Sunday, January 23, 2011

Must-Read: The Master Switch is a Masterpiece of Independent Spirit

Book Review
The Master Switch: The Rise and Fall of Information Empires, by Tim Wu

I am innately attracted to almost any book that has the phrase "The Rise and Fall of..." or the word "Empire" in the title, so naturally I was pretty excited about The Master Switch from the beginning. I also love reading detailed and multifaceted histories about virtually anything, from caviar to countries to Chanel No. 5. Basically, this book was right up my alley, being about the history of all different sectors of the telecommunications industry, especially the independent and entrepreneurial spirit that drove most telecom sectors from humble beginnings in garage workshops or on remote mountain top antennas to multi-billion dollar titans of industry. These telecom sectors (content, transmission, entertainment, etc.) are so intertwined in our lives today that we can hardly even imagine the days when cable TV and the Internet were no more than fringe ideas struggling to gain support from an industry and regulatory regime that strongly favors entrenched incumbents and monopolies. The Master Switch details plenty of dramatic rises and falls in telecommunications throughout the last century.

Being a history lover, I generally like any book about the great tales of trial and tribulation that occurred during the first 100 years of the telecommunications industry. What makes this book really special in my opinion is that it is literally an anthem of independent telecom entrepreneurs and innovators. Credit is rightly given to rural telecom pioneers--the farmers who strung up barbed wire out in the middle of the Great Plains in order to communicate with each other--as well as independent filmmakers, early radio mavericks, the cable TV crusaders, and of course the Internet and computer start-up geniuses (including the individuals who now basically rule the information empire--yes, even those guys had humble beginnings). My favorite story in the book was about how AT&T used to go into rural areas and literally pull out all the equipment and wires instilled by the rural telephone companies and burn or destroy the equipment in the town square for all to see. It really made me think that not much has changed in the last 100 years in terms of rural phone companies vs. The Big Guys. Even if AT&T doesn't go pull out wires and burn equipment anymore, the big companies certainly put the rural companies through the wringer with other forms  of attrition including USF funding, access revenue, and exclusive contracts with handset manufacturers. Sometimes it seems like they might as well just start pulling out wires and burning expensive digital switches in the town square. I recently uncovered some interesting history about my family's company, Walnut Communications, and its various conflicts with AT&T back in the old days (circa 1915). As the story goes, Walnut farmers were installing lines to reach the surrounding farm community and at one junction the Walnut line had to cross paths with an AT&T transcontinental circuit. The men were unable to install the Walnut line below the AT&T line, so they decided to quickly  toss the line over top of the AT&T line--big mistake! This actually shorted out the AT&T transcontinental line momentarily. Apparently it did not take AT&T very long to realize where and how the problem was caused, and the next day AT&T representatives showed up in Walnut to question my great-great-uncle Andy Schuttloffel about this little incident. Fortunately, the AT&T representatives determined that the AT&T line was actually too low to begin with, even though the Walnut crew should never have tried to put a line over top the AT&T line. Walnut was given a stern warning to never attempt such a feat again, and my great-great-uncle was actually invited to tour the AT&T facilities in Omaha, NE, where they were kindly shown that if their transcontinental line was ever shorted for even one minute, the cost would be hundreds of thousands of dollars. Some years later, there was another situation involving blocked long distance calls, where my great-great-uncle actually went to Chicago in desperation to literally beg to an AT&T executive that the good people of Walnut Iowa deserve quality telephone service and the right to be able to make long distance calls to anywhere, anytime. Apparently the AT&T executive was impressed with Andy's courage and convictions, and the long distance issue was resolved peacefully.

Back to the book... In addition to a nice overview of the history of all sectors of telecommunications, The Master Switch also features many other interesting and not commonly known anecdotes about some of my favorite characters in US telecom history, such as Theodore Vail, David Sarnoff and poor Edwin Armstrong, Henry Tuttle of Hush-a-Phone infamy, Lee De Forest, Philo Farnsworth, Judge Green, Ted Turner, and many more lesser-known but equally important telecom pioneers and inventors of various technologies. I strongly believe that it is critically important to understand the past if you want to have any hope whatsoever to not only comprehend what is going on right now, but to take a wild stab in the dark at foreseeing the future. Thus, "illuminating the past to anticipate the future" is one of the central themes of this book. The author does an exceptional job of walking the reader through the entire scope of the telecom and information industries, chronologically from humble beginning through (in some cases) devastating destruction and eventual rebirth and stabilization. Along the way, the connections between different industries are clearly drawn, until more recently when these lines became increasingly blurry to the point that now an average person could probably not tell the difference between wireless, cable and landlinetelecom industry--spanning multiple decades and multiple dominant corporations/technologies/etc. The Cycle is the industry's transition from open to closed , and it "is powered by disruptive innovations that upend once thriving industries, bankrupt the dominant powers, and change the world." Disruptive innovation, also called the "Kronos Effect" in the book, is an ongoing bee in the bonnet of the dominant empire-rulers in telecom. The book describes how AT&T was literally terrified of the answering machine, and RCA really did not want FM radio to take hold. Cable TV, the Internet, wireless...all disruptive technologies at one point and all very much despised by incumbents and monopolists at first. Why prevent people from enjoying a new technology? Disruptive innovations cost the incumbents money and can be really annoying to get rid of or delay indefinitely. The Kronos Effect basically means that the dominate company will devour a potential challenger before the challenger even gets a chance to show its true colors. This has happened over and over and over in the telecom industry, and it probably won't stop any time soon. It really makes you wonder how many potentially "killer apps" and whatnot were squashed in infancy before most people even had a chance to realize their benefits.

In light of some recent significant telecom events like the FCC's contradictory actions of first regulating the Internet to keep it "free" and "open" and then allowing two of biggest and most powerful players to merge (Comcast-NBCU) which practically gives Comcast-NBCU a golden ticket to violate alleged net neutrality rules, this book can offer a lot of insight with an eye towards what will happen in the future. I don't see any end to mega media conglomerates and the Googleization of everything, but hopefully there will still be room in this infinite empire for the small company to flourish. The lesson seems to be that if a small/new company tries to ruffle too many feathers, it will be devoured by the dominant company--either through unfavorable regulations, by being bled dry with legal fees, or through competitive inequality. But what is the point (or fun) of owning a small business if you are just going to be content with the status quo and mediocrity and not at least try to ruffle some feathers?

Existential questions aside, this book made me feel really proud to be part of the independent telecom industry. There is a lot of rich history to learn and discover from the independents, the mavericks, the crusaders, the entrepreneurs and the industry outcasts. My favorite line from this book was a quote from Austrian political scientist Leopold Kohr,

"...Whenever something is wrong, something is too big."

With that, I strongly encourage everyone to read this book. You will definitely spend a lot of time contemplating the stories told in this book and envisioning how the future of the telecom industry will unfold.

Cassandra Heyne

1 comment:

  1. It is an excellent book. It is very hard to find mention of the existenance of the Independent operators in these industries in the current literature, much less recognize the contributions and vitality they bring to their respective industries. It confirms the my long held suspicion that the Government is no friend of the "little guy"