From Gutenberg to Google

by Tom Wheeler

  A similarly unanticipated impact of mobile has sent banks and credit card companies scrambling. As we have seen, airtime remittances denominated in minutes rather than currencies have sprung up around the world. In Kenya, however, mobile operator Safaricom hit pay dirt with its M-PESA payment program (“pesa” is the Swahili word for “cash,” “M” stands for “mobile”) that exchanged legal tender, not airtime minutes, between mobile phones. The customer registers with Safaricom for an M-PESA account into which cash is deposited. Within M-PESA the cash becomes an electronic replica of real money that the system then delivers like money transfers in the developed world. In 2012, one-fifth of the Kenyan GDP reportedly changed hands through M-PESA.31

  Another unanticipated effect of the new network has been the reigniting of an entrepreneurial economy and at the same time a blurring of the line between home life and work life. By the beginning of the twentieth century, the railroad and telegraph/telephone had transformed an agrarian economy to an industrial economy in which industrial workers outnumbered farm workers. By the dawn of the twenty-first century, however, almost 60 percent of American males no longer worked on the shop floor but were engaged in information-based business.32

  The network-enabled Industrial Revolution destroyed an economy of artisan entrepreneurs operating out of or near the family homestead. The village smithy, for instance, could not survive the competition from the distant factory’s economies of scope and scale production. Our network revolution reverses that history to restore the role of the productive and creative individual.

  In the economy based on hard-goods production, masses of workers were brought together in one place to mass-produce products. In an economy of knowledge workers, the network transports information to the person using it, regardless of that person’s location. The result empowers individuals to make their contribution on their own terms.

  As the new network enhances those individuals’ connectivity, it increases their physical and economic independence. Claims adjusters, appraisers, sales agents, customer support personnel, auditors and bookkeepers, even R&D geniuses, are just a cross-section of knowledge-based workers who can now offer their services while operating wherever they want, independent of corporate structure. And not just services are enabled; artisan-produced goods, or kitchen-table companies, can reach worldwide markets right through their mobile device.

  One unanticipated result of such economic restructuring has been the new network’s effect on the family. When earlier networks moved workers into a centralized workplace they upended a tradition dating back to prehistory in which the family and the workspace were collocated. Our preindustrial blacksmith’s forge was normally located in proximity to his home, and his professional and personal lives were intertwined. The factory changed all of that. Once people had been pulled together in urban ghettos, the breadwinner was taken to the factory floor for most of the waking day. In 1800, only 5 percent of men in New York City worked outside the home. By 1840, that number had swelled to 70 percent.33

  The ability to be constantly connected to work is reversing the leave-home-to-go-to-work pattern. Work that can be done from anywhere, especially from home, is creating a “historical reintegration” that is returning society to the preindustrial era when work and the family were not physically separated.34

  New Networks, Old Reactions

  As history repeats itself with unanticipated results from new networks, it reiterates the resistance network-imposed changes produce. Whenever old institutions and the security of their conventions are threatened, a rearguard assembles to contest the innovations.

  While working with the UN Foundation’s efforts to use mobile technology to improve health care in developing countries, I witnessed the twenty-first-century reiteration of the Establishment’s opposition to network-driven change. As we have seen, the ability to connect remote areas without a health-care delivery system with doctors located far away can save lives. But in one high-need African nation, the health-care professional association’s response to such innovation was to add a new staff position—not for the purpose of facilitating such improvements but for challenging them. In a nation with a chronic shortage of health-care delivery, the position of “director of unnecessary technology” stood as a bulwark against the innovations made possible by the new network. It was the twenty-first-century reiteration of the nineteenth-century tavern owners and haulage companies who opposed the expansion of the railroad.

  A similar narrative has emerged regarding the network’s new infrastructure. In the nineteenth century, landowners fought to block the construction of rail lines across their fields. Today, that sentiment has meant opposition to the antennas that provide wireless connectivity. It has even become associated with an initialism, NIMBY—“Not In My Backyard.” During the railroad construction period, opposition tactics included hiring bullies to attack engineering crews. The opposition today is, fortunately, more civilized, but no less intense.

  The response of businesses confronted by the challenge of new networks also follows the old pattern. When early rail lines followed the same natural pathway through the Mohawk Valley used by the Erie Canal, the canal interests fought to limit the competition. Canal owners as well as barge operators, tavern keepers, haulage companies, turnpikes, and others affected by the expanding rails erected obstacles to protect their livelihoods. There was a similar response over a hundred years later when wired telephone companies tried to hobble wireless competition.

  While the Bell companies had mobile assets they wanted to grow, they preferred that such growth follow Theodore Vail’s 1916 claim and remain “supplementary to, and in cooperation with, the wire system, and not antagonistic to it or displacing it.”35 The competitive licensees created by the FCC, however, had the opposite idea. As CEO of the cellular industry’s trade association during the industry’s growth years, I was constantly refereeing the conflicting interests of the entrepreneurial wireless competitors and the incumbent wired phone companies.

  One struggle echoed the earlier days of the wire-line business, when AT&T used its control over connecting to the network to constrain independent telephone companies. In the modern case, federal law required such interconnection, but the regulation didn’t say at what price. The wired companies, for whom the interconnection fee from their mobile operations simply moved money from one corporate pocket to another, favored high fees that helped keep wireless prices high. The competitors fought to reduce the fees to a level that resembled the de minimus actual cost of connecting. It was a war within the industry. When the insurgents finally prevailed over the incumbents, wireless could compete effectively with wired. The result was the wireless penetration we take for granted today.

  History also repeats itself as new technology displaces the familiar and comfortable. Human nature dictates that deviation from old patterns creates a fertile ground for new suppositions; an intellectual worm of doubt gnaws at the public mind. In the railroad era, it was feared that the commotion of the speeding railroad would cause cows to stop grazing, hens to cease laying, and horses to abort their foals, while the locomotive’s exhaust would cause birds to fall from the air.36

  Shortly after the first telephone network was installed in Montreal, there was an outbreak of smallpox. The rumor took hold that the disease was carried by the new phone wires. Armed troops were needed to put down a violent mob intent on destroying the new telephone exchange. In January 1993, I was thrust into the middle of a similar panic when wireless technology was blamed for brain cancer.

  David Reynard, a Florida widower, appeared on CNN’s Larry King Live to discuss how he had filed a lawsuit alleging that his wife, Susan, had developed a fatal brain tumor as the result of the radio signals from her mobile phone.37 The day after the CNN show, the stocks of mobile carriers and phone manufacturers plummeted, some subscribers canceled their service, and fear spread as the worm of doubt was released. More than twenty years later the worm of doubt still burrows away, though the U
.S. Food and Drug Administration (FDA), the agency responsible for radiological safety, has reported that science has “not found sufficient evidence that there are adverse health effects in humans caused by exposure at or under the current radio-frequency exposure limits.”38 Multiple lawsuits, including the original Reynard case, have been rejected by the courts. Yet the worm of doubt still gnaws at the public conscience.

  We have progressed from the days when new technology could only be explained as a tool of the Devil. Given human nature, however, change will always be difficult. The Baltimore clergy to whom Morse’s telegraph was black magic and the complaint from the Ohio school board that the railroad was “a device of Satan to lead immortal souls to hell” still echo when a new technology confronts old conceptions.

  Forward Connections

  “The most profound technologies are those that disappear,” Mark Weiser, chief scientist at Xerox’s Palo Alto Research Center, opined in 1991.39 As we look forward, the convergence of high-capacity wireless distribution with the inexorable growth in computing power outlined in Moore’s law will make the network and its devices seem to disappear. The network that was built so that people could talk to each other has become the pathway for tiny computers to communicate without human involvement.

  We tend to think of Moore’s law in the context of how computing power has doubled about every two years. Now think of its other context: the reduction in computing cost. The manufacturing improvements that drove Moore’s law compressed the cost of computing power, not just the size of the chip’s circuits. It is this cost reduction that has enabled the explosion of microchips into everything around us. And that chip-enabled computing power will be connected without wires.

  The new wireless networks—using both commercially licensed as well as unlicensed spectrum—will connect the hundreds of billions of chips that will all be awaiting commands or sending back information. The new network itself is microprocessor chips communicating with other chips.

  The path of powerful wirelessly interconnected computing marches toward what some have labeled “digital dust”—an almost-infinite number of connected computing devices that form an “internet of things.” Its potential is even greater than the original wireless revolution that connected people to speak to each other. The network that allowed humans to restructure their lives is now connecting a multitude of inanimate, interconnected microprocessors that will oversee new patterns of life.

  The marriage of digital wireless connectivity with distributed processing power redefines the nature of common objects. Automobiles wirelessly report the performance of various systems and instantly notify emergency services in the event of a crash.40 Houseplants send a wireless text message to “water me.”41 Our relationships with our own bodies are altered as wirelessly connected Band-Aid-like monitors report vital signs, while our pills call in to report whether they have been properly ingested.42 Chips embedded in carpets even report what is going on above them.43

  Hundreds of billions of interconnected “things” also create an unprecedented amount of digital information. In the next chapter we discuss how this activity is creating a new capital asset. The massive impact of billions of people being able to speak to each other will be overwhelmed by a transformational tsunami of inanimate “things” capable of exchanging information to influence how humans live their lives.

  The new network revolution, driven by the most powerful and pervasive platform in the history of our planet, continues to develop. We are living amid a network revolution that promises to be of unprecedented size, scope, scale, and speed. It is neither the first time the networks underpinning our existence have changed nor the first time the results of those changes have made us question just what was going on.

  Part IV

  Our Turn

  Look around, look around at how

  Lucky we are to be alive right now!

  —Lin-Manuel Miranda, Hamilton, Eliza Schuyler verse

  “New networks challenge us to respond,” I wrote in the prologue. The just-completed journey through the history of networks delivers us to today. Now it is our turn.

  We have seen how new technology evolves in a Darwinian dance of innovation building upon innovation.

  We have observed that while technology is the catalyst, it is the secondary effects of the primary network change that are transformative.

  We have witnessed the struggles that occur when the immature effects of technology replace mature structures with a work-in-progress reset of the status quo.

  We understand the narrative. We know the history. The only thing different is that now it is our turn to make history.

  Eight

  The History We Are Making

  The headquarters of Facebook is a visual metaphor of the world we inhabit. The first thing that strikes you on walking in is that everything appears unfinished. The wall treatments and furniture are raw wood; even the giant iron beams that support the structure protrude in the middle of the open space, unpainted and unhidden, still bearing the spray-painted markings from their production and placement.

  When I asked CEO Mark Zuckerberg about the décor, he explained it had a purpose: to remind everyone that their efforts are never completed. The unfinished surroundings reinforce to employees that they are in the midst of a revolution in progress.

  Having concluded a review of the technologies that brought us to today, let’s turn to a brief consideration of some of our own works in progress. What follows is an unscientific selection of some of the changes created by our new networks. As we reflect on these, we would do well to recall the experiences of those who earlier stood astride network-driven change. Their need to respond to the new networks—and the lack of obvious solutions—was no different from ours.

  During my tenure at the FCC, I felt a bond with these histories. To remind me of this connection, I hung in my office a copy of the poster from the 1839 Philadelphia railroad dispute that we saw in chapter 3. Again, and again, I heard the issues raised by that poster replayed in twenty-first-century terms.

  We share a common bond with the 1839 Philadelphians who were confronted by the social, economic, and emotional issues raised by the new network. If we had been around then, how would we have balanced the desire to protect successful social and economic structures and institutions while responding to the potential—only beginning to be realized—of the new railroad network? It is a history that echoes in the decisions we make today.

  “History never looks like history when you are living through it,” John Gardner observed.1 Nothing is obvious. Our history will unfold according to how we deal with our new networks and their effects.

  New in New Ways

  What sets our time apart is how the networks that are triggering economic and social change are new in new ways.

  That newness is rooted in the architecture of the networks themselves. The new networks’ distributed architecture reverses the centralizing force earlier networks imposed on economic activity. At the same time, the decentralized applications of the distributed networks have recentralized economic power around the aggregated application of user information created by the network.

  Previously, whether by boxcars or phone calls, networks transported everything to a central point to be transferred onward. We saw how Chicago became the Second City as the product of the plains was switched to rail lines heading east. Taking advantage of the transfer, Chicagoans milled the grain and slaughtered the animals before shipping them onward. Around such activities congregated support businesses that sold their wares to the millers, butchers, and railroad men.

  Internet Protocol–based networks, however, do their routing not from a central point, but at multiple dispersed points, closer to the network’s edge. Economic activity has followed that migration. From entrepreneurs who eschew the centralized lab for a garage, to the backroom artisan who can now reach a worldwide interconnected market, economic independence that was once crushed by network-driven centralization is
being reborn thanks to new networks that push activity outward.

  In many cases, the new network hub has been pushed to the ultimate edge: the individual. Mobile devices have assumed the role of a network junction; data comes in, is acted on, and then is shipped back out. But rather than the institutionalized traffic of previous networks, this in-and-out activity is highly individualized.

  Our new networks also operate at near-zero marginal cost. In the old industrial economy, every time Ford built an additional car, the business faced steep marginal costs to acquire the metal, tires, labor, and other components. Today, however, every time Microsoft sells an additional copy of Word, it executes the virtually costless reproduction of an already assembled collection of zeros and ones, delivered at negligible cost over the internet.

  When the old AT&T had to set aside a whole new end-to-end circuit just to handle one additional call, its marginal cost was high. But when the current AT&T digital network is chockablock with packets jammed cheek-to-jowl to achieve the greatest efficiency, incremental costs almost disappear. By one estimate, the online delivery of a one-megabit file (1 million bits) costs one-tenth of one cent.2

  In the new network economics, the service provider must build the infrastructure (much as Ford must build an assembly plant), for which it deserves a fair return. But once the infrastructure costs are sunk, the marginal economics are quite different from those of the industrial era. It is the combination of zero marginal cost with open networks that has driven—and will continue to drive—innovation and growth in the twenty-first century.3

  Perversely, the distributed architecture of the network has allowed some to recentralize economic activity. History’s networks were centralized businesses that drove the centralization of the activities that used them. By distributing network functions—moving them “to the edge,” in network parlance—the new networks have distributed to individual users the control over what goes in and out of their personal network connections while at the same time funneling into centralized databases vast amounts of information about those users.