by Tim Wu
THIS IS A BORZOI BOOK
PUBLISHED BY ALFRED A. KNOPF
Copyright © 2010 by Tim Wu
All rights reserved. Published in the United States by Alfred A. Knopf, a division of Random House, Inc., New York, and in Canada by Random House of Canada Limited, Toronto.
www.aaknopf.com
Knopf, Borzoi Books, and the colophon are registered trademarks of Random House, Inc.
Library of Congress Cataloging-in-Publication Data
Wu, Tim.
The master switch : the rise and fall of information empires / Tim Wu.
p. cm.
eISBN: 978-0-307-59465-5
1. Telecommunication—History. 2. Information technology—
History. I. Title.
HE7631.W8 2010
384′.041—dc22 2010004137
v3.1_r3
For Kate
At stake is not the First Amendment or the right of free speech, but exclusive custody of the master switch.
—FRED FRIENDLY
Every age thinks it’s the modern age, but this one really is.
—TOM STOPPARD, The Invention of Love
Contents
Cover
Title Page
Copyright
Dedication
Epigraph
Introduction
PART I The Rise 1. The Disruptive Founder
2. Radio Dreams
3. Mr. Vail Is a Big Man
4. The Time Is Not Ripe for Feature Films
5. Centralize All Radio Activities
6. The Paramount Ideal
PART II Beneath the All-Seeing Eye 7. The Foreign Attachment
8. The Legion of Decency
9. FM Radio
10. We Now Add Sight to Sound
PART III The Rebels, the Challengers, and the Fall 11. The Right Kind of Breakup
12. The Radicalism of the Internet Revolution
13. Nixon’s Cable
14. Broken Bell
15. Esperanto for Machines
PART IV Reborn Without a Soul 16. Turner Does Television
17. Mass Production of the Spirit
18. The Return of AT&T
PART V The Internet Against Everyone 19. A Surprising Wreck
20. Father and Son
21. The Separations Principle
Acknowledgments
Notes
About the Author
Introduction
On March 7, 1916, Theodore Vail arrived at the New Willard Hotel in Washington, D.C., to attend a banquet honoring the achievements of the Bell system.1 Hosted by the National Geographic Society, the festivities were of a scale and grandeur to match American Telephone and Telegraph’s vision of the nation’s future.
The Willard’s dining room was a veritable cavern of splendor, sixty feet wide and a city block long. At one end of the room was a giant electrified map showing the extent of AT&T’s “long lines,” and before it sat more than eight hundred men in stiff dinner clothes at tables individually wired with telephones. Private power mingled with public: there were navy admirals, senators, the founders of Bell, and all of its executives, as well as much of Woodrow Wilson’s cabinet. “From the four corners of the country had come a country’s elite” wrote the Society’s magazine, “to crown with the laurels of their affection and admiration the brilliant men whose achievements had made possible the miracles of science that were to be witnessed.”
Then seventy-one years old, his hair and mustache white, Vail was the incarnation of Bell, the Jack Welch of his time, who had twice rescued his colossal company from collapse. As Alan Stone, Bell’s chronicler, writes, “Few large institutions have ever borne the imprint of one person as thoroughly as Vail’s on AT&T.” In an age when many industrial titans were feared or hated, Vail was widely respected. He styled himself a private sector Theodore Roosevelt, infusing his imperial instincts with a sense of civic duty. “We recognize a ‘responsibility’ and ‘accountability’ to the public on our part,” wrote Vail, as the voice of AT&T, “which is something different from and something more than the obligation of other public service companies not so closely interwoven with the daily life of the whole community.” Serving whatever good, his taste for grandeur was unmistakable. “He could do nothing in a small way,” writes his biographer, Albert Paine. “He might start to build a squirrel cage, but it would end by becoming a menagerie.” Thomas Edison said of him, simply, “Mr. Vail is a big man.”2
“Voice voyages” was the theme of the Bell banquet. It would be a riveting demonstration of how AT&T planned to wire America and the world as never before, using a technological marvel we now take for granted: long distance telephone calls.
After dinner, the guests were invited to pick up their receivers from the phones resting on the table. They would travel over the phone line to El Paso, on the Mexican border, to find General John Pershing, later to command the American forces in World War I.
“Hello, General Pershing!”
“Hello, Mr. Carty!”
“How’s everything on the border?”
“All’s quiet on the border.”
“Did you realize you were talking with eight hundred people?”
“No, I did not,” answered General Pershing. “If I had known it, I might have thought of something worthwhile to say.”
The audience was visibly stunned. “It was a latter-day miracle,” reported the magazine. “The human voice was speeding from ocean to ocean, stirring the electric waves from one end of the country to the other.”
The grand finale was a demonstration of Bell’s newest and perhaps most astonishing invention yet: a “wireless telephone,” the ancestor of our mobile phone, of which, by 1916, Bell already had a working prototype. To show it off, Bell mounted what might be called one of history’s first multimedia presentations, combining radio, the phonograph, the telephone, and the motion picture projector—the most dazzling inventions of the early twentieth century.
Miles away, in a radio station in Arlington, a record player began “The Star-Spangled Banner.” The sound came wirelessly to the Willard banquet hall over the eight-hundred receivers, while a motion picture projector beamed a waving Old Glory onto a screen. The combination of sight and sound “brought the guests to their feet with hearts beating fast, souls aflame with patriotism, and minds staggered.” AT&T, it seemed, had powers to rival the gods: “Perhaps never before in the history of civilization,” opined National Geographic, had “there been such an impressive illustration of the development and power of the human mind over mundane matter.”
It may seem a bit incongruous to begin a book whose ultimate concern is the future of information with a portrait of Theodore Vail, the greatest monopolist in the history of the information industries, basking in the glories of the nation’s most vital communications network under his absolute control. After all, these are far different times: our own most important network, the Internet, would seem to be the antithesis of Vail’s Bell system: diffusely organized—even chaotic—where his was centrally controlled; open to all users and content (voice, data, video, and so on.) The Internet is the property of no one where the Bell system belonged to a private corporation.
Indeed, thanks mainly to this open character of the Internet, it has become a commonplace of the early twenty-first century that, in matters of culture and communications, ours is a time without precedent, outside history. Today information zips around the nation and around the globe at the speed of light, more or less at the will of anyone who would send it. How could anything be the same after the Internet Revolution? In such a time, an information despot like Vail might well seem antediluvian.
Yet when we look carefully at the twentieth century, we soon find that the Internet wasn’t the fir
st information technology supposed to have changed everything forever. We see in fact a succession of optimistic and open media, each of which, in time, became a closed and controlled industry like Vail’s. Again and again in the past hundred years, the radical change promised by new ways to receive information has seemed, if anything, more dramatic than it does today. Thanks to radio, predicted Nikola Tesla, one of the fathers of commercial electricity, in 1904, “the entire earth will be converted into a huge brain, as it were, capable of response in every one of its parts.” The invention of film, wrote D. W. Griffith in the 1920s, meant that “children in the public schools will be taught practically everything by moving pictures. Certainly they will never be obliged to read history again.” In 1970, a Sloan Foundation report compared the advent of cable television to that of movable type: “the revolution now in sight may be nothing less … it may conceivably be more.” As a character in Tom Stoppard’s The Invention of Love, set in 1876, remarks, “Every age thinks it’s the modern age, but this one really is.”3
Each of these inventions to end all inventions, in time, passed through a phase of revolutionary novelty and youthful utopianism; each would change our lives, to be sure, but not the nature of our existence. For whatever social transformation any of them might have effected, in the end, each would take its place to uphold the social structure that has been with us since the Industrial Revolution. Each became, that is, a highly centralized and integrated new industry. Without exception, the brave new technologies of the twentieth century—free use of which was originally encouraged, for the sake of further invention and individual expression—eventually evolved into privately controlled industrial behemoths, the “old media” giants of the twenty-first, through which the flow and nature of content would be strictly controlled for reasons of commerce.
History shows a typical progression of information technologies: from somebody’s hobby to somebody’s industry; from jury-rigged contraption to slick production marvel; from a freely accessible channel to one strictly controlled by a single corporation or cartel—from open to closed system. It is a progression so common as to seem inevitable, though it would hardly have seemed so at the dawn of any of the past century’s transformative technologies, whether telephony, radio, television, or film. History also shows that whatever has been closed too long is ripe for ingenuity’s assault: in time a closed industry can be opened anew, giving way to all sorts of technical possibilities and expressive uses for the medium before the effort to close the system likewise begins again.
This oscillation of information industries between open and closed is so typical a phenomenon that I have given it a name: “the Cycle.” And to understand why it occurs, we must discover how industries that traffic in information are naturally and historically different from those based on other commodities.
Such understanding, I submit, is far from an academic concern. For if the Cycle is not merely a pattern but an inevitability, the fact that the Internet, more than any technological wonder before it, has truly become the fabric of our lives means we are sooner or later in for a very jarring turn of history’s wheel. Though it’s a cliché to say so, we do have an information-based economy and society. Our past is one of far less reliance on information than we experience today, and that lesser reliance was served by several information industries at once. Our future, however, is almost certain to be an intensification of our present reality: greater and greater information dependence in every matter of life and work, and all that needed information increasingly traveling a single network we call the Internet. If the Internet, whose present openness has become a way of life, should prove as much subject to the Cycle as every other information network before it, the practical consequences will be staggering. And already there are signs that the good old days of a completely open network are ending.
To understand the forces threatening the Internet as we know it, we must understand how information technologies give rise to industries, and industries to empires. In other words, we must understand the nature of the Cycle, its dynamics, what makes it go, and what can arrest it. As with any economic theory, there are no laboratories but past experience.
Illuminating the past to anticipate the future is the raison d’être of this book. Toward that end, the story rightly begins with Theodore Vail. For in the Bell system, Vail founded the Ur—information network, the one whose working assumptions and ideology have influenced every information industry to follow it.
Vail was but one of many speakers that evening at the Willard, along with Alexander Graham Bell and Josephus Daniels, secretary of the navy. But among these important men, Vail was in a class by himself. For it was his idea of enlightened monopoly in communications that would dominate the twentieth century, and it is an idea whose attraction has never really waned, even if few will admit to their enduring fondness for it. Vail believed it was possible to build a perfect system and devoted his life to that task. His efforts and the history of AT&T itself are a testament to both the possibilities and the dangers of an information empire. As we shall see, it is the enigma posed by figures like Vail—the greatest, to be sure, but only the first of a long line of individuals who sought to control communications for the greater good—that is the preoccupation of this book.
Vail’s ideas, while new to communications, were of his times. He came to power in an era that worshipped size and speed (the Titanic being among the less successful exemplars of this ideal), and in which there prevailed a strong belief in both human perfectibility and the unique optimal design of any system. It was the last decades of Utopia Victoriana, an era of faith in technological planning, applied science, and social conditioning that had seen the rise of eugenics, Frederick Taylor’s “scientific management,” socialism, and Darwinism, to name but a few disparate systematizing strains of thought. In those times, to believe in man’s ability to perfect communications was far from a fantastical notion. In a sense, Vail’s extension of social thinking to industry was of a piece with Henry Ford’s assembly lines, his vision of a communications empire of a piece, too, with the British Empire, on which the sun never set.4
Vail’s dream of a perfected, centralized industry was predicated on another contemporary notion as well. It may sound strange to our ears, but Vail, a full-throated capitalist, rejected the whole idea of “competition.” He had professional experience of both monopoly and competition at different times, and he judged monopoly, when held in the right hands, to be the superior arrangement. “Competition,” Vail had written, “means strife, industrial warfare; it means contention; it oftentime means taking advantage of or resorting to any means that the conscience of the contestants … will permit.” His reasoning was moralistic: competition was giving American business a bad name. “The vicious acts associated with aggressive competition are responsible for much, if not all, of the present antagonism in the public mind to business, particularly to large business.”5
Adam Smith, whose vision of capitalism is sacrosanct in the United States, believed that individual selfish motives could produce collective goods for humanity, by the operation of the “invisible hand.” But Vail didn’t buy it. “In the long run … the public as a whole has never benefited by destructive competition.” Smith’s key to efficient markets was Vail’s cause of waste. “All costs of aggressive, uncontrolled competition are eventually borne, directly or indirectly, by the public.” In his heterodox vision of capitalism, shared by men like John D. Rockfeller, the right corporate titans, monopolists in each industry, could, and should, be trusted to do what was best for the nation.6
But Vail also ascribed to monopoly a value beyond mere efficiency and this was born of a high-mindedness that was his own. With the security of monopoly, Vail believed, the dark side of human nature would shrink, and natural virtue might emerge. He saw a future free of capitalism’s form of Darwinian struggle, in which scientifically organized corporations, run by good men in close cooperation with the government, would serve the public best.
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Henry Ford wrote in My Life and Work that his cars were “concrete evidence of the working out of a theory of business”; and so was the Bell system the incarnation of Vail’s ideas about communications. AT&T was building a privately held monopoly yet one that pledged commitment to the public good. It was building the world’s mightiest network, yet it promised to reach even the humblest American with a telephone line. Vail called for “a universal wire system for the electrical transmission of intelligence (written or personal communication), from every one in every place to every one in every other place, a system as universal and as extensive as the highway system of the country which extends from every man’s door to every other man’s door.” As he correctly foretold at that dinner, one day “we will be able to telephone to every part of the world.”7
As he spoke at the National Geographic banquet, Vail was just four years from death. But he had already realized an ideology—the Bell ideology—and built a system of communications that would profoundly influence not just how people spoke over distances, but the shape of the television, radio, and film industries as well: in other words, all of the new media of the twentieth century.
To see specifically how Vail’s ideology shaped the course of telephony and all subsequent information industries—serving as, so to speak, the spiritual source of the Cycle—it will be necessary to tell some stories, about Vail’s own firm and others. There are, of course, enough to fill a book about each, and there have been no few such volumes. But this book will focus on chronicling the turning points of the twentieth century’s information landscape: those particular, decisive moments when a medium opens or closes. The pattern is distinctive. Every few decades, a new communications technology appears, bright with promise and possibility. It inspires a generation to dream of a better society, new forms of expression, alternative types of journalism. Yet each new technology eventually reveals its flaws, kinks, and limitations. For consumers, the technical novelty can wear thin, giving way to various kinds of dissatisfaction with the quality of content (which may tend toward the chaotic and the vulgar) and the reliability or security of service. From industry’s perspective, the invention may inspire other dissatisfactions: a threat to the revenues of existing information channels that the new technology makes less essential, if not obsolete; a difficulty commoditizing (i.e., making a salable product out of) the technology’s potential; or too much variation in standards or protocols of use to allow one to market a high quality product that will answer the consumers’ dissatisfactions.