The Master Switch

by Tim Wu

  At first, broadcasters could ignore cable as an irrelevancy at worst and, in extending the reach of broadcast at the margins (a bonus audience for advertisers), a minor help at best. The friction started when enterprising cable operators began to set up shop in larger towns and offer “imports” of channels from other vicinities. The signal-obstructing hills of Pennsylvania, for instance, made it a prime market for cable TV (as they had, interestingly, also for early radio). A small-town operator might offer his customers not just the local broadcasts but Pittsburgh stations as well.

  The fat did not really hit the flame until the late 1950s, however, when the cable operators began to lease time on microwave towers, allowing them to import stations from even farther away. Now mostly supplanted by fiber optic technology, these structures were then cropping up across the country, originally erected to provide a cheap way for radio and television networks to move their signals from one city to another in relay fashion via high frequency microwaves. The real significance of these towers to our larger narrative, however, will be as the first alternative to AT&T’s long lines, a new channel for sending information across the country instantaneously. But so far as broadcast/cable relations were concerned, microwaves were the last straw. The two sides would become the implacable foes they remain to this day.

  The broadcasters banded together to squash cable, or at least beat it back into the boonies. Their campaign would mark another instance of the Kronos effect: an effort by an existing media power to devour a suspected challenger in its infancy.

  The broadcasters were not paranoid: cable was indeed an idea with the power ultimately to destroy broadcasting by stripping it of its audience. By freely importing and exporting stations between cities, the cable operators threatened to fragment what were once fixed, guaranteed audiences for local broadcasters, who enjoyed an effective monopoly and could charge advertisers accordingly. (If there was a chance someone in town was getting their television from a nearby city, the local broadcaster’s claim to audience and thereby revenues was diminished.) The campaign against cable, however, was waged in terms of loftier principles than simple commerce. The broadcasters framed “the cable problem” as a crisis of infringed rights of intellectual property, an attack on free television (cable, unlike broadcast, was from the start by subscription), and even a threat to social mores.

  As one local broadcaster testified in 1958, “We believe that when a community antenna system takes our programs out of the air, without our permission, and sells that program material at a profit—and in many cases, a fantastic profit indeed—this is a violation of our property rights.”4 The copyright complaint was also brought before the U.S. Copyright Office, summarized as follows: “The activities of the CATV operators constitute a ‘clear moral wrong’ comparable to the old practice of ‘bicycling’ movies from one theatre to another in order to get two performances out of a single license.”5 It was the broadcasters’ contention that cable would destroy local media and with it local communities, for the importation of big-city stations would bring with it big-city values. Jack Valenti, Hollywood’s lobbyist, lent moral support from a sister industry, calling cable “a huge parasite in the marketplace, feeding and fattening itself off of local television stations.”6

  In a sense, some of what the broadcasters charged was true, especially in the long run. Cable did in fact virtually destroy the world of “free” television: by 2010, the vast majority of American households would be paying for access to television, either through cable, satellite, or fiber optics. It is also true that the importation of channels made the local broadcaster less important or viable. On the other hand, these local operators were typically affiliates of one of the national networks, making their claim to local legitimacy more a matter of form than of substance.

  In addition to this rhetoric, the broadcasters brought a full-scale legal attack to bear against cable before the federal courts and the FCC. They began by accusing cable of unfair competition and copyright infringement. It is one thing for an individual’s antenna to capture a transmission out of the air, argued the broadcasters, but when a firm retransmits it to thousands of its subscribers, it is “performing” the program without permission, therefore illegally. The broadcasters’ copyright infringement suit went all the way to the Supreme Court, where in Fortnightly Corp. v. United Artists7 in 1968 the Court ruled that the cable operators had done no wrong. The Court’s reasoning was simple, if a bit circular: cable operators were part of the free audience for the work, albeit possessed of an unusually powerful antenna, and their retransmission no more constituted a “performance” under statute than if an apartment building owner had set up an antenna for the benefit of all his tenants. The majority opinion by Potter Stewart (whose famous common sense allowed of pornography, “I know it when I see it”) represented a fairly clear effort on the part of the Warren Court to throw the cable industry a lifeline, despite the anchor of the copyright law.

  But if the courts were hesitant to throw the book at a new industry on behalf of the broadcasters, the FCC would prove much more receptive to the plea. As in the 1930s, the commission was gripped by fear of new technology, and when asked to consider cable, they acted like the farmer who is dismayed by a tractor’s lack of horses. The merits of the innovation—access to dozens of channels and a high quality picture—did not fit their mandate as they saw it, which was to bring free television to the people, improve the quality of what was broadcast, and encourage the rise of as many local stations as possible.

  Cable television just didn’t fit the mission. The technology, moreover, such as it was, came not from Bell Labs, MIT, or some other pedigreed institution, but from a collection of small-town wheeler-dealers—owners of appliance stores, for example, who saw cable as a way to supplement their income. Besides, by the 1960s the FCC had found another idea of what the future of television would be: UHF or Ultra High Frequency broadcasting (also known as the “bottom dial” on old TV sets, before electronic tuners). UHF was similar to VHF, the existing broadcast television, but tended to propagate more weakly.

  Siding with the broadcasters, the FCC began to use its regulatory powers to throttle the cable industry. Its most aggressive move came in 1966, when, having decided that cable posed a threat to the common good, they issued an order barring it from America’s hundred largest cities or towns by population. It was, effectively, a cease and desist order; bringing TV to remote towns was fine, but for the sake of the public interest, cable would not become a major means of distributing television.

  With such operational constraints, investment in cable dried up. And so it was that what had seemed as late as 1968 a classic case of creative destruction in the making, the emergence of a clearly disruptive technology in which even some broadcasters, seeing its inevitability, had already begun to invest, ended with deepening the entrenchment of the established broadcast industry. As the economic historians Stanley Besen and Robert Crandall would later write, “Cable entered the 1970s as a small business relegated principally to rural areas and small communities and held hostage by television broadcasters to the Commission’s hope for the development of UHF.”8 Things could very easily have stayed that way. In many countries, cable television was effectively blocked by regulation, even today reaching just a small percentage of homes. As recently as the 1990s, most Britons received just four broadcast television channels. But American cable’s redeemer was coming, and in a most unlikely guise.

  CABLE’S SAVIORS

  In the annals of television, Fred Friendly is known for having, among other things, collaborated with his close friend Edward R. Murrow to create See It Now on CBS, a totally new type of program that aimed to use the power of network television as a counterweight to political authority. The content varied, but the fundamental idea was to offer a forum for otherwise unheard voices, perhaps the most famous of these being that of Milo Radulovich, a U.S. military officer victimized by Joe McCarthy’s Communist witch hunt. Conceived in a crusading spirit g
oing back at least as far as Upton Sinclair, the show certainly didn’t represent a revolutionary mission for journalists, or for the media for that matter. Yet it was a novelty for network television, and one that would change the face of the medium completely. Friendly would eventually abandon the networks to become a founding advocate of public broadcasting, and by the late 1960s, he was in the vanguard with Smith and others evangelizing for cable.9

  Smith and Friendly were both residents of an American city critically in need of cable TV: New York, or more precisely, Manhattan. Like those who inhabited the mountain towns of Pennsylvania or the West, Manhattanites, caught in the canyons formed by skyscrapers, had difficulty receiving TV broadcasts, and so the cable companies found a ready market. Unsure of where he should stand on the matter, Mayor John Lindsay in 1967 put Fred Friendly in charge of a commission to study cable television in New York.10

  Friendly had slightly less utopian ideas than Smith about the promise of cable. He had by then spent a decade trying to build up public TV as an alternative to the networks, and in cable he saw another means to the same end. His vision was less Smith’s brave new world of radically democratic access to a limitless variety of content, and more a pragmatic way to alleviate the relative scarcity of options. As he described the problem in The Saturday Review:

  What ails us is not too many Brinkleys and Cronkites, not the broadcast executives who favor Nixon … not a conspiracy of white supremacist station owners who will not give minority groups the prime time of day (although there are a few of these). Rather the major restrictive and malevolent force is the absurd shortage of air time.11

  With just three TV channels, producers had to make hard choices, as in 1964, when faced with broadcasting the cash cow I Love Lucy or the congressional hearings on the Vietnam War. Friendly’s vision of public television was of a channel free of commercial considerations and thus always available to serve up “alternative” content. In cable, Friendly saw the same, only more so: a giant, wide-open medium where the public interest could be given its due respecting all sorts of issues, and the people thereby empowered.

  Friendly had identified a new reality of the age of mass information: the power of concentrated media to narrow the national conversation. It may seem paradoxical to suggest that new means of facilitating communication could result in less, not more, freedom of expression. But a medium, after all, is literally something that comes between the speaker and the potential listeners. It can facilitate speech only if it is freely accessible. And if it becomes the means by which most people inform themselves, it can decisively reduce free speech by becoming, whether by malign intent or merely benign effect, the arbiter of who gets heard. It was by such means, Friendly believed, that the shortage of TV stations had given exclusive custody of a “master switch” over speech, creating “an autocracy where a very few citizens are more equal than all the others.”

  Based on this logic, Friendly developed a notion of how cable might cure what was ailing the nation, including electoral politics, an arena in which he thought television had “made the high cost of campaigning an aberration of democracy.” Ralph Smith had a similar hope, prophesying that “CATV could arrest and reverse some ominous developments in American electoral politics.” The two shared the view that the cable system could simply open an extra channel exclusively for politicians to speak to the public. Without the need to spend money on broadcast time just to be heard, all politicians, presumably, could compete on equal footing in the marketplace of ideas.

  The Alfred P. Sloan Foundation, a philanthropic organization founded in 1934 by a former CEO of General Motors, had also become a voice in the debate over cable and went further than Friendly or Smith, proposing a future including both open and partisan cable channels. It would be an expensive arrangement, conceded the Sloan Foundation, but the latter sort of outlet, they theorized, could be “an extremely valuable fund raising instrument, and might well pay its own way.”12 In suggesting the concept of an all-news channel that could also be of use to campaigns, the foundation had perhaps a premonition of the stroke of genius that would give birth to Fox News. But it remains a matter of heated debate whether the existence of such a commercial outlet relieves or exacerbates what Friendly termed “an aberration of democracy.”

  These were some of the great hopes for cable. But the cable dreamers were also mindful of dangers. Should cable come out from under the heel of broadcast, it must not then become a monster in turn. Above all, its champions pressed for some form of common carriage regulation. What this meant exactly wasn’t clear, but there was a general concern that cable should carry content without discrimination, and should be impressed with duties of public service. Friendly, of all the cable evangelists the most cynical about what might go wrong, wrote, rather presciently, “If not regulated, the current Monopoly could give way to a new Tower of Babel, in which a half-hundred voices scream in a cacophonous attempt to attract the largest audience.” It was clear to him that cable could equally be a force for the worse as for the better—and if the former, he predicted, then “a debilitating and decaying force that could one day make us look back at the Sixties as the Golden Age.”

  As Friendly, Smith, and the others championed cable, its true white knight lurked unsuspected in the Nixon White House in the person of Clay Whitehead. At the age of thirty-two, Whitehead had been asked to lead the newly created Office of Telecommunications Policy, from which, working with a now less hostile FCC, he proceeded to launch the initiatives that would untether cable.

  First among these was the creation of the Cabinet Committee on Cable Communications—which, as the name suggests, was a cabinet-level body appointed to decide the future of the cable industry. What’s less predictable, perhaps, is that the Nixon administration’s vision for cable was in some ways almost as idealistic as Friendly’s and Ralph Lee Smith’s. The administration, first of all, wanted to repeal the regulatory blocks imposed on the industry. Yet it also proposed a strict division between ownership of the cable lines and power over programming. The cable operator was to be granted discretion over the content of only one or two channels; the rest would be reserved for public interest programming, or freely available for lease by anyone. This arrangement the Nixon administration called its “separations policy.”13

  One cannot fail to be impressed by the radicalism of the Nixon policy. Both in freeing the cable industry from geographical restrictions on its business and in denying both the federal government and the operators themselves any power over programming, the administration was evincing a hard-core libertarian streak not always associated with a White House that also spied on its enemies. It can’t be accounted for precisely. Possibly the Cabinet Committee’s views were really just those of Clay Whitehead, who, while believing in deregulation, tended to view the cable operators as no less a potential threat to diversity of speech than the government. This wariness of corporate power was also at the heart of his most famous initiative, the so-called Open Skies policy, which permitted any qualified company to launch a satellite, a technological shift that would liberate not only cable but long distance calling, too, as we shall see.*

  Still, one cannot overlook President Nixon’s immediate and personal motivation to help out the cable industry. In an increasingly pernicious ecosystem of information created by his perceived enemies, the networks reporting on the war in Vietnam and Watergate, he had identified their natural predator. The president had already channeled considerable thought and emotion toward the goal of bringing down the networks and their news departments. The logic of giving new freedoms to the cable industry cannot conceivably have been lost on his ceaselessly strategizing mind. And so, unlikely as it may seem, the president better known for threatening the media—his attorney general would infamously warn The Washington Post that its publisher would “get her tit caught in the big fat wringer” if Robert Woodward and Carl Bernstein continued their explosive investigation—must be credited, in part, for one of the greatest liberal
izations of media in postwar history, and for the launch of the cable industry. As a further irony, the Cabinet Committee’s so-called Whitehead Report would come out seven months before Nixon resigned his office.14

  The administration changed, but not the drift of reform. Through the later 1970s, Ford’s and then Carter’s administrations would pick up where Nixon’s left off. The rule requiring the creation of local content was turned into the much less onerous condition of providing “public access” channels. Eventually, as a kind of sop to the networks, the White House would also broker a deal whereby cable television was brought under copyright. Thus by the end of the seventies the cable experiment was in full swing. It remained to be seen, however, what the medium would become.

  * Whitehead was a character of fascinating contradictions. On the one hand, he would be a point man in Nixon’s increasingly fierce battles with the news media over Vietnam and Watergate, imputing to them liberal bias by describing their content with the deathless phrases “elitist gossip” and “ideological plugola.” On the other hand, he was one of five federal officials working behind the scenes to lay the groundwork for Gerald Ford’s presidency as the cauldron of Watergate was boiling over.

  CHAPTER 14

  Broken Bell

  Clay Whitehead, Nixon’s telecommunications czar, became in 1974 the first government official to call openly for an end to the Bell monopoly. Just one month before Nixon’s resignation, he declared, “Unless the would-be monopolist [AT&T] or the public can demonstrate special public policy considerations that justify monopoly, it should not be permitted.” The “antitrust laws,” he said, “should be enforced to ensure that regulatory mechanisms cannot become a haven for escape from competition.”1