How America Got On-Line: Politics, Markets, and the Revolution in Telecommunications

How America Got On-Line: Politics, Markets, and the Revolution in Telecommunications

How America Got On-Line: Politics, Markets, and the Revolution in Telecommunications

How America Got On-Line: Politics, Markets, and the Revolution in Telecommunications

Synopsis

The telecommunications industry is the most dynamic sector of the U.S. economy and a driving force of economic and social change worldwide. In this study of the interplay of technological innovation, entrepreneurship, and public policy, the author of Wrong Number: The Breakup of AT&T traces the telecommunication industry's evolution from the invention of the telegraph to the introduction of the web. In the process he shows how once discrete communications sectors have converged in a new hypercommunications structure that is reshaping the world economy. In its interdisciplinary reach, the book examines engineering, judicial, legislative, and administrative developments as well as the internal policies and external relations of firms such as AT&T. Finally, and with appropriate caution, the author attempts to assess the probable future impact of telecommunications on public life.

Excerpt

The title of composer John Cage autobiography, How to Improve the World (You Will Only Make Matters Worse), captures the sentiment of many observers of the telecommunications industry about government control. Throughout the world there has been a movement toward privatization of telecommunications services and the introduction of competition. Where private monopoly prevailed, as in the United States and the most populous provinces of Canada, there has been a clear trend toward the introduction of competition at every level of service and in every equipment sector. As for public ownership, this book joins in its general rejection. The 1989 fall of the Berlin Wall signaled the dismal failure of public ownership as a system of production and distribution. In the West it is difficult to find an example of a publicly owned enterprise that is operated efficiently. The U.S. Postal Corporation is widely viewed as the American model of everything that is wrong with public ownership.

Rejecting public ownership, however, does not mean that government should play no role in shaping market structure or behavior. I eschew any attempt to provide a general theory distinguishing proper and improper governmental intervention throughout the complex modern economy; this book is about the telecommunications industry and its interfaces with other sectors. A historical view of that industry shows that the relationships between government intervention and market structure are complex and that the appropriate relationship has varied over time. There have been circumstances in which private monopolies subject to certain forms of government regulation or subsidy have resulted in excellent market performance. The static measures of such performance include technological progressiveness, relative efficiency of production, and the level of price relative to production costs. And, of course, these aspects can be measured over time. At times when technology is advancing slowly, the service is homogeneous (plain old telephone service), and there are clear scale economies, monopoly . . .

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