Any lawful device: Revisiting Carterfone [telecom]

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Any lawful device: Revisiting Carterfone on the eve of the Net
Neutrality vote

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the Commission is doing now.

By Matthew Lasar

Nearly 50 years ago, the Federal Communications Commission issued one
of the most important Orders in its history, a ruling that went
unnoticed by most news sources at the time. It involved an application
manufactured and distributed by one Mr. Thomas Carter of Texas. The
"Carterfone" allowed users to attach a two-way radio transmitter/
receiver to their telephone, extending its reach across sprawling  
Texas oil fields where managers and supervisors needed to stay in
touch. Between 1955 and 1966, Carter's company sold about 3,500 of
these apps around the United States and well beyond.

In the end, however, Carterfone's significance extends far beyond the
convenience that Thomas Carter's machine provided its users over a
decade. It is no exaggeration to say that the world that Ars Technica
writes about was created, in good part, by the legal battle between
Carter, AT&T, and the FCC's resolution of that fight - its Carterfone
decision. The Carterfone saga starts as the appealing tale of one
developer's willingness to stick to his guns. But it is really about
the victory of two indispensable values: creativity and sharing.

Bill Horne
(Remove QRM from my email address to write to me directly)

Re: Any lawful device: Revisiting Carterfone [telecom]
On Friday, December 22, 2017 at 7:16:30 PM UTC-5, Bill Horne wrote:

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This is only half the story.  Here is the other half:

Until Carterphone, federal and state regulators _deliberately_
created various telephone company policies to serve the social
interest.  Specifically, everyone agreed that universal service--
providing very low cost telephone service so it was affordable by
many people--was a desirable social goal.  However, to widely offer
service at $3/month (which included a durable telephone set and
all wiring and set maintenance) required a subsidy.  That subsidy
came--deliberately--from pricing other telephone services at a high

When the telephone companies (both Bell and independent) recognized
the world was changing, they prepared to change their world, too.
For instance, in the 1970s, Bell planned to eliminate flat rate
pricing for all plans.  Western Electric developed new CAMA
technology to track local calls on step-by-step offices*.  However,
beyond a few trial places, this policy was not implemented.

One policy that was widely implemented was changing for Directory
Assistance calls.

This is covered in detail in the good book, "Heritage and Destiny:
Reflections on the Bell System in Transition" by Alvin Von Auw.

* A description of the new CAMA equipment may be found in:

P.S.  The Bell System did allow certain customer owned equipment
to be connected to its network.  This included public address systems
connected to the switchboard and dial controlled dictation machines.

Re: Western Electric-- Any lawful device: Revisiting Carterfone [telecom]
On Friday, December 22, 2017 at 7:16:30 PM UTC-5, Bill Horne wrote:

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This article makes the statement, "AT&T should never have been  
allowed to own Western Electric in the first place", and
that is incorrect.

In the past, many companies were vertically integrated, that is,
they owned the manufacturing, sales, and service divisions.   So,
it was not unusual that AT&T owned Western Electric.

Further,  Western Electric was more than just manufacturing.  AT&T
delegated procurement and installation to W/E as well, functions
that other companies did in-house.  W/E saved money by utilizing  
substantial economies of scale in both manufacturing and procurement.

In my personal opinion, Western Electric equipment was superior
to that of other telephone manufacturers, such as Automatic  
Electric, Kellogg, and Stromberg Carlson.

There is one other key issue:  government policy dictated that
the Bell System depreciate its equipment over a long period of
time.  Accordingly, Bell built its equipment to last for a long  
period of time.  We can see that by the following Bell advertising,
one from 1948, one from 1966:  (This was a frequent theme).

(LIFE 12/6/1948 "We expected this")

(LIFE 7/22/1966) "You don't have to worry about a Bell Telephone"

This business model worked well for Bell and its customers for
decades.  However, by the late 1960s onward, society was rapidly  
changing, and consumers were no longer satisfied with the status-quo.
They were tired of the same old black rotary dial set (and plenty  
of the older 302 sets remained in service in the 1960s).  Most
significantly, people didn't mind spending $10 for a cheap poor
quality telephone--even if it only lasted a year or so (which  
was often the case), they still felt they were ahead of the game
over paying $1/month forever to rent a boring black W/E set.

Likewise, the business community wanted more sophistication in  
its telephone systems.  The Bell Labs history admits development
lagged behind foreign competition. Bell had several electronic
PBX systems for business (800 series, Dimension), but apparently
many business customers wanted more "glitz" (whether that glitz
actually served their needs is another story.)

Had there not been a Divestiture, changing market forces and
consumer desires would have resulted in a very different AT&T
today.  As von Auw's book explains, AT&T recognized in the 1970s
that renting a telephone set--and providing full maintenance for  
it and the associated wiring--was no longer economical.

A key question never answered was if government regulation
would've allowed the Bell System to compete on a level playing
field against the newcomers.  That is, for Bell to charge market
rates for its services rather than rates designed for cross-subsidy
or universal service.

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