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Business Bookshelf: History could doom an open Internet

In the communications industry, monopolies or cartels, often sanctioned by government in the name of efficiency and public service, have a habit of asserting themselves, Tim Wu writes in 'The Master Switch.'

November 28, 2010|By Richard Waters

Faced with the evidence presented in this book about the evolution of promising communications and media networks over the last century, it is hard to feel optimistic about the Internet.

As told by Tim Wu of Columbia University in "The Master Switch: The Rise and Fall of Information Empires," the history of modern communications — from telephone to cable television — is one of freedoms thwarted. Monopolies or cartels, often sanctioned by government in the name of efficiency and public service, have a habit of asserting themselves.

Ultimately, those information empires may not hold back technological advances, but they often prove adept at forestalling the inevitable for some time.

If that pattern holds, the radical openness of the Internet may soon come to seem a historical oddity. Wu's history of the telephone, radio, movie and TV industries in the U.S. reveals a common pattern.

The birth of communications technologies is often an occasion for rampant idealism. It happened with the telephone and again with radio: Hobbyists and local businesspeople leapt at the chance to form their own small networks and stations, and commentators pronounced the dawn of a more perfect democracy of information.

Eventually, larger networks formed and big business took over. The downside: a world in which information diversity was constrained, and where network owners were more willing to engage in self-censorship to please government or vociferous social groups. Incumbents also have a strong incentive to suppress promising technologies that might undermine their power.

But there is hope. The seeds of new communications technologies are often sown at the edges of the empire — in a lone inventor's lab or, as with the Internet, in a government research agency. By the time the powerful wake up to the danger, it is too late.

The history of the information industries seen through this lens casts a useful light on an important current debate: Is the Internet by nature a more "open" medium that will resist the swing toward centralizing control, or is it destined to follow a similar path? Wu's history, published by Knopf, suggests a depressing answer.

But in important ways, the Internet really is different. The old media were built on economic or physical scarcity. There was not enough room on the radio dial for everyone who wanted to run their own station, at least not one with signal power to reach beyond a few miles.

The rise of dominant broadcast networks was not the result solely of rapacious business strategies; the airwaves were a scarce resource. On the Internet, access to content is theoretically limitless and the cost of distribution falls almost to nothing.

That does not mean reactionary or restrictive forces can't, or won't, win again. In this regard, history provides ample warning. Government bureaucrats have provided scant defense — indeed, they have often been complicit in the creation of information empires.

As this book argues persuasively, they often become captives of the industries they are meant to regulate. It is also often easier to reach an accommodation with a communications monopolist — in return for fulfilling some "public interest" function — than to risk rocking the boat.

Consumers have also proved careless in their defense of the freedoms that unrestricted networks ensure. Openness in communication networks is a worthy ideal, but as anyone with a PC struck by a computer virus can attest, its virtues can be overrated.

In this regard it is Google, current king of the online media heap, that looks like the anomaly. Wu quotes Chief Executive Eric Schmidt: "The vote is clear that the end user prefers choice, freedom and openness."

If so, that is not at all clear to Steve Jobs at Apple, whose iPhone and iPad are built on a different premise. Ease of use and quality of service are the touchstones in his universe — even if that comes at the price of less choice.

Wu has an answer to the risk of a return to less-open networks. He proposes a ban on vertical integration in communications and media, to keep producers and distributors of digital content apart, and to separate both from the producers of electronic gadgets.

This should be as fundamental as the separation of church and state. There would be no motivation for any network or device to prefer some types of content over others. All bits would, finally, be created equal.

Such a remedy, however, seems neither practical nor justified. It would require the forced break-up of today's media conglomerates and the imposition of strict regulations over a large and growing part of the economy. Where is the current harm that requires such a dramatic response?

Apple's products are winning millions of customers. And though they stop short of Schmidt's ideal of openness, they are far closer to current notions of the personal computer than to limited-function consumer electronics.

Will the iPad, and the networks and content to which it is attached, prove the thin end of the wedge, and will this lead to the rise of the next restrictive information empires? There is still time for the script to turn out differently. But regulators and consumers have been put on notice.

Waters is a San Francisco-based editor for the Financial Times of London, in which this review first appeared.

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