by Tim Wu
Let’s return to Hickman’s magnetic tape and the answering machine. What’s interesting is that Hickman’s invention in the 1930s would not be “discovered” until the 1990s. For soon after Hickman had demonstrated his invention, AT&T ordered the Labs to cease all research into magnetic storage, and Hickman’s research was suppressed and concealed for more than sixty years, coming to light only only when the historian Mark Clark came across Hickman’s laboratory notebook in the Bell archives.
“The impressive technical successes of Bell Labs’ scientists and engineers,” writes Clark, “were hidden by the upper management of both Bell Labs and AT&T.” AT&T “refused to develop magnetic recording for consumer use and actively discouraged its development and use by others.”5 Eventually magnetic tape would come to America via imports of foreign technology, mainly German.
But why would company management bury such an important and commercially valuable discovery? What were they afraid of? The answer, rather surreal, is evident in the corporate memoranda, also unearthed by Clark, imposing the research ban. AT&T firmly believed that the answering machine, and its magnetic tapes, would lead the public to abandon the telephone.
More precisely, in Bell’s imagination, the very knowledge that it was possible to record a conversation would “greatly restrict the use of the telephone,” with catastrophic consequences for its business. Businessmen, for instance, the theory supposed, might fear the potential use of a recorded conversation to undo a written contract. Tape recorders would also inhibit discussing obscene or ethically dubious matters. In sum, the very possibility of magnetic recording, it was feared, would “change the whole nature of telephone conversations” and “render the telephone much less satisfactory and useful in the vast majority of cases in which it is employed.”6
And so we see that the enlightened monopolist can occasionally prove a delusional paranoid. True, once magnetic recording arrived in America, there were a few, from Nixon to Lewinsky, whose sordid secrets would be exposed by it. But, amazingly enough, we all still use telephones. Such are the liabilities of being subject to the whim of even the most high-minded corporation: even the fantasy that the fate of the company could be at stake can have significant consequences. It was safer to shut down a thrilling line of research than to risk the Bell system.
This is the essential weakness of a centralized approach to innovation: the notion that it can be a planned and systematic process, best directed by a kind of central intelligence; that it is simply a matter of assembling all the best minds and putting them to work in unison. Were it so, the future could be planned and executed in a scientific manner.
Yes, Bell Labs was great. But AT&T, as an innovator, bore a serious genetic flaw: it could not originate technologies that might, by the remotest possibility, threaten the Bell system. In the language of innovation theory, the output of the Bell Labs was practically restricted to sustaining inventions; disruptive technologies, those that might even cast a shadow of uncertainty over the business model, were simply out of the question.
The recording machine is only one example of a technology that AT&T, out of such fears, would for years suppress or fail to market: fiber optics, mobile telephones, digital subscriber lines (DSL), facsimile machines, speakerphones—the list goes on and on. These technologies, ranging from novel to revolutionary, were simply too daring for Bell’s comfort. Without a reliable sense of how they might affect the Bell system, AT&T and its heirs would deploy each with painfully slow caution, if at all.
Perhaps the response seems less neurotic if we consider how deep-seated can be the apprehension of the Kronos effect. Not for nothing would the Bell system prove itself among the best defended and most secure monopolies in corporate history. Whatever the opportunity inherent in new technology, there was always also a threat, one that prudence demanded be devoured at birth. Bell’s own genesis had proved that bit of wisdom. In 1876, Alexander Bell had patented the machine that eventually dethroned and replaced what was then the nation’s greatest corporation, Western Union. What charm of the new can possibly rival the instinct for self-preservation? Certainly not a plastic cup.
THE TRIAL OF INNOVATION
Thus did AT&T in deadly earnest go about hushing the Hush-A-Phone. At the two-week trial (technically a hearing), the company showed up with dozens of attorneys, including a top litigator from New York City, and no few expert witnesses. Legal representatives of each of the twenty-one regional Bells came as well, necessitating that extra seats be installed in the hearing room—bleachers for AT&T’s lawyers. On Hush-A-Phone’s side were Harry Tuttle, his lawyer, the acoustics professor Leo Beranek, and one expert witness, a man named J.C.R. Licklider.7
Bell’s lawyers mounted a powerful assault against the cup and the cup-bearing company itself. The argument was that the Hush-A-Phone posed substantial harm to telephone service, and at the same time, that the company by that same name, in selling a useless device, was essentially perpetrating a fraud on the public. Bell led with a Bell Labs engineer, W. H. Martin, who set out to show that the Hush-A-Phone impaired telephone service. According to his tests, it created a “transmission loss” of 13 decibels and “receiving loss” of 20 decibels. The loss, he said, was greater “than the total of all the improvements which have been incorporated in the Bell System handsets and the accompanying station apparatus for a period of over 20 years.”
The next Bell witness, AT&T vice president John Hanselman, testified more broadly in favor of Bell’s ban on “foreign attachments,” justifying it in terms of the public good and AT&T’s stewardship of the telephone system. It was among the firm’s duties to protect the consumer from such useless gimmicks, he maintained. And if there was any use to a Hush-A-Phone, he suggested, unembarrassed by his own casuistry, AT&T would have invented and marketed it. Nor was uselessness the gravest threat. Foreign attachments created outside Bell’s design and control standards posed all manner of hazard, including power surges up the phone lines that might electrocute Bell repairmen and send them falling to their deaths. On cross-examination by Tuttle’s lawyer, Hanselman finally conceded that such a calamity had never occurred. But, he insisted, there is always a first time.
Like the next Bell witness, Hanselman also testified that there was no demand for a voice silencer in any case. If there were, as a reporter summarized his perfect corporate smugness, “it would clearly be brought to his attention.” The proof was that hardly anyone was actually using the Hush-A-Phone, and so the consequences of banning it were furthermore negligible. That there might be some good in the operation of the free market per se simply did not figure in his conceptual universe: “It would not be feasible,” he told the FCC, “to allow customers to buy devices on the open market.”
AT&T’s counsel left no stone unturned, subsequent witnesses reaffirming the same points made by earlier ones, until finally, one made the startling charge that the Hush-A-Phone was unhygienic. As related in Telecommunications Reports, “Mr. Burden [stated] that he had sufficient experience as a plant man cleaning the cone-shaped transmitters formerly used by operators to realize that a receptacle such as the Hush-A-Phone would collect food particles, odors, and whatnot over a period of time.”
With that, AT&T rested its case.
The theory of Hush-A-Phone’s case was, in bald contradiction to AT&T’s claims, that the phone silencer was indeed an effective and useful device, and one that AT&T didn’t offer. As such, it was of no potential harm to consumers or to the telephone system or its representatives. Testifying first, Henry Tuttle presented the FCC with a list of reasons why customers might want a telephone silencer. Sanity was one, the reduction of office noise being “important to the mental health of employees,” in his view. Privacy was another, a necessity for many professionals and businessmen, which claim he supported with a list of Hush-A-Phones in use in Washington, D.C., including a number in congressional committee rooms. In addition, Tuttle distributed a collection of testimonials called “Phone Conversations Overheard,
” a compilation of cautionary tales was included the woeful story of one man who’d been disinherited when his uncle overheard his nephew making unflattering remarks about him on the telephone. If only he’d had a Hush-A-Phone …
But the strongest part of Hush-A-Phone’s case was the technical aspect. In addition to Beranek, who already enjoyed some eminence, Tuttle brought in, on his designer’s advice, a friend of Beranek’s from army days who was now a professor at Harvard, one J.C.R. Licklider. The pair of academics, who will reappear later in their better-known identities as the founders of the Internet, “gave the hearing,” according to one reporter, “a somewhat ivy-covered atmosphere, taking the spectators and participants back to their college days.”8 But more importantly, they lent an air of unimpeachable authority. Beranek and Licklider, also an expert on acoustics, had run a battery of tests on the silencer, demonstrating that conversations conducted with it remained satisfactorily audible while effectively free from eavesdroppers. This proof did not prevent Bell’s lawyers from launching a fierce and lengthy cross-examination, resulting in numbingly complex disagreements about the means of testing word articulation quality. Still, Licklider’s report had provided actual data bearing on the question of intelligibility, whereas the counterargument depended on some abstract claim of “transmission loss.”
It is worth pausing to observe that as Bell’s lawyers squared off against Licklider and Beranek over technology, the world was witnessing, unbeknownst to anyone, even the combatants, the first of many engagements between AT&T and the Internet’s founders—in effect, the Fort Sumter, so to speak, in the epic fight between those later to be called the “Net-heads” (backers of the Internet) and the “Bellheads.” Never mind that it was 1950 and they were arguing over a plastic cup sold in classified ads.
To close their case, the Hush-A-Phone team offered dramatic demonstration to rival O.J.’s bloody glove. Tuttle called his secretary and asked her to speak into a telephone receiver, first with, then without the Hush-A-Phone attached. In accordance with Licklider’s findings, the device did indeed alter the acoustics of the telephone transmission, making it sound more “boomy.” Yet, as was evident to all, the speech remained intelligible. The Hush-A-Phone, in other words, indubitably worked.
ONE MIND OR MANY?
Bell was right about one thing at least: the Hush-A-Phone wasn’t terribly popular, and it showed few signs of catching on. To understand AT&T’s all-out response as more than merely neurotic, then, one must see the device not for what it was but for what it represented: a threat to the system, and by extension to a sanctified method of innovation. The device itself did not so much effect as foreshadow an intolerable loss of control. It might have failed per se and yet encouraged people to attach all manner of other devices to the telephone, thus coming to see Bell’s technological holy of holies as something anyone could tamper with. It might even lead to a future in which people purchased their own telephones!
Here, then, we come to the second weakness that afflicts centralized systems of innovation: the necessity, by definition, of placing all control in a few hands. This is not to say that doing so holds no benefit. To be sure, there is less “waste”: instead of ten companies competing to develop a better telephone—reinventing the wheel, as it were, every time—society’s resources can be synchronized in their pursuit of the common goal. There is no duplication of research, with many laboratories chasing the same invention. (That avoidance of redundancy in applying brain capital should sound familiar from Vail’s philosophy of industrial organization: centralized innovation is the R&D sibling of monopoly, with the same type of claim to efficiency.) Yet if all resources for solving any problem are directed by a single, centralized intelligence, that mastermind has to be right in predicting the future if innovation is to proceed effectively. And that’s the problem: monopoly presumes a prescience that humans are seldom capable of.
AT&T and other proponents of centralized innovation assumed the future of the telephone system to be not only knowable, but indeed known. As Beranek put it, “Bell had created the best telephone system in the world. They had the big laboratory. Their attitude was, we don’t need you.” Bell never missed a chance to assert its need to control every single working part of the system. As it enunciated the need in its legal briefs:
It would be extremely difficult to furnish “good” telephone service if telephone users were free to attach to the equipment, or use with it, all of the numerous kinds of foreign attachments that are marketed by persons who have no responsibility for the quality of telephone service but are primarily interested in exploiting their products.9
Quality control, by such lights, depended on control of every other kind.
Unfortunately, it would be decades before innovation theorists challenged this Bell orthodoxy. In the 1980s, the economists Richard Nelson and Sidney Winter examined the record of human innovation and devised what is now called the “evolutionary” model of innovation. Their thesis implied that in fact innovation is much more a process of trial and error than theretofore imagined. General human ignorance about the future leads to a great many human errors. Furthermore, the human element always introduces an irrationality, even to the point of such paranoia as Bell evinced concerning magnetic recording. Thus if everything is entrusted to a single mind, its inevitable subjective distortions will distort, if not altogether disable, the innovation process. By contrast, Nelson and Winter argued, the most rapid or efficient innovation typically results when the widest range of variations are proposed and the invisible hand of competition, as proxy of the future, picks among them. It is rather like Darwin’s idea of the relative fitness of individuals in determining the evolution of species, and like natural selection it depends on the power of accidents.10
Hush-A-Phone was a forerunner in this latter-day approach to innovation. Looking at the telephone and AT&T’s network, Tuttle saw what we today would call an innovation platform. In other words, the Bell system was something that people could and should try to improve, with add-ons and new features. The innovation Tuttle envisioned was privacy, but other outsiders would imagine devices that could answer the phone and transmit images or other forms of data. But AT&T believed that if phone subscribers wanted privacy, they could cup their hands over the receiver.
The irony of the Hush-A-Phone affair is that no company should have understood the importance of outside invention better than Bell, whose eponymous founder was the very archetype of the outsider bearing long-shot ideas that turn out to shape the future. Yet by the 1950s AT&T had left the spirit of Alexander Bell behind. Or perhaps, more ominously, Bell understood that its inevitable downfall would come at the hands of one exactly like its founder, and the only strategy was to temporize. Eventually, a meal gets away even from Kronos.
HUSH-A-PHONE DECIDED
Bernard Strassburg, chief counsel to the FCC during the Hush-A-Phone trial, considered the result of the proceedings to be preordained. “In my view, Tuttle’s prospects of winning his case before the FCC were, from the start and without court intervention, virtually nil,” he would write. “It was the conviction of the FCC and its staff that they shared with the telephone company a common responsibility for efficient and economic public telephone service and that this responsibility could only be discharged by the carrier’s control of all facilities that made up the network supplying that service.”11
After the hearing in 1950, the FCC sat on the Hush-A-Phone case for five years. Federal agencies have some discretion about when they will decide things, and the FCC elected to stall, allowing AT&T to continue its ban on foreign attachments. It was not until late in 1955 that the FCC issued a brief decision.
AT&T, the federal agency decided, had been right: the Hush-A-Phone was indeed a danger to the telephone system and a nuisance to consumers—“deleterious to the telephone system and injures the service rendered by it,” in the words of the report. More generally, the FCC held that “the unrestricted use of foreign attachments … may resu
lt in impairment to the quality and efficiency of telephone service, damage to telephone plant and facilities, or injury to telephone company personnel.”12 The preposterous image of the electrified repairman had apparently sunk in.
The decision was painful and expensive for Tuttle, who had financed the lawsuit himself and devoted years to the case to no avail. When he heard the news Beranek contacted Tuttle and forswore any further royalties due him for inventing the silencer. “I just felt bad for him.” With little left to lose, Tuttle decided to go for broke and appeal the FCC’s decision, again at his own expense. Arguments were heard, and one year later, in 1956, eight years after Tuttle’s initial FCC filing, the D.C. court of appeals released its decision. The panel of federal judges, headed by David Bazelon, reversed the commission and vindicated Tuttle and the Hush-A-Phone.
In a scene reminiscent of the conclusion of Lord of the Flies, the D.C. court administered the judicial version of a reality check on Bell’s tortured logic: “To say that a telephone subscriber may produce the result in question by cupping his hand and speaking into it,” wrote Judge Bazelon, “but may not do so by using a device … is neither just nor reasonable.”13 The court also admonished the FCC for delaying its decision for five years. Finally, in one crucial phrase—one that in time would unravel AT&T, the phrase, in fact, that would result in its eventual breakup—Judge Bazelon affirmed that the subscriber has the “right reasonably to use his telephone in ways which are privately beneficial without being publicly detrimental.”14
With Hush-A-Phone’s modest victory, the door was cracked not only to every manner of ancillary device in the 1970s, but, as we shall see, to the collapse of Bell’s once indomitable empire. Though not without a battle royal: if AT&T was willing to launch a thousand ships to ward off a plastic cup, one can imagine the force that would be brought to bear against a genuine rival in the form of MCI. But in 1956 that eventuality was as yet in the distant future.