The Cycle that Wasn’t

Over at Ars Technica, I’ve got a review of Tim Wu’s The Master Switch. An excerpt:

By mid-century, each of these communications technologies [telephone, movies, radio, television] was in the grip of one or a few large companies. Yet everything began to change in the 1960s. Hollywood abandoned the Hays code in 1968, ushering in a golden age of cinema in the 1970s. The FCC allowed a startup called MCI to begin offering long-distance service using microwave radio technology, the first step in a process of deregulation that culminated with the 1984 breakup of AT&T. And the Nixon administration repealed regulations that had limited the growth of cable television, creating a platform that would eventually provide robust competition for broadcast television networks.

If Wu’s theory of “the cycle” is correct, these trends toward openness in the 1960s and 1970s should have been followed by contrary trends in recent decades. But Wu struggles to come up with examples of industries that have become more closed since 1980. The two examples he does mention aren’t very convincing.

Wu argues that the consolidation of the Baby Bells marked a turn toward a closed telephone market. Yet this reading ignores the broader trends in that industry. The average American household in the late 1980s—after the breakup—still had only one choice for local telephone service. In the 1990s, cable companies entered the telephone market and cell phones became affordable and ubiquitous enough to offer a serious alternative to a land line. And since the turn of the century, a variety of VoIP providers, including Skype and Vonage, have given consumers still more choices. The telephone industry is clearly more competitive today than at any time in the 20th century.

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1 Response to The Cycle that Wasn’t

  1. Kaleberg says:

    Communications, particularly person to person communications, has gotten a lot more open, but there has been a lot of consolidation in local radio, ownership of newspapers and television stations and that aspect of media. (The big crisis in newspapers is as much a result of all the mergers requiring good will write downs as of declining ad revenue.) Of course, it is easy to argue that broadcast radio, television and newspapers are fighting rear guard actions even now in the face of new distribution methods.

    It is probably easier to find examples outside of communications. The white goods industry – refrigerators, washers and the like – is down to three or four companies from dozens maybe a decade ago. A lot of that was a result of their soaring productivity in the 90s, estimated at a factor of four or five on top of other gains.

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