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?

[jrmcferren]

I can name two really quick. Transistors and UNIX.

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?

[DigiShaman]

Here's a compiled list from a linked website. URL below.

Data Networking

Since the transmission of the first facsimile in 1925, Bell Labs has explored ways to use networks to deliver more than just voice traffic. In the late 1940s, researchers demonstrated the first long-distance remote operation of a computer by connecting a teletypewriter in New Hampshire with a computer in New York. Throughout the '80s and '90s, Bell Labs worked to increase modem speeds and pioneered the first trial of Digital Subscriber Line (DSL) technology. Today, DSL is becoming a popular way to transform regular copper phone lines into high-speed data connections, giving consumers faster access to the Internet.

The Transistor

Developed in 1947, as a replacement for bulky and inefficient vacuum tubes and mechanical relays, the transistor revolutionized the entire electronics world. The transistor sparked a new era of modern technical accomplishments from manned space flight and computers to portable radios and stereos. Today, billions of transistors are manufactured weekly.

Cellular Telephone Technology

In a paper in 1947 Bell Labs was the first to propose a cellular network. The primary innovation was the development of a network of small overlapping cell sites supported by a call switching infrastructure that tracks users as they moved through a network and pass their call from one site to another without dropping the connection. Bell Labs installed the first commercial cellular network in Chicago in the 1970s. Since then Bell Labs has continued to innovate in the wireless area, recently creating digital cellular telephone technology offering better sound quality, greater channel capacity, and lower cost.

Solar Cells

While there were theories and activities to harness the sun’s energy dating back to the 1800s, Bell Labs, in 1954, was the first to actually build a device that used the sun’s power to create practical amount of electricity.

Laser

The invention of the laser, which stands for “Light Amplification by Stimulated Emission of Radiation,” can be dated to 1958 with the publication of a scientific paper by Bell Labs researchers. Lasers launched a new scientific field and opened the door to a multibillion-dollar industry that includes applications in medicine, communications, and consumer electronics.

Digital Transmission and Switching

In 1962, Bell Labs developed the first digitally multiplexed transmission of voice signals. This innovation not only created a more economical, robust and flexible network design for voice traffic, but also laid the groundwork for today's advanced network services such as 911, 800-numbers, call-waiting and caller-ID. In addition, digital networking was the foundation for the convergence of computing and communications.

Communications Satellites

Bell Labs was the pioneer in communications satellites. In 1962 it built and successfully launched the first orbiting communications satellite (Telstar I). Telstar was unique in that it had the ability to receive a signal, amplify it, and then transmitted it back to elsewhere on earth . . . which is, after all, the core of what a communications satellite does. This technology allowed telephones calls to be bounced from coast to coast and around the world. The satellite was powered by Bell Labs solar cells and transistors – two other Bell Labs pioneering inventions.

Touch-Tone Telephone

First introduced by Bell Labs in 1963, touch-tone replaced rotary dials. This ushered in a new generation of telephone services and capabilities including voice mail and telephone call center applications. In a recent survey of Americans, touch-tone dialing was named the most important business communications advance of the last century.

Unix Operating System and C Language

The Unix operating system and the C programming language, closely intertwined in both origin a

Re:Ma Bell Stifled Innovation?

[MadKeithV]

Yeah, there's that, but what else has Bell ever done for us?

Re:Ma Bell Stifled Innovation?

[Kenshin]

We got transistors from the alien craft that crashed at Roswell.

Don't they teach you anything in school?

Re:Ma Bell Stifled Innovation?

[travisb828]

That AT&T died in 2005 when it was bought by SBC. The new AT&T is SBC with the AT&T name, and Bell Labs was spun off in 1996 by the original AT&T to become Lucent. Lucent was then merged with Alcatel to become Alcatel-Lucent. Meanwhile the Bell Labs Holmdel Complex is sitting vacant.

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.

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.)

on the other hand

[cinnamon colbert]

Stuff never broke, you knew that your neighbor wasn't getting a better deal, and you didn't have to worry about sevrice or dropped calls; ma bells team of engineers and workers kept stuff running smoothly
And, as anyone who travels abroad knows, the supposed "benefits" of competition don't seem so good: in those awful socialist countrys like france, they have, and have had for many years, superior telecoms.
Of course, when the CEO of Verizon makes 18 or 20 million dollars a year, he has an incentive to hire (on Verizon's nickel) economists and journalists to tell the world how great competition and the unbridled capitlism are...

Re:on the other hand

[StikyPad]

US wireless providers are to competition what diarrhea is to shit. It may be competition, but it's not particularly healthy.

Monopoly?

[WonderingAround]

In Canada you have a lot more choice in providers, most of the American companies are available as well as Rogers and Bell, i guess it's just better, like our healthcare...

"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.

T-Mobile is the only provider ...

[querist]

T-Mobile is the only provider that I've found in the USA that does not truncate the high bit on text messages. I can send text messages in Chinese and Japanese with my unlocked iPhone on T-Mobile. AT&T and Sprint clip the high bit. I hope AT&T won't screw up T-Mobile's network.

Re:T-Mobile is the only provider ...

[revlayle]

This is kind of like saying "I hope Darth Vader doesn't force-choke me"

Government stifles innovation

[darjen]

The Myth of Natural Monopoly p.56-57
Unnatural Monopoly: Critical Moments In The Development Of The Bell System Monopoly

Re:Government stifles innovation

[iluvcapra]

The assertion that the Bell System was an "unnatural" monopoly is a bit of a straw man, nobody claims that AT&T came to run the whole system on its own. What's remarkable is that between Teddy and Franklin Roosevelt most of the progressive/populist pressure on the government was to nationalize the telephone system, as has been done in just about every other jurisdiction of the Earth. FDR rejected this, ironically considering his reputation today, and instead chose the cartel solution, such that there was still a nominal "private" company running the phone system for a profit, while it was protected from competition enough to do all the things the nationalized carriers were doing, like undertaking huge capital expenditures on undersea cables and trunks, and expanding telephony to rural areas where wired telephone service has never been profitable.

Where all of these critiques fall flat is in the rigid line drawing around acts of corporations and the acts of state. A sufficiently influential company possesses statelike powers in any real-world society, and will always try to meld government policy to its design; any government powerful enough to defend property rights will perforce have the power to decide what is and what is not ownable, and this power will always be drawing arbitrary lines protecting business plan X from business plan Y. This is unavoidable and arguing as if this is "unnatural" is a bit of a con.

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.

Re:The example in TFA is just silly

[amper]

As someone who did a lot of work in the early-mid 1990's helping to commercialize the Internet, I have to say that I must respectfully disagree.

AT&T, as they were constituted, had a very long history of secrecy and obstruction of technological innovations reaching the general marketplace. Let me ask you this, have you ever seem any non-Ma Bell publicly available books prior to the 90's describing how T circuits work? No, you haven't, because they didn't exist. This information was guarded very carefully by AT&T as proprietary information and as trade secrets. Very, very few people understood how these things worked back then, and most of those were former AT&T and Baby Bell employees.

Did Bell Labs create new things? Sure they did, just the same as Xerox's Palo Alto Research Center created things, and IBM's T.J. Watson Research Center created things. The difference was, AT&T had a government protected monopoly and used their monopoly power to stifle competition, so they kept all these things in-house. The other guys only dropped stuff that they didn't feel had commercial potential, and they weren't monopolies, anyway. It wouldn't have mattered if other companies came up with technological innovations in telecommunications, unless they thought they could sell them to AT&T, because they wouldn't have be able to commercialize them with AT&T controlling the market. The real advantage of the break up was not price competition, but that AT&T had to start sharing the market with other companies, and because of that, they were forced to let other companies know how to make their systems interoperable with the existing infrastructure.

Nit

[iluvcapra]

The company called "AT&T" is not, was not, and has only a tenuous relationship with the entity "Ma Bell," American Telephone a Telegraph. The company called AT&T is actually the old SBC, Southwestern Bell Communications, one of the RBOCs, that took over AT&Ts name and trademarks after buying the AT&T Corporation in 2005.