Difference between revisions of "Myths/monopolies would not exist without government/telecomm"
(Created page with "==Myth== It is often claimed that the telecomm business would not be so heavily monopolized by region if government hadn't essentially awarded each of the major telecomms (AT&...") |
(→Reality: reorg -- moved Bell 1913 stuff into chronological order) |
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This is actually the opposite of the truth. | This is actually the opposite of the truth. | ||
==Reality== | ==Reality== | ||
| − | === | + | ===1913=== |
| + | the {{l/wp|Kingsbury Commitment}} of 1913 allowed AT&T, which had been able to corner the telephone business due to having largely invented it in the late 1800s (as Bell Telephone), to continue as a government-''sanctioned'' monopoly . That is: the government did not ''keep competition out'' in any way; it simply ''didn't do anything to prevent AT&T'' from doing so. The {{l/wp|Willis Graham Act}} of 1921 further solidified this situation, determining that telephone companies were natural monopolies and that government had no interest in ensuring competition in that business. | ||
| + | ===1934=== | ||
Regulation of the US telecommunications industry essentially began in 1934 with the creation of the FCC. At that time, the industry consisted mainly of radio and telephone, [[wikipedia:Timeline of the introduction of television in countries|television]] still being largely experimental at that time and not widely broadcast. | Regulation of the US telecommunications industry essentially began in 1934 with the creation of the FCC. At that time, the industry consisted mainly of radio and telephone, [[wikipedia:Timeline of the introduction of television in countries|television]] still being largely experimental at that time and not widely broadcast. | ||
This regulation was initially quite heavy: radio broadcasts were expected to operate in the public interest, and telephone (mostly regulated by the states); the lone exception was [[wikipedia:AT&T Corporation|AT&T]], which was allowed to operate long-distance phone service essentially as a monopoly. | This regulation was initially quite heavy: radio broadcasts were expected to operate in the public interest, and telephone (mostly regulated by the states); the lone exception was [[wikipedia:AT&T Corporation|AT&T]], which was allowed to operate long-distance phone service essentially as a monopoly. | ||
| − | So from 1934 to 1982, this was the situation: | + | So from 1934 to 1982, this was more or less the situation: |
* '''radio''': heavily regulated, operated by diverse companies | * '''radio''': heavily regulated, operated by diverse companies | ||
* '''long-distance telephone''': unregulated, operated by a monopoly | * '''long-distance telephone''': unregulated, operated by a monopoly | ||
* '''local telephone service''': loosely regulated by states; initially diverse, but gradually acquired by AT&T | * '''local telephone service''': loosely regulated by states; initially diverse, but gradually acquired by AT&T | ||
| − | |||
| − | |||
===1975=== | ===1975=== | ||
IN 1975, the FCC passed rules prohibiting ownership of both a daily newspaper ''and'' any "full-power broadcast station that serviced the same community". The rule was intended to ensure a diversity of voices (including political positions) in each area. | IN 1975, the FCC passed rules prohibiting ownership of both a daily newspaper ''and'' any "full-power broadcast station that serviced the same community". The rule was intended to ensure a diversity of voices (including political positions) in each area. | ||
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Unfortunately, this did little or nothing to reverse the {{l/ip|media consolidation}} that was already well underway by that time. | Unfortunately, this did little or nothing to reverse the {{l/ip|media consolidation}} that was already well underway by that time. | ||
| + | |||
==Conclusions== | ==Conclusions== | ||
In repeated instances, monopolies tended to form when the government wasn't actively and forcefully preventing it. Removing "regulatory barriers to entry" did nothing to encourage entry, since the established players were able to control the field without government help. It was only when government carefully limited the size and degree of corporate control of the markets that there was any substantial diversity within a given market. | In repeated instances, monopolies tended to form when the government wasn't actively and forcefully preventing it. Removing "regulatory barriers to entry" did nothing to encourage entry, since the established players were able to control the field without government help. It was only when government carefully limited the size and degree of corporate control of the markets that there was any substantial diversity within a given market. | ||
Latest revision as of 19:15, 10 January 2015
Myth
It is often claimed that the telecomm business would not be so heavily monopolized by region if government hadn't essentially awarded each of the major telecomms (AT&T, Comcast, Verizon, Time-Warner Cable, etc.) monopolies in each of the areas where they do business.
This is actually the opposite of the truth.
Reality
1913
the Kingsbury Commitment of 1913 allowed AT&T, which had been able to corner the telephone business due to having largely invented it in the late 1800s (as Bell Telephone), to continue as a government-sanctioned monopoly . That is: the government did not keep competition out in any way; it simply didn't do anything to prevent AT&T from doing so. The Willis Graham Act of 1921 further solidified this situation, determining that telephone companies were natural monopolies and that government had no interest in ensuring competition in that business.
1934
Regulation of the US telecommunications industry essentially began in 1934 with the creation of the FCC. At that time, the industry consisted mainly of radio and telephone, television still being largely experimental at that time and not widely broadcast.
This regulation was initially quite heavy: radio broadcasts were expected to operate in the public interest, and telephone (mostly regulated by the states); the lone exception was AT&T, which was allowed to operate long-distance phone service essentially as a monopoly.
So from 1934 to 1982, this was more or less the situation:
- radio: heavily regulated, operated by diverse companies
- long-distance telephone: unregulated, operated by a monopoly
- local telephone service: loosely regulated by states; initially diverse, but gradually acquired by AT&T
1975
IN 1975, the FCC passed rules prohibiting ownership of both a daily newspaper and any "full-power broadcast station that serviced the same community". The rule was intended to ensure a diversity of voices (including political positions) in each area.
1982
AT&T was sued for using profits from its monopoly subsidiary Western Electric (which manufactured the phone equipment used by AT&T and its local telephone subsidiaries) to keep prices low in its long-distance business (and thence keep out the competition), which was against anti-trust law. Rather than risk losing ownership of Western Electric, AT&T proposed divesting ownership of and breaking up its regional telephone service companies. The settlement was finalized in 1982.
1996
The Telecommunications Act of 1996 was intended to open up markets to competition by removing regulatory barriers to entry, including removing the 1975 rules against cross-ownership.
Unfortunately, this did little or nothing to reverse the media consolidation that was already well underway by that time.
Conclusions
In repeated instances, monopolies tended to form when the government wasn't actively and forcefully preventing it. Removing "regulatory barriers to entry" did nothing to encourage entry, since the established players were able to control the field without government help. It was only when government carefully limited the size and degree of corporate control of the markets that there was any substantial diversity within a given market.