Archive for February, 2011

Will the Internet Be Closed

Thursday, February 3rd, 2011

The Master Switch, Tim Wu, 2010

Here is a history of the rise and fall of information empires including telephone, radio, television, cable, film, and the Internet. It focuses on the bigger than life empire creators: Theodore Vail of the Bell telephone system, David Sarnoff of the RCA/NBC radio and television empire, Adolph Zukor of Paramount Pictures, one of the five studios comprising the movie empire, and Ted Turner of Turner cable. This history is viewed through the lens of Joseph Schumpeter’s cycle of corporate birth and death he called “Creative Destruction”. Wu argues that these empires did not crumble when a new and destructive innovation emerged but consistently exhibited the “Kronos effect” after the Greek legend of Kronos, the rule of the universe, who so worried that his children would dethrone him that he ate them.

Bell labs invented a devise to record telephone conversations in 1934 using magnetically recorded tape. This invention was so “eaten” by the Bell system that researchers only uncovered the patents in 1990. Magnetic recording which was the foundation of audio and video recording and is still the foundation of mass computer storage depend instead on German patents of a much later time.

David Sarnoff sarnoff Philo Farnsworth farnsworth Edwin Armstrong armstrong

FM radio was invented by Edwin Armstrong of Columbia University in 1934 in work funded by David Sarnoff of RCA. Sarnoff correctly recognized FM as a destructive technological advance and prevented its introduction until the 1970’s when it was carefully introduced under the full control of RCA. Armstrong killed himself in 1954.

Philo Farnsworth invented electronic cathode ray television in 1928 in the San Francisco bay area. Sarnoff sent his top scientist under the guise of consideration an investment to try to uncover the secrets of the invention. Rather than license or buy the patent, RCA labs spent years reinventing television. While Britain and Germany introduced broadcast television by 1935, the US did not see broadcast television until after WWII in 1946 all thanks to the efforts of Sarnoff. After extensive litigation, Sarnoff was forced to license Armstrong’s invention for $1 million in 1939. Sarnoff did prevent television from undermining his radio empire. In an incredible rewriting of history, Sarnoff has been widely recognized as the inventor of both FM and television.

John Baird baird

The British inventor of television, John Baird, would go on to invent high definition analog color television decades before either were introduced. For a time Baird and Armstrong teamed up in Britain but their research was destroyed in the Crystal Palace fire of 1936.

The role of government comes under scrutiny here as well particularly anti trust activity and the mostly tarnished history of the FCC which is charged with regulating communications commerce. To prevent its breakup by active anti trust activities, AT&T agreed in 1913 to divest itself of its Western Electric manufacturing arm and to become a “common carrier” a benign public utility operating in close cooperation with the government to provide universal and non discriminatory telephone service to all Americans. Thus AT&T was allowed to continue its monopoly until the 1970’s when it broke its non discriminatory vow in an attempt to kill MCI, the first real threat to its long lines monopoly. MCI built a backbone using microwave radio but needed to connect through Bell for the “last mile” connections to most customers. AT&T engaged in extensive litigation, discriminatory pricing, and finally thug tactics of damaging MCI equipment and “accidentally” dropping service connections. The Federal government finally had enough and brought anti trust action to break up AT&T in 1984 into eight regional “baby Bells” and AT&T long distance company.

Clay Whitehead Nixon’s Telecommunications Czar Breaks Up Bell whitehead

AT&T in the 1970’s had already lost the battle to prevent foreign devices from being attached to their network when the government ordered them to install standard RJ45 connecting jacks to all their phone lines. After this decision, customers were free to connect their own telephones, answering machines, facsimile machines, and data modems to their phone lines. There was an overnight explosion of equipment and services following this one simple change to the monopoly.

Today AT&T has once again consolidated itself into a near monopoly, merging five of the baby Bells into long distance AT&T. Verizon has its own long distance network and combines two East coast baby Bells. USWest merged with independent QWest to form the third regional telephone company. This new consolidation made the illegal wiretaps requested by W Bush to be implemented on a vast scale. Senator Obama voted to give AT&T and other carriers immunity from prosecution for participating in this illegal activity.

The FCC has a very tarnished record in both telephone and radio television regulation. Except for one brief moment when the FCC opened up spectrum in the early radio days, the FCC has been heavily on the side of entrenched monopolies and against innovation. They have gone out of their way to block new companies and new ideas and to make life as difficult as possible for new entrants like moving the FM spectrum for no technical reason, forcing companies and consumers to discard their old equipment and buy new. The tarnished record continues, in Wu’s view in the approval of the Comcast NBC merger and in the compromised net neutrality provisions.

Paramount’s Adolph Zukor 1929 man of the year zukor

The early Edison film trust used its patents on projectors and cameras to create a monopoly on the early production and distribution of film. But by the 1910’s independent film companies were springing up outside of New York, particularly in Hollywood where they could quickly decamp to Mexico if the trust came after them. The Edison trust emphasis on short (ten minute), cheap (no movie stars) productions quickly fell victim to the more lavish, longer films featuring stars. Five studios emerged in Hollywood and they quickly formed a cartel controlling stars, prices, and distribution. The Hollywood cartel reached its zenith when the studios acquired ownership of virtually all theaters in the hundred largest US markets. Now they could effectively prevent the screening of independent and foreign films. The only movies seem by wide audiences from 1920 through the 1950’s were studio films. Worrying about anti trust breakup, the studio imposed on themselves a bizarre code of self censorship in an attempt to convince the government their product promoted national values and morals. This strategy worked until the late 1940’s when anti trust broke up the studios, ordering them to sell their theaters. What emerged from this breakup was the film industry we have today with producers, distributors, and exhibitors (more and more self exhibits via VHS, DVD, and now Internet streaming.

Ted Turner Television Revolutionary turner

The discussion of cable focuses on the television innovations of Ted Turner (Turner Classic Movies), sports, and CNN. But also emerging are MTV, ESPN, Discovery, Weather, and other specialized cable (or satellite) only channels. But he quickly turns to the attempts at conglomeration, where media companies are combined with film companies with cable companies. He covers the disastrous merger of Time Warner with the dying AOL that destroyed most of Ted Turners fortune. But he also covers the Disney mergers and worries about the effects of an NBC Comcast merger which was completed shortly after the book’s publication.

Paul Baran Inventor of the Packet Network baran

Vinton Cerf Bob Kahn created TCP/IP using Encapsulation cerf kahn

Finally, after all this history of information empires, Wu turns his attention to the Internet with a good brief history of its origins in the ARPANET. The architects reveal that the structure of the Internet was an inevitable outcome of the problem of interconnection so many incompatible machines in the Universities and government. They had to invent and impose a standard protocol TCP/IP that all computers would need to support and implement. Used initially for messaging, it was quickly understood that any digital content could be carried from point to point via the packets and the world wide web, HTML, packet voice and video were invented. Most importantly, the system is open by its very design and architecture. Proprietary computers and products can be attached and used, but the architecture of the Internet itself remains open and free.

WU asks the question that is central to the book: Will the Internet remain free and open or will it succumb to an information empire or cartel who will close the Internet to all but approved content and application? He poses two alternate visions: Apple (closed system) and Google (open system at present).

Cable companies are merging with media giants into ever larger combines with NBC Comcast as the largest yet. Today’s cable companies offer telephone service and broadband Internet in addition to their traditional television broadcasts. To access the Internet today, consumers must have service from a telephone or a cable company. There is some talk of building wireless Internet access networks (WIFI) but beyond a handful of business locations and most motels, WIFI is not a practical way for consumers to get Internet access. Will the telephone companies and cable companies close the Internet (a la China) or leave it open?

Steve Jobs, starting with the creation of the Macintosh in the 1980’s has moved apple from an open to a closed technology company. You needed a special key to open the Macintosh case and were not invited to engineer any add ons to the computer. This was a dramatic change from the Wozniak designed Apple II which was open and its engineering details available to anyone. Jobs has continued the closed designs with ever slicker desirable products including the IPOD, the IPHONE, and now the IPAD. All start with I for Internet, but Jobs view of the Internet is very different from that of open system advocates. With the IPOD, Jobs negotiate special deals with music producers to market their products via a closed ITunes store where the user can purchase a single song to download to his computer and IPOD. The entire system is closed, proprietary, and exclusive. With the IPHONE, Jobs negotiated an exclusive deal with AT&T for two years. Now the IPHONE can be used with a second carrier, Verizon. The IPHONE includes down loadable applications which must be written to Apple specifications and must be approved by Apple and are available for download only from Apple. The latest IPOD now runs many of the IPHONE applications. The IPAD, which by all accounts is another hit for Apple is available in either an IPOD or an IPHONE version. It is an IPOD, IPHONE with a bigger display. What they all have in common as far as the Internet is concerned is that access is filtered by Apple approved applications. For Wu, this is very worrying, since Apple has a propensity to make its exclusive deals with companies having inherently closed system and monopolistic histories.

Google was created as an open system at Stanford using Stanford computing resources. Their professed philosophy of “do no evil” is reminiscent of the professions of AT&T “universal affordable telephone access” and the studio’s self censorship, and NBC and CBS emphasis on values and public service. Wu argues that search is the Internet’s “master switch”, the key to finding Internet content, and that at 65% of Internet search dominance, Google easily qualifies as a monopoly. Will Google remain the benign, neutral presenter of search results or will they evolve into something more ominous? Wu finds it encouraging that Google has not used its vast resources to create access infrastructure or to buy content. They seem content to digitize libraries, offer shared videos (Youtube) and stay away from owning content.

Apple and Google Battle of the Phones jobs schmidt

Apple and Google used to sit on one another’s boards and were quite close. When Apple showed signs of limiting Google with its approved IPHONE applications, Google countered by creating a competing and open operating system based on Linux specifically designed for mobile telephones called Android. Android is now found in a number of manufacturers phones and is being promoted openly by those manufactures as IPHONE killers. Google offers Android free of charge with the only provision that Android phones will offer unfiltered Internet access. Clearly Google is worried about monopolistic limitations on the Internet that AT&T, the cable conglomerates, and Apple may impose to limit free and unfettered access to the Internet. Google attempted to work within the constraints imposed by the Chinese government, decided this wasn’t who they were as a culture and pulled out of China. We hope, with Wu, that this remains who Google is and what they stand for. Google is today’s master switch.