The Secret History of the Telephone Network

By Henke, Jon | Reason, August-September 2014 | Go to article overview

The Secret History of the Telephone Network


Henke, Jon, Reason


The public utility model of telecommunications was not as inevitable as it seems today.

The People's Network: The Political Economy of the Telephone in the Gilded Age, by Robert MacDougall, University of Pennsylvania Press, 344 pages, $55

Since the early days of the telegraph, North America has seen titanic struggles to define the government's role in telecommunications. The major players in these battles have been policy makers, progressives, and corporations, and the results, for the most part, have been a sort of mutually beneficial collusion. Progressives got universal service and regulation, corporations got government-backed monopolies and other privileges, and policy makers got another lever of power to pull.

In The People's Network: The Political Economy of the Telephone in the Gilded Age, the Western University historian Robert MacDougall provides a detailed history of how this regulatory-industrial complex took different forms in the United States and Canada from the earliest days of telephone networks in the 1870s to the eventual consolidation of national networks in the 1910s and 1920s.

After the telephone was patented in 1876, the Bell Telephone Company licensed the technology to tiny, local-only exchanges--the first phone directory contained just a few individuals and a few dozen listings-- which were later interconnected (and eventually owned) by the American Telephone 8c Telegraph Company, a Bell subsidiary. From the beginning, the embryonic industry was criticized by people who worried that the telephone system would undermine local autonomy and expose seemingly stable communities to the increasing volatility of the interconnected world around them. Many of the populists who fought against the emerging American Bell system, MacDougall writes, "were hardly the proletariat. Yet they...wrapped their complaints about service and rates in the garb of democratic resistance to monopoly."

These anti-Bell activists advocated "an alternative capitalist order, one more open to cooperative and state-based enterprise." They were joined by smaller competitors, independent telephone operators, and cooperatives that arose throughout the country, frequently in cahoots with municipal authorities attempting to preserve local control over the telephone system.

Such control was sometimes regulatory, sometimes financial, and often both. Across the country, MacDougall writes, local governments "seized what powers they did have-sovereignty over their own streets, sidewalks, and skies--and leveraged those for every advantage they could exact."

[ILLUSTRATION OMITTED]

In 1890, for example, Muncie, Indiana, "passed a 'civic beautification' law that ordered the removal of all telephone poles" from a downtown area where, it so conveniently happened, the local Central Union switching office was located. The Muncie City Council backed down only when the telephone company agreed "to supply free telephone service to the mayor, the fire chief, and every schoolhouse in the city." As MacDougall wryly notes, "Consumer protection and municipal graft, went hand in hand."

Industry learned to play this crony capitalist game. The history of telecommunications is a long story of progressives and populists demanding "public interest" regulations that produce and protect monopolies, followed by progressive and populist demands for regulations to fix the problems that their earlier regulations created. At each step, activists were coached and coaxed by the political and business interests in question.

In the early days, the telephone system was a patchwork of local networks, some built by the Bell system, others by smaller local companies. In one sense, the struggle between Bell--eventually known as AT&T-- and the independents can been seen as a competitive fight for customers, standards, and technologies that eventually died down when the government chose sides. …

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