Ma Bell Stifled Innovation, AT&T May Do the Same

An anonymous reader writes "AT&T recently announced it plans to acquire T-Mobile to create the largest wireless network in the US. If the deal is allowed to complete, it will create only three major players in the industry with Verizon being a close second and Sprint being a distant third. Sprint, along with consumer rights groups, have already cried foul. They argue that AT&T's proposed acquisition will stifle competition and innovation."

Comments

Ma Bell Stifled Innovation?

[Anonymous Coward]

Ever heard of "Bell Labs"?

Re:Ma Bell Stifled Innovation?

[GKThursday]

C

That's something we'd really miss if they left. . .

Re:Ma Bell Stifled Innovation?

[Zerth]

Ever try to buy a 3rd party phone back in the day without paying an extra monthly fee for the privilege of hooking it up to the Bell system? Or buy a phone at all, for that matter, instead of leasing it for an exorbitant monthly fee?

That kind of shenanigans paid for all that innovation.

Re:Ma Bell Stifled Innovation?

[Virtucon]

No, the detection of the Background Radiation Signature from the Big Bang.

Bell Labs also didn't stifle innovation, they created lots of things that affected people's lives. The Buisness side of AT&T ran it as a pure monopoly and that's why we had a huge anti-trust case leading to the breakup of AT&T originally. Now we have the divested baby bells buying up the parent (SBC buying AT&T and then becoming the new AT&T) but in reality having three carriers for Wireless in this country is a bad thing.

Re:Ma Bell Stifled Innovation?

[Anubis IV]

Just because they produced some innovative ideas (and they did, which I don't want to marginalize) does not mean that they didn't stifle innovation from others through anti-competitive practices. Otherwise, we could make the same argument of any monopoly that has an R&D department, even as they're squashing all of the innovative startups that have ideas which would completely change the game.

Re:Ma Bell Stifled Innovation?

[cpu6502]

>>>Ever try to buy a 3rd party phone back in the day without paying an extra monthly fee for the privilege of hooking it up

And modems:
Bell/AT&T kept modems at a slow 1200 baud from the 1950s to the 1980s. Innovation was "stifled". You were not allowed to use any other kind of other manufacturers, but as soon as the Government ordered them to standardize & allow third-party phones/modems, the speed skyrocketed from 1200 to 33,000 in ten years time.

Per inflation, if the AT&T monopoly still existed, the cost of long distance calling would have risen from 50 cents to 120 cents/minute. Or maybe held steady. Instead the government forced competition (Sprint, MCI, etc), and the price rapidly dropped to 5 cents per minute.

Teddy Roosevelt is rolling in his grave

[rolfwind]

That it's even an open question shows how far from actual trustbusting we have gone.

Even as a libertarian, I see this, just as all democracies (as opposed to republics) devolve, so does uncheck capitalism - always in the direction of corporate socialism (rent-seeking, bailouts, etc.)

"Argue"

[unity100]

Whats there to be argue. if there is a SINGLE provider monopoly in a nation, more than innovation is stifled. Not even right wing economists argue against that anymore.

The example in TFA is just silly

[hey!]

The article claims that Bell stifled innovation by choosing not to bring an invention made by a company employee to market, in this case magnetic tape audio recording. That's such an overblown reading of the event that it's laughable. Companies create ideas all the time they decide not to productize because they're not really in their core business, because they fear (rightly or wrongly) that they'll will have a negative impact on that core business. In this case it was both.

In any case, magnetic audio tape was invented in Germany in the prior decade, and magnetic wire recording technology had existed since the 1890s and was widely commercialized in the 1920s.

On the other hand, in Ma Bell's tenure we had the development of Unix, computer networking, and satellite telephony, in which the company paid key roles. The break-up of the Bell System was motivated in part by the hypothesis that competition would bring new technologies like digital telephony (in this case ISDN) to market faster. While nobody can say what would have happened without the break up, on that goal at least the break up could not be called a success.

The result of the break-up wasn't rapid technological innovation; it was price competition. That was a good thing. By in large the AT&T monopoly worked very well, within the expected limitations of any such regulated monopoly. We had *excellent* telephone service for the era, but it was much more expensive than it might have been. Under the covers it was quite technologically advanced. Ma Bell designed the multiplexed digital transmission system (the T Carrier system) that is still used in North America today back in the 1950s, and did early deployments as early as 1961. The commercial adoption of the Internet occurred a decade after the break up of the Bell System in 1984, but it was based on the T Carrier system and its refinements, all designed and implemented by the Bell system in the 60s and 70s, *before* the break-up.

Which is not to say that monopolies are necessarily a good thing. It was good that the break up lowered long distance prices. Nor are such monopolies always technical successes (BT comes to mind). It is even possible that the columnist is right, and that the Bell System *did* somehow stifle innovation, despite the historical fact of all the innovations it brought to market as a monopoly. The problem is his argument, which is pure, ignorant BS.