The Master Switch: The Rise and Fall of Information Empires

March 10, 2011

Here, Tim Wu takes as his theme the US' domination of the information industries throughout the 20th century. Starting with telegraphy and telephony in the late 19th century and moving through film, radio, television and then the internet, he describes the origins of these technologies and their eventual domination by monopolistic corporations. As a history lesson for anyone interested in how innovations move from inventors' garages and laboratories to our living rooms, The Master Switch is a good read, but it is its relevance to the evolution of the internet that makes it an important book.

Wu argues that information is not like other resources, owing in part to its ethereal nature but more significantly because public access to it is central for the effective running of a modern democracy. The internet is now such a key platform for information access in developed economies that any attempts to restrict or slow down its flow by network operators need to be resisted. By showing how corporate interests took control of initially "open" systems such as the telephone, radio and television networks, he sets the scene for where the internet might be heading.

Of course, analogies can be misleading and every industry is subject to different dynamics that shape its development. However, Wu's focus on information industries, or empires as he calls them, lends considerable weight to his argument that the interests of network operators seldom align with network users. This is particularly true of his extensive history of AT&T, which has gone from monopoly to fragmentation and back to a near-monopoly over the past 100 years, and it looks likely to exert considerable power over the future direction of the internet.

At the heart of the book is a story of control and the natural desire of corporations to maximise their return on capital investments. If left unchecked by effective competition or regulation, a monopoly is the natural outcome, as is shown by the clever but ruthless manoeuvrings of AT&T and J.P. Morgan in the early 20th century. By cleverly manipulating the regulators and either crushing or buying its competitors, AT&T dominated the US telecommunications market for more than 60 years until its break-up in 1984.

While a universal telephone service for all US citizens who could afford it may have been a positive outcome of this monopoly, high prices to consumers and a lack of innovation were less desirable side effects. A key reason for the mass adoption of the internet as a communications and information-sharing network has been the low barrier to entry for anyone wanting to develop and launch a service on this platform. Whatever you think of them, Facebook, Skype, Wikipedia, YouTube and a plethora of other web-based services are changing the way we work, communicate and amuse ourselves, and would never have seen the light of day on a network controlled by a telecommunications or cable television operator. The broadly adhered to principle of "network neutrality", whereby all data that travel across the internet are treated equally by those managing the network, has worked well for users and been a key driver of innovation over the past 20 years.

While Wu's book wanders off-topic at times, as he describes personalities and players not always central to his core arguments, he ultimately presents a strong case for regulators to play a more active role in securing the future of the internet. If left unchecked, it is possible that the telephone, cable television and mobile operators may reclaim the internet as their own and stifle the most important communications innovation since the invention of the movable-type printing press in the 15th century.

The Master Switch: The Rise and Fall of Information Empires

By Tim Wu. Atlantic, 384pp, £19.99. ISBN 9781848879843. Published 17 March 2011.

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