Capítulo 4
The Rise of Bell: From Competition to Empire
In 1904, farmer Edmund Burch created his own telephone network on New Mexico's Johnson Mesa by stringing wire between fence posts. Part of the "Independents" movement, these DIY telephone builders represented an "uprising of the people" against Bell's monopoly. After Bell's patent expired in 1894, hundreds of independent firms emerged, bringing telephony to rural America where Bell wouldn't serve.
These farmers pioneered social uses of telephone technology, including community party lines and even broadcasting weather reports before radio existed. For a brief period, low entry costs allowed small operators to compete with Bell, creating a rare open phase in American telephony.
This competitive era ended when J.P. Morgan invited Theodore Vail to Jekyll Island in the early 1900s and revealed his plan to regain control of Bell and build "the greatest wire monopoly the world had ever seen." In 1907, Morgan executed his takeover, installing Vail as president of AT&T. Returning at age 62, Vail introduced a new slogan: "ONE SYSTEM, ONE POLICY, UNIVERSAL SERVICE"-meaning not service for all, but elimination of all competing systems.
Vail believed redundant phone lines were as wasteful as duplicate railroad tracks. In 1909, at Morgan's direction, Vail seized control of Western Union, making himself president of both companies. AT&T now controlled all instantaneous long-distance communications in America. Where Bell once waged scorched-earth campaigns against Independents, Vail now invited rivals to join him, using connectivity as both carrot and stick. His agreements required Independents to adopt Bell standards and equipment, paying special fees for long-distance access. It was "purchase or perish"-the same model Rockefeller used for Standard Oil.
As Bell consolidated under Vail's "One Company, One System" slogan, the Taft administration began investigating AT&T. But Vail executed a brilliant maneuver: he asked to be regulated. In a move unimaginable today, Bell agreed to operate under government-set rates, asking only that prices be "just and fair." This led to the 1913 "Kingsbury Commitment" settlement, where Bell agreed to sell Western Union, allow Independents access to long-distance services, and halt acquisitions in over a thousand markets.
While appearing to champion openness, the agreement cleverly preempted the more severe remedy of breaking up Bell. Vail's most meaningful concession was agreeing to serve as a common carrier, pledging that Bell would remain equally open to all users. The Kingsbury Commitment sanctioned history's most lucrative monopoly while achieving common carriage goals-Bell eventually wired every American home with reliable service.
Yet this alignment between state power and information monopoly carried substantial dangers. Vail died in 1920, having completed his vision of an uncontested Bell system. His legacy remains controversial-he eradicated competition but genuinely committed to public service and accepted regulated prices in exchange for monopoly security.
Capítulo 5
Hollywood's Birth: Rebels Against the Edison Trust
In 1912, theater owner Adolph Zukor waited three hours to meet Jeremiah Kennedy, president of the Edison Motion Picture Patents Company, seeking permission to screen Sarah Bernhardt's "Queen Elizabeth." Kennedy dismissed Zukor's vision with "The time is not ripe for features," forcing Zukor to become "one more outlaw" in defiance of the Film Trust. This pivotal rejection would ultimately lead to Hollywood's creation.
Unlike Bell or Edison with their respective inventions, film's creators were largely co-opted by existing entertainment powers, with Thomas Edison effectively becoming American cinema's godfather despite not inventing it. By 1908, after years of patent litigation, Edison and other major players formed the Motion Pictures Patent Company (the "Film Trust"), pooling sixteen key patents and fixing prices throughout the industry.
At an Imperial Hotel meeting in 1909, distributor Carl Laemmle heard the Trust's dictatorial terms: only Trust members could make or import films, theaters needed $2 weekly licenses, and rule-breakers faced immediate boycott. Despite the safer path of cooperation, Laemmle was driven by moral outrage to declare himself "an Independent," risking his business to challenge the "film octopus."
As the Trust intensified its legal assault, suing Laemmle 289 times over three years, the Independents fled to Los Angeles, where they could quickly escape across the Mexican border if needed. The Trust's monopoly wasn't merely economic but expressive-its rules limited film length to ten minutes, banned "stars" to prevent celebrity demands, prohibited most imports, and imposed strict moral censorship.
Though the Independents weren't ideological free speech crusaders but businessmen seeking opportunity, their rebellion ultimately opened a powerful new medium of expression. Despite facing the Edison Trust's patents, financial resources, and distribution control, the Hollywood Independents ultimately prevailed. When Fox and Laemmle countersued on antitrust grounds in 1912, the Taft administration launched an investigation. The Trust's bizarre defense-claiming exemption as a private speech regulator performing a public service-failed to convince the courts, and in 1915, a federal court ordered its dissolution.
This sparked an era of astonishing creative breadth, with over 4,200 films released in 1914 alone. Every genre and niche market was explored-films for blacks, Jews, Irish, socialists, anarchists, and more. The First World War gave Americans a path to global supremacy as the European film industry collapsed. The Edison Trust members quickly passed into obscurity, while Hollywood's founders-Laemmle, Fox, and Zukor-went on to establish studios that still dominate American film today.
Capítulo 6
Radio's Consolidation: The Birth of Networks
In 1922, Herbert Hoover declared advertising on radio "inconceivable," reflecting the idealized vision of radio as a decentralized, utopian medium. Yet despite this sentiment, AT&T's station WEAF aired the first major radio advertisement that same year, promoting Hawthorne Court housing development.
AT&T leveraged its monopoly on the nation's long-distance network to create the National Broadcasting System (NBS), America's first true broadcast network reaching 65% of American homes with radios by 1924. This network model allowed for economies of scale, pooling revenues from sixteen stations to create higher quality programming and enabling presidential addresses to reach the entire nation simultaneously.
Advertising transformed radio into a zero-sum game for listener attention, incentivizing centralization and making commercial and nonprofit radio into rivals. AT&T initially disguised its advertising as "common carrier" service while gradually developing sponsored programs like the "A&P Gypsies" and the "Eveready Hour," pioneering the formula of "entertainment that sells" that would dominate American broadcasting for decades.
By the mid-1920s, AT&T seemed poised to dominate radio completely. The company held the crucial long-distance lines, and its aggressive president Walter Gifford sought conquest in the Vail tradition. AT&T had even designed radio sets that would receive only AT&T broadcasts.
The only obstacle was the Radio Corporation of America (RCA), a strange entity formed in 1919 at the navy's insistence as a national champion to hold vital radio technologies for American interests. David Sarnoff, a "genius of industrial combat," led RCA against AT&T, despite Gifford initially refusing to negotiate with the "abrasive Jew."
When AT&T lost both a secret binding arbitration and a crucial vacuum tube patent suit, while facing FTC investigation, the companies struck a deal. AT&T sold its network to RCA, which became NBC, preserving AT&T's long-distance networking business while ceding broadcasting to Sarnoff.
By the 1930s, American radio had transformed from an open medium dominated by amateurs to big business controlled by a Radio Trust. The Federal Radio Commission, created in 1927, aggressively favored large commercial broadcasters over smaller stations, declaring "there is not room in the broadcast band for every school of thought."
With General Order No. 40, the FRC reset the entire dial, creating forty nationwide clear channels for large broadcasters while cramming hundreds of smaller stations into fifty leftover frequencies. This transformation mirrored global trends toward centralized radio control, most ominously in Nazi Germany where Goebbels insisted "it is necessary to clearly centralize all radio activities" to achieve national unity.
Despite some benefits of the network system, including quality programming and "sustaining programs" in the public interest, the American government had essentially accommodated industry's profit-maximizing vision rather than preserving radio's open character.
Capítulo 7
The Paramount Ideal: Hollywood's Studio System
Thomas Tally, owner of Los Angeles's premier "first-run" theater since 1909, received unwelcome news from Paramount in 1916. Following management changes after founder Hodkinson's expulsion, Paramount was changing its terms: Tally would now be required to buy a full year's worth of films without preview-a practice known as "buying blind."
William Hodkinson and Adolph Zukor represented fundamentally opposing visions for the film industry. Hodkinson believed each layer of the industry (production, distribution, exhibition) should remain separate, favoring "individual efforts rather than mass production." He opposed vertical integration, creating Paramount as America's first national distributor of feature films that advanced funds to producers for exclusive distribution rights.
In contrast, Zukor sought to control every aspect of the business like other industrial magnates of the time. Where Hodkinson championed craft filmmaking with directors having creative control, Zukor promoted a "central producer" model with streamlined production and guaranteed audiences. Despite Hampton's warnings that Zukor would oust him, Hodkinson refused to abandon his "Paramount Ideals," ultimately being removed from the presidency in July 1916 when Zukor secretly bought out his partners.
Zukor's campaign against independent theaters employed classic divide-and-conquer tactics. In New England, he partnered with Alfred Black, who acquired dozens of theaters through persuasion or intimidation. For the South, Zukor deployed S.A. Lynch's team, known as "the wrecking crew." Lynch presented theater owners with an ultimatum: either sell to Paramount's "chain" or agree to show only Paramount films-"the block." Those refusing faced competition from newly-built theaters next door or worse threats.
Block booking stripped theater owners of both business discretion and cultural curation power-the ability to select entertainment appropriate for local audiences or reject objectionable content. Though the Supreme Court would eventually rule block booking violated antitrust laws, economists like Nobel Prize winner George Stigler later defended the practice as efficient. However, these economic analyses overlooked how block booking, when practiced by an oligopoly of top studios, effectively displaced independent films from prime venues.
1926 marked American film's decisive turning point when Zukor broke the independent theater industry by taking over Balaban and Katz, Chicago's powerful theater chain. This victory gave Paramount direct control of over 1,000 theaters nationwide, with Publix Theater Corporation dominating the South and Midwest and serving 2.5 million customers daily.
By the late 1920s, the major studios had eliminated most independent theaters, producers, and distributors. In just a decade, film had transformed from one of America's most open industries to one of its most controlled, demonstrating how rapidly information industry structures can change.
Capítulo 8
The Legion of Decency: Private Censorship Through Industrial Control
In 1915, Daniel Lord, a young Jesuit priest and drama professor, began his career as a moral crusader by denouncing George Bernard Shaw's work as lacking "truth." Lord would devote his life to fighting against what he considered "filth" in media, believing that cultural products should improve audiences by reinforcing established truths rather than challenging them.
Lord's lasting contribution to American culture was writing and enforcing the Production Code that governed Hollywood films from 1934 until the 1960s. At the height of their power, Lord and his allies gained effective control over film in the United States, practicing a censorship to rival any authoritarian regime.
In the late 1920s, Lord joined with Martin Quigley, a film trade journal publisher, and William Hays, president of the Motion Picture Producers and Distributors of America, to create a new type of activism targeting the film industry. Joseph Breen became the enforcer of their Production Code, believing he could "cram decent ethics down the throats of the Jews." These Catholic activists realized that private censorship would be more effective than government regulation, preferring "prior restraint" to stop vulgar films before production.
Early 1930s Hollywood films were among the edgiest in American entertainment history, embodied by Mae West's liberated characters in films like "She Done Him Wrong" and "I'm No Angel." These pre-Code films celebrated independence, individual freedom, and were deeply cynical about organized power. After West's second film, Lord wrote an angry letter to the industry threatening a "day of reckoning," which arrived when Paramount announced her third film in 1934.
Though Adolph Zukor had no censorial instincts himself, the centralized studio system he created made speech control possible. Had Zukor and other studios not eliminated independent producers, distributors, and theaters, the Production Code could never have gained such leverage.
Wu argues that in the United States, industrial structure determines the limits of free speech. Though the First Amendment protects against government censorship, it has nothing to say about private entities limiting each other's speech. When access to media requires navigating industry barriers, there is no truly free market for speech.
By the mid-1930s, Joseph Breen wielded extraordinary influence over American cinema, with Liberty magazine claiming he had "more influence in standardizing world thinking than Mussolini, Hitler, or Stalin." The film industry, Catholic Church, and even the White House embraced this censorship system, with Eleanor Roosevelt praising the industry's self-regulation.
Under the Code, Hollywood produced beloved classics like Philadelphia Story, but at the cost of accepting a regime that demanded respect for authority and Hollywood endings. Serious challenges to institutions like marriage, government, or the Church became virtually nonexistent in films for decades. This severe speech restriction worked because the right to make films was controlled by just a dozen men, who made themselves subject to Breen's veto.
Capítulo 9
Television's Capture: How Sarnoff Controlled the Future
In January 1926, John Logie Baird, an eccentric inventor whose previous creations included the "Baird undersock" and exploding pneumatic shoes, demonstrated the world's first working television in London. Using a crude machine built from wire, wood, and a spinning disk, Baird transmitted ghostly but recognizable human faces.
Almost simultaneously, American Charles Francis Jenkins (who had earlier co-invented the first American film projector) unveiled his polished wooden "radiovisor" in Washington. By 1928, 22-year-old Philo Farnsworth leapfrogged both with the first electronic television using a cathode ray gun instead of mechanical parts, showing remarkably clear images of Mary Pickford to the press.
Rather than allowing television to develop organically and potentially threaten radio's dominance, RCA's David Sarnoff determined that television would emerge under his company's control. Television would be created in radio's image, ensuring it wouldn't undermine radio's advertising-based business model.
Within a year of 1926, Jenkins's and Baird's primitive televisions sparked a race to found an industry. Jenkins emerged as America's front-runner, opening the world's first television station in Washington D.C. in 1928, soon claiming 25,000 viewers. He quickly added a second station in New Jersey, planting seeds of the first television network. General Electric and AT&T developed competing versions, with GE broadcasting Alfred Smith's Democratic nomination acceptance and the first television drama.
Sarnoff, foreseeing television's potential to destroy NBC and RCA, established a clear message as early as 1928: television wasn't ready for consumers. He repeatedly lobbied the FCC to accept that television was merely radio with pictures, a technology only the established radio industry could properly develop.
The FCC, staffed largely by former Bell and radio industry employees and obsessed with "planning," accepted RCA's self-serving claim that premature television might "fix" on inferior standards. Unlike radio's early "permissionless innovation" under Hoover, television required experimental licenses with strict standards. The commission effectively arrested television's commercial development from the late 1920s until the 1940s.
Philo Farnsworth, a young Mormon inventor from Idaho, developed electronic television that offered unlimited resolution compared to mechanical systems. Despite patenting his technology in 1930 and having working models by the early 1930s, Farnsworth was systematically undermined by Sarnoff. After naively giving Sarnoff's scientist Vladimir Zworykin a three-day laboratory tour, Farnsworth found himself victim of industrial espionage, as RCA simultaneously tried to discredit his invention while secretly reverse-engineering it.
At the 1939 World's Fair, Sarnoff orchestrated television's American "birth" with theatrical flair. Standing at a podium surrounded by veiled television sets, he declared, "Now, ladies and gentlemen, we add sight to sound!" as the veils lifted to reveal his image on each screen. The media, forgetting years of previous television demonstrations, credited RCA and Sarnoff with inventing television.
Farnsworth, despite holding the crucial patents for electronic television, couldn't defeat Sarnoff's ruthless tactics. Though Farnsworth proved his patents valid in 1934 and forced RCA to license his technology in 1939, he lacked the aggressive legal representation Bell had employed against Western Union. Unlike Bell, Farnsworth had no champion like Hubbard or Vail to battle the radio industry. His company went bankrupt, and Farnsworth himself fell into alcoholism and depression, leaving television's history to be written by its corporate captors.
Capítulo 10
The Separations Principle: A Constitutional Approach to Information
The ancient cycle of centralized power rising and falling persists in our information industries. While American democracy created constitutional safeguards against concentrated political power, it has been less vigilant about private economic power influencing public life.
Unlike normal industries, information enterprises traffic in expression and have become embedded in every dimension of national and personal life. This raises a crucial question: should we approach information power with the same balancing mechanisms we use for political power?
Rather than pursuing narrow economic regulation through antitrust law, or government control as seen in Europe's nationalized media, Wu proposes a "Separations Principle" for the information economy. This constitutional approach would maintain distance between those who develop information, those owning network infrastructure, and those controlling access tools.
Like the separation of church and state, this principle refuses to take sides between institutions naturally bound to conflict, preserving both while enabling diverse perspectives. And like separation of powers, it accepts that some benefits of concentration will be sacrificed.
Vertical integration creates inherent conflicts of interest as firms cannot serve two masters-the objectives of creating information often oppose those of disseminating it. History demonstrates this corruption: the Radio Trust's advertising model narrowed content, while film suffered under Edison's technological monopoly and later under studio-controlled exhibition that enabled private censorship through the Production Code.
AT&T's monopoly transformed a dynamic communications market into a stagnant, oppressive industry resembling a small-scale Soviet planned economy. Despite AT&T's internal efficiency and Bell Labs' achievements, the company's control over every aspect of "the System" blocked innovation. Inventions like magnetic recording, electronic television, packet networking, and fiber optics were delayed for decades.
The federal government has repeatedly proven itself an inferior arbiter of what benefits information industries. From the 1920s through the 1960s, it wrecked the decentralized AM marketplace to serve chain broadcasting, blocked FM radio's development, reserved television for the NBC-CBS duopoly, and hindered cable television. Government consistently protected concentrated power against underdogs.
Contrary to popular belief, the information revolution wasn't caused by laissez-faire capitalism but by judicious controls on private power. Free markets naturally birth would-be emperors forging chains, and paradoxically, preserving freedom sometimes requires controls on private power.
Despite our current informational golden age with unprecedented diversity in media, we may be near the high point of a pendulum that has always swung back toward centralization. The Internet isn't infinitely elastic but depends on physical connections operated by finite companies. The convergence of all information forms onto one "superhighway" creates dangerous dependency on a single network.
The next empire could arise from carriers taking over content (like Comcast acquiring NBC-Universal), Hollywood merging with telecom through Apple devices, or even Google abandoning its openness principles for survival. With everything on one network, the potential for control exceeds all previous eras.
We might not notice this consolidation, distracted by newer toys and faster connections. But as electronic information now forms the substrate of daily life, our insatiable demand for bandwidth makes us vulnerable. We must secure our sovereignty over information choices now, before others take it from us in ways history has repeatedly foretold.
