Juan Monroy — Technological Disruptions 2

The Master Switch “Cycle”
- Consolidation
  - an industry forms from the new technology
  - a dominant player emerges
- Disruption
  - a new technology arrives
  - great promise and utopian discourses for the new technology
  - the dominant player tries to suppress the new technology
  - the earlier technology declines
- Cycle
  - a new dominant player emerges
  - the disruptive technology becomes consolidated again
Telephone
- AT&T becomes Bell monopoly
  - promise of universal service
  - functions as a common carrier
  - controls local and long distance lines
  - controls telephone hardware to the last mile, including telephone equipment
  - prohibition over foreign attachments
  - AT&T maintained position of
    - universal service
    - no interconnection with competition
    - no foreign attachments by customers
- Anti-Trust Action, 1984
  - Microwave Communications, Inc.
    - new competitor for AT&T using microwave relay, 1963
    - cheaper alternative to AT&T
    - business service between St. Louis and Chicago
  - Breakup of (“Ma”) Bell Monopoly
    - 1970s belief in decentralization
    - Seven regional Bell Operating Companies (RBOCs)
    - AT&T retained control of long distance telephone
    - Baby Bells took control of local telephone
    - foreign attachments flourished
      - RJ–45 (RJ–11)
      - Hush-a-phone
      - Carterphone
      - Dennis Hayes built a 1977 modem
      - fax machines
    - innovations
      - computing
      - telephony
      - networking
- New AT&T reborn as a dominant player
  - Deregulation with Telecommunications Act 1996
  - Baby Bells reconsolidated
  - SBC was very aggressive in consolidation
    - Ed Whitacre
    - RBOCs
    - SBC and the rebirth of AT&T
  - New oligopoly in telecommunications
    - AT&T: formerly Southwest Bell, SBC
    - Verizon: merger between GTE, Bell Atlantic
    - Qwest: formerly US West
Film
- Studio System
  - emerges from Independents and feature films
  - vertical integration
    - production
    - distribution
    - exhibition
  - anti-competitive practices
    - block booking
    - blind bidding
  - Big Five were vertically integrated
    - Paramount
    - Warner Brothers
    - 20th Century-Fox
    - MGM-Loews
    - Radio-Keith-Orpheum
  - Little Three controlled two aspects of vertical integration
    - Columbia
    - Universal
    - United Artists
- Fall of the Studio System
  - Anti-Trust Action of the 1940s
    - Roosevelt era origins
    - Thurman Arnold, lead prosecutor
    - studios required to divest of theaters
  - Cultural Factors
    - post-World War II suburbanization
    - rise of television
  - Emergence of New Hollywood era
    - influence of foreign films
    - Production Code eliminated in 1966
    - Ratings System adopted 1967
    - greatest creative output in Hollywood’s history
- Conglomeration
  - Heaven’s Gate
    - end of the New Hollywood era
    - “auteur film from hell”
  - rise of media conglomerates
    - Steven Ross
    - Warner Communications
    - synergy
  - intellectual property development
    - franchise films
    - other revenues
  - risk management
    - minimize risk with predictable businesses
    - less risky businesses absorb losses by box office bombs
    - films made by corporations, not filmmakers or even film studios
  - Big Six Conglomerates
    - Time-Warner
    - CBS-Viacom
    - Comcast NBC-Universal
    - Sony
    - News Corp
    - Disney
Television
- Network Oligopoly
  - Three networks
    - NBC
    - CBS
    - ABC
  - Networking technology
    - AT&T
      - NBC Red: NBC
      - NBC Blue: ABC
    - Western Union
      - CBS
    - no other networking technologies existed
- Cable TV
  - Ralph Lee Smith
  - promised to bring an unlimited number of channels into the home
  - cable TV was limited to Community Antenna Television
    - John Walson, Pennsylvania
    - distant signal imports
    - Kronos effect: broadcasters and film studios banded together to bust cable
    - FCC wanted to nurture UHF and banned cable in top 100 cities
  - deregulation
    - Nixon’s Cabinet Commission: repeal all regulatory blocks on cable
    - Open Skies: satellite
    - promise of new competition with new networking technology
- Cable goes commercial
  - Ted Turner
    - buys WJRJ-TV in Atlanta
    - envisions a new national network
    - new superstation
  - commercial model
    - acquire cheap content
    - broadcast sports teams (Braves)
    - charge for retransmission to local cable companies
    - sell advertising on a smaller scale than networks
Computing
- Age of Mainframes
  - large, room-sized computers
  - punch cards as storage devices
  - computers only for governments and large corporations
  - IBM (“Big Blue”) was dominant player
- Personal Computing
  - personalizing the computer
    - Douglas Engelbert mouse video
    - mouse
    - keyboard
  - Xerox Alto
    - desktop metaphor
    - mouse
  - Altair
    - build-your-own computer
    - inexpensive
    - hobbyists training ground
    - Microsoft BASIC
  - Apple I
    - computer for the home
    - personal
    - easy-to-use
  - IBM PC Jr.
    - IBM enters personal computing market
    - powerful
    - inexpensive, business machine
  - Macintosh
    - graphical user interface
    - consumer product not an open, customizable computer
- Internet
  - packet switching: decentralized network
    - designed by Paul Barran
    - objections from AT&T
  - TCP/IP
    - Vincent Cerf
    - common language for inter-networking
- Consolidation
  - AOL-Time Warner merger
    - Steven Case and Gerald Levin
    - Cross pollination
    - Walled garden
    - Synergy
    - It went from being a destination than a platform
    - Net neutrality
  - Apple
    - Exclusive partner with AT&T in the US
    - Closed architecture
    - Walled garden
    - Apple II was open, Mac was closed
    - Integrated projects
    - In an age of open standards
  - Google
    - metaphor of telephone girls connecting calls
    - directory of the Internet
    - PageRank
    - switch of the web