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Communications by wire, an incredibly dynamic market at the turn of the century, became a stagnant, oppressive industry under decades of AT&T rule. The sector began to resemble a small-scale version of the planned economies of the Soviet Union.
But it became a menace when it sought to control every single aspect of “the System”—all handsets, long distance, data communications—ultimately making itself the gatekeeper for all innovation. As a consequence, inventions from magnetic recording
it has been the habit of the Justice Department to identify failures of competition by their effect on prices. In practice, however, not all dangerous arrangements inflate prices. The Edison Trust, one will remember, kept prices low by preventing more sophisticated product development.
Most of the federal government’s intrusions in the twentieth century were efforts at preventing disruption by new technologies in order to usher in a future more orderly, less chaotic.
It was through the FCC’s power that the Nixon administration implemented the first and still the most fundamentally important extant separation: that between carriage and services. It took the form of the FCC’s separating AT&T’s phone system from all the new services that had begun to operate on that network, from computer networking, through the Internet.
If the stories in this book tell us anything, however, it is that the free market can also lead to situations of reduced freedom. Markets are born free, yet no sooner are they born than some would-be emperor is forging chains.
Put another way, we have hardly managed to improve on the Roman conception of virtue in governance.
While there were once distinct channels of telephony, television, radio, and film, all information forms are now destined to make their way increasingly along the master network that can support virtually any kind of data traffic. This tendency, once called “convergence,” was universally thought a good thing, but its dangers have now revealed themselves as well.
