R. Bradley Lambert, “The Effect of the Second Computer Inquiry on Telecommunications and Data Processing,” Wayne Law Review 27 (1981): 1543.

24. See, for example, “Who Will Supply the Office of the Future?” Business Week, July 27, 1974, 42.

25. AT&T Revisions to Tariff 260 and 267 Relating to Dataspeed 40, 62 F.C.C. 2d 21 (1977).

26. Computer Inquiry, Tentative Decision, 72 F.CC 2d 358, 393 (1979).

27. Ibid., 394.

28. Ibid., 430

29. Second Computer Inquiry, Final Decision, 77 F.C.C 2d 384, 419–20 (1980).

30. Mark L. Goldstein, “Letting the Phone Company Off the Hook,” Industry Week, February 17, 1986, 29. See also Herbert E. Marks and James L. Casserly, “An Introduction to the F.C.C’s Third Computer Inquiry,” in Telecommunications and the Law, ed. Walter Sapronov (Rockville, Md.: Computer Science Press, 1988), 309–32.

31. See, for example, Bryan Wilkins, “CBEMA vs. Deregulation,” Computerworld, December 30, 1985/January 6, 1986, 105.

32. Mitch Betts, “Users and Vendors Blast F.C.C Protocol Conversion,” Computerworld, November 24, 1986, 13.

33. Computer III Further Remand Proceedings, 10 F.C.C Red. 8360 (1995).

34. Amendment of Sections 64.702 of the Commission’s Rules and Regulations (Third Computer Inquiry, Report and Order), 104 F.C.C. 2d 958 (1986).

35. Ibid., 988, 1008.

36. The chronological development of Computer III is detailed in Chris L. Kelley, “The Contestability of the Local Network: The F.C.C’s Open Network Architecture Policy,” Federal Communications Law Journal 45 (December 1992): 89–147.

37. See the excellent Gary K. Nitzberg, “Open Network Architecture (ONA),” htt­p:/­/ww­w.n­itz­spa­ce.­com­/ga­ry/­pap­ers­/tm­ona­.ht­ml.­

38. Details are provided in Computer III Remand Proceedings: Bell Operating Company Provision of Enhanced Services, 10 F.C.C Red. 8360 (1995). See also Kelley, “Contestability of the Local Network,” 141–45.

39. California v. F.C.C., 905 F. 2d 1217 (9th Cir., 1990).

40. California v. F.C.C., 39 F. 3d 919 (9th Cir., 1994).

41. Computer III Remand, 8360.

42. Robert L. Hummel, “Eight Ways to the Future,” Byte, December 1996, 85.

43. Andrew S. Grove, Only the Paranoid Survive (New York: Currency Books, 1996), 87.

44. The two principal sources on which I rely for much of my summary are Richard N. Langlois, “External Economies and Economic Progress: The Case of the Microcomputer Industry,” Business History Review, spring 1992, 1–50; and Michael S. Malone, The Microprocessor: A Biography (New York: Springer-Verlag, 1995).

45. Texas Instruments, Press Release, “Standard Calculator on a Chip Announced by Texas Instruments,” September 17, 1971.

46. In addition to the sources in note 44, see also “The Personal Computer Strives to Come of Age,” Economist, May 19, 1979, 101; Apple Computer, “Corporate Timeline —January 1976 to May 1995,” htt­p:/­/pr­odu­ct.­inf­o.a­ppl­e.c­om/­pcb­ack­gro­und­/19­95/­.

47. On Microsoft’s role in the development of the IBM PC, see Daniel Ichbiah, The Making of Microsoft (Rocklin, Calif: Prima, 1993), chap. 9.

48. See Tim Frost, “Multimedia and the Information Superhighway,” Gramophone, July 1996, 158–66.

49. See James Martin, Telecommunications and the Computer (Englewood Cliffs, N.J.: Prentice-Hall, 1990), chap. 32.

50. Joel Dreyfuss, “What Will Send Computers Home,” Fortune, April 2, 1984, 71.

51. Stan Veit, “Helpful Hints on How to Use the Various Communication Networks That Are Available on Your Microcomputer: The Computer Network Maze,” Computers & Electronics, March 1983, 60.

52. Jim Dufly, “Trintex Hatch Plan to Revive Videotex,” MIS Week, March 7, 1988, 20.

53. Harley Hahn and Rick Stout, The Internet Complete Reference (Berkeley, Calif.: McGraw-Hill, 1994), 2.

54. John R. Levine and Carol Baroudi, The Internet for Dummies (San Mateo, Calif.: IDG Books, 1993), 7.

55. For the early history I rely primarily on Katie Hafher and Matthew Lyon, Where Wizards Stay Up Late (New York: Simon and Schuster, 1996).

56. An excellent source on the history of electronic mail is Ian R. Hardy, “The Evolution of ARPAnet email,” History Thesis Paper, University of California, Berkeley (spring 1996).

57. J.C.R. Licklider and Albert Vezza, “Applications of Information Networks, Proceedings of the IEEE 66 (November 1978): 1331.

58. See H. Gilbert, “Introduction to TCP/IP,” htt­p:/­/pe­lt.­cis­.ya­le.­edu­.

59. Robert H. Zakon, “Hobbes Internet Timeline V.2.5,” htt­p:/­/in­fo.­iso­c.o­rg/­gue­st/­zak­on/­int­ern­et/­his­tor­y/h­it.­htm­l.

60. The discussion of hypertext is based on Jakob Nielsen, Multimedia and Hypertext (Cambridge, Mass.: Academic Press, 1995), chaps. 1–3; Steven Baker, “Hypertext Browsing on the Internet,” UNIX Review, September 1994, 21; Tim Berners-Lee et al., “The World Wide Web,” Communications of the ACM, August 1994, 76.

61. See Jon Hill, Jan Ozer, and Thomas Mace, “Real Time Communication,” PC Magazine, October 8, 1996, 102–5; Joint Opposition of Netscape Communications Corp., Voxware Inc., and Insoft Inc., Provision of Interstate and International Interexchange Telecommunications Service via the Internet, F.C.C. Docket, RM 8775, May 8, 1996.

62. George Cole, “World on a Local Line,” Financial Times, November 13, 1996, 21; Norm Alster, “Intel Flexes Its Muscles to Deter Net Access Fees,” Investor’s Business Daily, January 2, 1997, A2; Christopher Libertelli, “Internet Telephony Architecture and Federal Access Charge Reform,” Boston University Journal of Science and Technology Law 2 (May 2, 1996): 13–25.

Chapter 9. Telecommunications Turbulence

  1. Wayne Rasmussen, “The Impact of Technological Change on American Agriculture, 1862–1962,” Journal of Economic History 22 (1962): 578–91.

  2. Paul MacAvoy and James Sloss, Regulation of Transport Innovation (New York: Random House, 1967); Douglas W. Webbink, “The Impact of UHF Promotion: The All-Channel Television Receiver Law,” Law and Contemporary Problems, summer 1969.

  3. Jacob Schmookler, Invention and Economic Growth (Cambridge: Harvard University Press, 1966).

  4. United States v. AT&T, Stipulation/Contention Package, Episode 5, paragraphs 507, 509, 535, 536.

  5. See Ron Goldberg, “The Big Squeeze,” Popular Science, November 1993), 100–103.

  6. “The Spectrum of 1995 Dealmaking,” Mergers & Acquisitions, March/April 1996, 43.

  7. “The Year on the Net,” Wall Street Journal, Interactive Edition, December 9, 1996.

  8. Details on the breakdown of the Bell Atlantic–TCI deal are provided in Paul Wiseman and James Cox, “Information Highway Under Construction,” USA Today, February 25, 1994, 1B; Anthony Ramirez, “Partners in a Failed Merger,” New York Times, February 24, 1994, D6; Dennis K. Neale, Johnnie L. Roberts, and Leslie Cauley, “Why Mega-Merger Collapsed,” Wall Street Journal, February 25, 1994, A1.

  9. Raymond Smith, Speech at Harvard University Business School, March 7, 1994.

10. Peter Coy, “There’ll Be a Heaven for Couch Potatoes, By and By,” Business Week, November 1, 1993, 38.

11. Mike Antonucci, “Bell-TCI Merger Offers a Peek into the Future,” San Jose Mercury-News, October 14, 1993, 1A.

12. David P. Hamilton and Dean Takahashi, “Fearing End of Moore’s Law, Labs Push Chips to the Limit,” Wall Street Journal, December 10, 1996, A1.

13. Steven Lipin and Don Clark, “More High Tech Firms Tying the Knot, Spurred by a Buy-Not-Build Strategy,” Wall Street Journal, May 3, 1996, A3.

14. See “Cable TV: Advanced Technology,” Jones Telecommunications and Multimedia Encyclopedia, htt­p:/­/ww­w.d­igi­tal­cen­tur­y.c­om/­enc­ycl­o/.

15. See Joe S. Bain, Industrial Organization (New York: John Wiley, 1959), 210–18.

16. See generally Janet Wasko, Hollywood in the Information Age (Austin: University of Texas Press, 1994).

17. G. Christian Hill, “Telecom Providers Scramble as Battle of the Bundle Begins,” Wall Street Journal, Interactive Edition, September 16, 1996.

18. John J. Keller, “Why AT&T Takeover of NCR Hasn’t Been a Real Bell Ringer,” Wall Street Journal, September 19, 1995, A1, A5; “Analysts Applaud AT&T’s Move, Suggest Market Overreacted,” CNN, News, September 21, 1995, 6:21 A.M., Transcript no. 1183–3.

19. Details on CATV history are provided in Don R. Le Duc, Cable Television and the F.C.C.: A Crisis in Media Control (Philadelphia: Temple University Press, 1973), 68, 69.

20. 47 U.S.C. 224.

21. Carter Mountain Transmission Corp. v. F.C.C., 375 U.S. 951 (1963).

22. Frontier Broadcasting v. Collier, 24 F.C.C. 251 (1958); Mary Alice Mayer Phillips, CATV: A History of Community Antenna Television (Evanston, 111.: Northwestern University Press, 1972), 57.

23. United States v. Southwestern Cable Co., 392 U.S. 157, 178 (1968).

24. First Report and Order (Cablecasting), 20 F.C.C. 2d 201 (1969). See also Memorandum Order and Opinion (Cablecasting), 23 F.C.C. 2d 825 (1970). The local-content rules were upheld in United States v. Midwest Video Corp., 406 U.S. 649 (1972).

25. Report and Order in Docket 20528, 59 F.C.C. 2d 294 (1976), and F.C.C. v. Midwest Video Corp., 440 U.S. 689 (1979). This case is known as “Midwest Video II,” to distinguish it from the one cited in note 24.

26. Thomas W. Hazlett, “Wired,” New Republic, May 28, 1989, 11–13; James W. Roman, Cable Mania (Englewood Cliffs, N.J.: Prentice-Hall, 1983), 142; John Cooney, “Cable TV’s Costly Trip to the Big Cities,” Fortune, April 18, 1983, 82–88; “Judge Rules Houston Cable Awards Violate Antitrust Law,” Broadcasting, August 13, 1984, 66, 67.

27. ICI, History of TCI, htt­p:/­/ww­w.t­ci.­com­:80­/.

28. See the excellent analysis of the law in Donald J. Boudreaux and Robert B. Ekelund, Jr., “The Cable Television Consumer Protection and Competition Act of 1992: The Triumph of Private Over Public Interest,” Alabama Law Review, winter 1993, 355.

29. Continental Cablevision, “How a Cable System Works,” htt­p:/­/ww­w.c­ont­ine­n-t­al.­com.

30. Brooke Crothers, “Grove Casts Doubts on Cable Modems,” C/NET, May 31, 1996, 1. See also Katie Barnes, “Cable Modems: Fast Pipe or Pipe Dream,” C/NET, http://www.cnet.com; Rose Aguilar and Jeff Pelline, “The Cable Era Begins,” C/NET, September 5, 1996, 1–3; Alex Lash, “Big Bandwidth Finally Here, Sort Of,” C/NET, August 14, 1996, 1–3; Alex Lash, “Cable Service to Hit the Road,” C/NET, August 13, 1996, 1, 2; Jim Connors, “The Evolution of Cable Television to Interactive Communications Service Provider,” htt­p:/­/ww­w.c­atv­.or­g:8­0/m­ode­m/s­un.­htm­l.

31. See Peter Krasilovsky, Interactive Television Testbeds, Benton Foundation Working Paper 7 (n.d.).

32. “The Competition,” C/NET, http://www.cnet.com; “ADSL Tutorial,” http://198.93.24.23/adsl; Debbie Sallee, “Motorola’s Copper Gold ADSL Transceiver Delivers: More, Better, Faster,” htt­p:/­/ww­w.m­ot.­com­/sp­s/m­ctg­/md­ad; Doug Lakin, “An Alternative to ADSL and DBS: LMDS,” Silicon Investor, May 11, 1996, 1; Fred Dawson, “LMDS Poised to Make Significant Inroads,” Interactive Week, January 15, 1996, 1–5.

33. Mark Robichaux, “The Pizza Pan Dishes Fly off the Shelves; Prices Plunge,” Wall Street Journal, November 7, 1996, A1.

34. Edmund L. Andrews, “Communications Bill Signed, and the Battles Begin Anew,”New York Times, February 9, 1996, A1.

35. An excellent discussion of the statute is Peter W. Huber, Michael K. Kellogg, and John Thorne, The Telecommunications Act of 1996 (Boston: Little, Brown, 1996).

36. Joseph A. Schumpeter, Capitalism, Socialism, and Democracy, 3d ed. (New York: Harper & Brothers, 1950), 132.

37. Adam Smith, The Wealth of Nations (1776; reprint, New York: Random House Modern Library, 1937), 423.

38. Aaron Director, “The Parity of the Economic Market Place,” Journal of Law & Economics 7 (October 1964): 2.