FEE – Ma Bell Suppressed Innovation for Thirty Grueling Years

Ma Bell Suppressed Innovation for Thirty Grueling Years

July 21, 2016

By Bill Frezza

“Oh, for the days of Ma Bell!” is not a lament we’re likely to hear. And for good reason. Before the breakup of AT&T, America’s telephone system was a government-sanctioned monopoly characterized by stagnant service offerings, high costs, and a glacial pace of consumer-facing innovation.

So it was distressing when a federal appeals court engaged in a bit of 1970s nostalgia last month by upholding the Federal Communications Commission’s (FCC) ill-conceived net neutrality rules. Under the new FCC rules, Internet service will increasingly be regulated like a public utility, rather than a competitive market.

The likely result? Reduced investment in online communications infrastructure, reduced competition, and innovation slowing down to a crawl.

Technology companies in the United States are our economy’s drivers—making things better, faster, and cheaper while creating new jobs and economic growth. Nothing could be worse for American competitiveness, or for consumers, than returning to the ‘golden age’ of Ma Bell.

Take it from me. I spent the early years of my career toiling for Ma Bell’s crown jewel, Bell Labs, which gave us technology breakthroughs like the transistor, the laser, the solar cell, and scientific advances in radio astronomy that provided the first direct confirmation of the Big Bang. While these are impressive achievements, they are not the whole picture. To see that fuller picture, we need to apply the most basic test for assessing economic policies, which is to examine not only what is seen, but also what is not seen.

Americans under the age of 30 never experienced our telecommunications system when it was a statutory monopoly. That’s fortunate for them as consumers, though it deprives them of some important historical perspective.

For seven decades, Bell delivered the world’s most advanced, reliable, ubiquitous telecom network in the world, spitting out ample profits that funded what many called a national treasure. Problem was, it was the exact same phone service for most of those seven decades.

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