Hell's Bells: A Radio History of the Telephone; No. 5

Big, powerful monopolies that used to have it all are worried because the monopoly they have is not everything anymore. The only remaining medium of mass communication in this country to which we all have a legally enforceable right of access is the telephone system. The explosion of communications in that mid to late 70s timeframe, 77, 78, 79. Many people communicating on a more one on one. Kind of basis, since technology is changing so rapidly, if it becomes a political debate and I think any existing entrenched competitor, fierce competition. Hell's Bells: A radio history of the telephone. Over the last 10 years since the breakup of AT&T, we have seen an explosion

in the number and variety of telephone based information services. Some are designed to sell a product. Others distribute information for a fee, and still others are designed to save a company money by automating some front desk operations. Welcome to tell a broker tell a broker in an automated telephone brokerage service you can play stock trades. Just two decades ago, it would have been impossible for anyone but AT&T to attach such a service to the network. Now anyone can operate their own messaging, fax data, audio imaging or any kind of service from their phone lines. With the divestiture of the Bell operating companies from AT&T in 1984, the seven Baby Bells were restricted from long distance manufacturing and information services. These were to be the domain of AT&T and its competitors. But over these last 10 years, the monopoly bells have fought hard to enter these fields, especially information services. Kathy Blankenship of Pacific Bell was director of a marketing strategy group looking

for ways to enter the enticing world of information services. You know, I think there was a lot of looking across the ocean to France, especially. France had had the most outdated telephone system at one time. And all of a sudden around that time frame, we're hearing about the tremendous success of the Minitel system. And they had actually gone in and given away you dumb terminals to consumers and had information services and they were making lots of money in that sort of thing. And in a lot of our policymakers in the United States were going over there and looking at that and saying, why don't we have that kind of infrastructure in this country? What's preventing it? And they were asking that question of a lot of different companies and organizations. We had the consumer advisory panel looking at how could the information age be brought to California, working with Pacific Bell around that time frame, the consumer advisory panel was known

as the Intelligent Network Task Force and was made up of influential community leaders. Pacific Bell gave each of them a Macintosh computer, a free calling card, a travel budget staff support and a mission publish a vision, a call to action about the telcos possible role in establishing a unified infrastructure for schools, homes, business, government and community groups. Their report was given wide circulation throughout the U.S. and served as a template for a national grassroots lobbying effort. The panel's vision was met with a mostly sympathetic company response and eventually was digested and absorbed into what is today's corporate vision dubbed the Knowledge Network. The idea was to facilitate computing networks, distance learning and more efficient school administration through centralized facilities designed and controlled by the local telephone company here. There were vestiges of the traditional monopoly mindset.

Pacific Bell professed that social needs would be far better served if the educational software were all housed in the intelligent network, in other words, down in a brick building owned by the telephone company. This made far better sense to them than the vision of desktop computing, with the power distributed on desktops and the software distributed on disk. Why, they asked, are there no phone lines into classrooms? While computer companies showered schools with PCs and software, Pacific Bell used its educational rhetoric as a strategy to sell school districts on the benefits of contracts. And I think the fundamental question was, gee, we're hearing so much about technology and we're looking at other countries and they're using technology. And the computer is supposed to be a wonderful thing. But there isn't a computer in every household and the computers aren't all linked together. And why isn't that happening? And so we got into a lot of discussions about what benefit,

what value add could the local exchange companies bring, particularly to information services? If we were allowed in and there was a lot of discussion about the concept of a gateway where it would be the analogy that we used was the operator when the telephone was first invented. If people needed to get to somebody else, there was always that operator there to make the connection to provide the axis of the assistance, to console and to navigate for that user. I mean, when the telephone was first invented, Bell and his compadres used to send out lists of what you could do with the telephone. And we kind of got into the same kind of thing, you know, what could you do if you had the technology to use information services? What kinds of things could you have? Medical imaging, remote X-ray diagnostics that were, you know, lists and lists and lists of the kinds of things that could be done that would be facilitated

by this gateway. And some of the discussions actually led to some of the freedoms that we did actually achieve from Judge Greensward. Our own information services, restrained by the terms of the consent decree, the Bell companies have lobbied long and hard in Congress, using special 800 numbers to pound the Capitol with constituent phone calls and telegrams. Their sometimes shrill message has been, You can't do this without us. The information age will miscarry if our hands remain tied by artificial legal restrictions. Their agenda in their vision of of this information revolution are utter nonsense. Audrey Kraus is executive director of Turn toward Utility Rate Normalization, an influential San Francisco based consumer group which scrutinizes the complex financial maneuvers of Pacific Bell.

If you allow the regional Bell operating companies to dump the cost of of upgrading the network to an entirely fiber optic system at the expense of ratepayers, you will price basic phone service out of the affordable range for probably a majority of Americans. And I think what's really going on is that big, powerful monopolies that used to have it all are worried because the monopoly they have is not everything anymore. It's one very important part of our telecommunications infrastructure, the basic part of it, the connection we all get to the telephone system. And my feeling is that ought to be good enough for them and they ought to do a good job of running that and running it at low cost and making it work for everybody. And if they would refocus their goal on that and on truly getting to the point of universal, affordable telephone

service, let private enterprise take care of the rest of it because it's out there. And if there's a demand for services, somebody is going to provide it and it's going to be able to do so at a competitive price. And certainly there will be winners and losers in the competitive marketplace. But those winners and losers should be funded by people who are willing to risk their capital through the the stock market. Any rate payers don't want the price of basic service to pay for fancy new information services. But the definition of basic affordable service may be gradually changing, evolving to include more sophisticated connections between homes, businesses, government institutions and schools, connections that would be available to everyone at low cost. Andrew Jay Schwartzman is an attorney with the Media Access Project in Washington, D.C., a group which speaks up for the public interest in the changing world of communications policy.

I think that those who advocate letting the services develop and cater to the higher end of the market business and and the occasional wealthy individual who can afford them are missing the point, both from a political. Perspective and an economic perspective politically. Telecommunications is the mechanism by which we exercise our voice in the democratic process in the last two years of the 20th century, and by giving the tools to a few rather than many, you create barriers and differences between and among us that that have great political cost. I think with the bell, see what you tend to see when you talk to people in the bells as they want big pipes. Mike Godwin is legal counsel to the Electronic Frontier Foundation, a group dedicated to the preservation of civil rights in the information age.

You know, they want fiber to the home, which, you know, fiber optics to the home are going to take 30 years, my guess, to implement, you know, up in the 90 percentile range. But they want to have high this high bandwidth, really, really high bandwidth connectivity to the home. The idea being that once you do that, you can send video, you know, video, television, a video telephone, rather, in other kinds of other kinds of video media that are transported over the phone lines. That's very exciting to them, but it's essentially a hardware vision. I think what it lacks and what some other groups are able to provide is a social vision or maybe some kind of, you know, that vision thing about what what people are going to do with this hardware once it's in place. And I think we have an inkling of what that hardware is going to be used for when we see how people are using computer hardware.

Now, co inventor of the bulletin board, Ward Kristiansen, says what began simply as a virtual meeting place for his computer club has mushroomed into a global social phenomenon. The explosion of communications in that mid to late 70s timeframe 77 78 79 meant people communicating on a more one on one kind of basis. And also one of the things that I'm sort of indirectly proud of, I don't I don't mean patting myself on the back, but but let's say happy for others as a result of was that there were people using the bulletin board, which I who I later learned were, say, deaf. And also there were very young people who displayed a, shall we say, immature attitude. And it was sort of a leveler among people and among economist economics where they were coming from, whether they were homeless or living in a mansion. Everyone had an equal voice on the bulletin board. And I enjoyed the way that that brought people together as no previous medium had ever done. If you know anything about bulletin board systems or even the commercial online services, what you find is that the people who use them are not are no longer computer

hobbyists. I mean, their neighbors may think they're computer hobbyists, but they're not really the kind of highly, technically knowledgeable soldering iron tech heads that you saw 15 years ago. What you now see is that there are people who are professionals in other disciplines or people who are not technically knowledgeable in any other way, but who have set up a computer as a bulletin board system. And what they're really offering is virtual communities or forums for other people with shared interests to talk to them and for them to talk to other people. That's very exciting because one of the things that has happened in the 20th century is that when when populations have become more mobile, the trade off has been a loss of sense of community. I think almost everyone has experienced moving to a new place and not knowing people and living there for a couple of years and still not knowing who your neighbors are because they are so big. The Bell operating companies were legally restrained from entering into the content

business, the creation or manipulation of information. Now the courts have lifted many of the information services restrictions. So far, the bells have played the role of pure common carrier, a neutral, nondiscriminatory conduit for the information of others. But in a curious twisting of rolls, the phone companies want to retain their historic role as a common carrier, but also desire First Amendment rights to publish, package and edit the new information services flowing over their network. Just being the provider, the pipeline isn't enough to make the investment worthwhile, so you need to be able to have some control of the programing. Kitty Bernick is director of external affairs for the Pacific Telesis Group in San Francisco, the parent company of Pacific Bell. You're talking about shaking things up that didn't really even exist a decade ago. There wasn't cellular service. A decade ago we didn't have information services a decade ago. And so people who had invested in one kind of technology,

for example, printing presses, could afford to be complacent and not have to worry about their investment being at risk. Since technology is changing so rapidly, it it becomes a political debate. And I think any existing entrenched competitor fears competition. But entrenchment is in the eye of the beholder. Bernick portrays Telesis as a David taking on the publishing Goliath, the American Newspaper Publishers Association. Meanwhile, AT&T, recently freed to enter information services, has taken out newspaper ads condemning the Bell operating companies as monopolies. A Michael Noel is a professor of the Annenberg School for Communications at the University of Southern California. No, in terms of past history, if you look at the AT&T history from the perspective of just monopolization, you certainly see a lot there that could create a pattern. You see these early days of the Morgan veau combination attempting to wipe out their competitors and simply acquire them.

You see the Vale Morgan view of a monopoly of telephone and telegraph service. Together, there was a total monopolization of all telecommunications. So you see it there. It failed because of threats of government action. So that monopoly disappeared from their fingers. You see their technology base in the early days of radio broadcasting, again coming to for that here because of technology and also because they owned. The network that interconnected their own radio stations, they were able to have a radio network that others could not get access to because they said, no, no, no, we won't connect you to that network. So you see the same monopolization again, in this case, radio broadcasting that one failed to again, government action. Again, what that were threats of government action. What that went to a halt. You see their technology based and the recording of sound signals, the famed West Trex label from old movies that you remember seeing sound audio by Wearer's WAAX, that was a division of Western Electric.

They did all the sound recording at one time. I think over 90 percent of the talkies were controlled, in essence by AT&T technology, things of that variety, another monopolization attempt. They never achieved anything. But certainly there were steps made in the early days of television on the part of AT&T to get into that world, too. And here also they viewed the idea of one provider in all. So there is in a sense, if you look at that past history, you can say you could lay claim that whatever the AT&T empire got near in terms of a new business, there are instant attempts were to monopolize it. So you could claim that the single most important issue in telecommunications policy right now is the issue of the extent to which telephone companies, those who provide the conduits for communication, should be permitted to also provide the content that flows along those content. Those conduits.

Former FCC Commissioner Nicholas Johnson wrote the landmark Carterphone and MCI Decisions, which opened the door to competition in the telephone business. And it's my position that that raises enormous problems for our society, not only for consumers and regulators, but actually for shareholders and the telephone companies as well, who I think will end up making less money if their companies go off down this road. Well, we do want to be a content provider. We already are a content provider. I think being a content provider is different than the notion of how you provide that content. And I think this whole discussion about content versus conduit has really, to me, insults the intelligence of the American consumer. You know, what it boils down to is let the marketplace decide who should be providing what services. And the consumer can make some intelligent choices for themselves about what they choose to watch, what they choose to buy, what phone numbers they choose to call. And it's the consumer in the marketplace that's deciding that not some bureaucrat

or some self-appointed guardian of the public's First Amendment rights, the danger of creating a bottleneck by allowing those who control the access into the home to determine the content of what travels into the home, I think is a grave threat to the democratic process and to the lives of our grandchildren. I think that is a totally absurd argument. And that's the argument that the newspapers made when radio was introduced 50 years ago, that radio would be controlling the editorial content, that newspapers would go down the drains. That new this is a quote that newspapers would be nothing but a plaque on the halls of Radio City Music Hall. And that's nonsense. Newspapers are flourishing. If you've ever sat on public transportation, you see the number of newspapers that are that people are looking at. People want a variety of media

for their information. I don't think that the telephone companies want to have any role whatsoever in determining content or other alternatives which have been suggested, such as quote unquote, bundling programing. I believe that it will be most unfortunate if the telephone companies succeed in earning some degree of First Amendment speaker status, which they have been demanding and asking for. And I profoundly hope that the courts will will reject those claims. As I view it, the First Amendment is designed to promote the rights to speak and the rights to receive information of citizens of living, breathing American citizens who use the information that they obtain to become educated and to make wise decisions through exercise of the democratic process and the vote. Corporations don't vote corporations

owners who each have an individual right to vote. I don't want somebody by virtue of being rich and owning a corporation to have more First Amendment rights than one who can't afford to own a corporation. I feel that that's a very dangerous direction which the telcos would like to lead, and I think it will move them away from their. Where business and what they know how to do and what they will do best and will lead them into areas where they will simply invest and lose large amounts of capital and endanger the democratic process along the way. First Amendment rights of corporations, lots of corporations, not just media companies like The New York Times or Cox Cable, have been recognized by the U.S. Supreme Court for this entire century. The most dominant case was in the late 70s when the Supreme Court found that all corporations have First Amendment rights. The First Amendment protects all speech by everyone. One of the purposes of the First Amendment is to promote a full discussion of issues.

Therefore, all speech is allowed and the source is irrelevant. So to say that some corporations that newspaper companies have First Amendment rights and other corporations don't is just plain wrong. Under the the current laws of this country, with this right of of speech goes their right to censor any view they don't like. So having lost our First Amendment rights with regard to newspapers, with regard to radio, with regard to television and just about with regard to cable fight still going on there to some degree and the building envelope, we've lost all those things. The only remaining media of mass communication in this country to which we all have a legally enforceable right of access is the telephone system. And I think it's going to be very difficult once the telephone company gets in the information business to try to get the Supreme Court to understand and support the notion that although

newspapers can censor and radio stations can censor and television stations can censor and cable television systems can censor and in utility envelopes can be censored, that somehow the telephone company can't censor. I mean, why is that going to be that the telephone company so different from all these others that when they're using their own conduit for their own communication, in their own exercise of First Amendment rights, that somehow their First Amendment rights don't permit them to censor other people, even though others do. So I think it's just incredibly dangerous and it will mean the the absolute end of free speech in America for citizens. It won't mean the end of free speech in America for the people with 100 million dollars of spare pocket change who can go out and buy a television station or a newspaper. But if you don't happen to have 100 million dollars in spare pocket change, you're going to be denied your ability to communicate by means of the most effective monopolistic conduits of communication

in this country, which are the way by which most people get their information. We were not able to as much as our customers would have liked us to, we were not able to stop carrying the traffic of dial up porn providers. What the courts did enable us to do because we were common carriers was to segment their services onto certain types of lines. And they also permitted us not to bill and collect for those services. But we were not able and indeed we continue to carry dial upon traffic because the courts have ruled that as common carriers, we cannot exclude that or any other particular content that we or anyone else may decide is unsavory. Where we want to be at the end is broadband type services available to all members of

the public, whether this has to be fiber to the home, whether this has to be by the year 2010 or 2015 or 2020, that's less clear to me. What I feel most strongly about is that this has to be done on a pure common carrier basis. There must be complete separation between the ownership of the conduit and control of the editorial content of material that is carried over these transmission systems. By that I mean nondiscrimination, equal access and reciprocal access. Any anybody who hooks into the public network has to offer everybody else the same access to their system that they obtained by hooking into the public network.

And that's a concept which is not mine, it's really articulated best by Ellie Ngoma, the Colombian, and this reciprocal common carriage, I think is a very useful construct. The control of that is going to be made by the policy makers. And if I can just quote from Chairman Markey, who's the chairman of the House Telecommunications and Finance Subcommittee, people like him are going to be making the decision if indeed the American public is to enjoy the benefits of multichannel competition. Policy makers and regulators should examine the possibility for all viable participants to compete on a common carrier basis. So what Schwartzman is talking about is likely pretty likely to happen if we get in the business. And I think what Markey and other policymakers are talking thinking is in his direction. Of providing these services on a common carrier basis, we've never said of any of the businesses that we're in, whether it's information services or voicemail or cellular, that we want to be the only provider or that we should be the only provider

or that we're best suited to be a provider. What we're saying is let us be a player, let us be one of the players and see what consumers in the marketplace decide. Let them decide. Don't let the bureaucrats decide. The telephone giants have their share of bureaucrats to how will they respond when faced with agonizing editorial choices when the cop killer video is broadcast on their channels or the Ku Klux Klan wants a slot in the new fall lineup, will they wear their traditional hat as neutral common carrier or will they reach for a new hat? That of editorial gatekeeper? Perhaps we can have it both ways, but only if the ground rules for this game are clearly spelled out. And we all keep a watchful eye as we write this next chapter in the history of the telephone. Hell's Bells, a radio history of the telephone, was written and produced

by Gregg McVicar of Pacific Multimedia with research by Tom Read and original theme music by Larry Council. The project director was Leo Lee. Funding was provided by the Telecommunications Education Trust, established by the California Public Utilities Commission. To order audiocassettes or written transcripts of the series, send us a fax at five one zero nine three eight twenty eight fifty. And thanks for listening. This is Western Public Radio.