Telecommunications

Telecommunications is the carriage of signals over distance — signs, words, images, sounds, or data of any kind, moved by wire, radio, light, or any other electromagnetic means. The tag covers transmission as a thing bought and sold: the telegraph and its tariffs, submarine and terrestrial cable, the telephone, radio and television broadcasting, microwave relay, fiber, satellite links, and mobile networks and the spectrum they run on. Long-distance communication is far older than any of this — beacon fires, smoke, signal flags, semaphore towers, drums, horns — but none of it was a commodity, because none of it was sold. The threshold is the electric telegraph, which arrives around 1840 in the work of Cooke and Wheatstone in Britain and Morse and his collaborators in the United States, and the reason it marks the beginning is commercial rather than technical: it was the first time a person could hand a message to a company that owned a wire and be charged by the word to have it carried. What became a commodity was not the ability to communicate at a distance but the transmission itself.

Its first effect was to destroy a profession. For as long as trade had existed, a merchant's profit consisted substantially in knowing a price that the people he dealt with did not know — a differential in information that distance alone maintained. The transatlantic cable of 1866 is the cleanest measurement of that differential's collapse anywhere in economic history, because cotton was traded in both New York and Liverpool and both markets kept records. Before the cable, news crossed the Atlantic by ship in seven to fifteen days, usually about ten, and the average gap between the New York and Liverpool price of cotton ran to 2.56 pence a pound, roughly sixteen percent of the New York price. After it, information typically arrived in a day. The average gap fell by about thirty-five percent, to 1.65 pence, and the variance of that gap — the room in which a well-informed trader operated — fell by something like ninety-three percent. Each additional day of delay, it turns out, had been worth about a twenty-four percent larger departure from a single world price. Daily cotton exports rose thirty-seven percent.

One finding in that episode is worth holding onto, because it generalizes: while the volatility of prices collapsed, the volatility of shipments rose by more than a hundred percent. Faster information made the price steadier and the cargo traffic choppier, because merchants who now knew the distant price could wait for it and then move all at once. This is the characteristic signature of telecommunications throughout its history. It does not merely speed up an existing trade; it relocates where the uncertainty lives. The commodity markets that followed the cable — with their standardized grades, their futures, and their continuous quotation — are structures built to manage a world in which the price everywhere is known at once and the only remaining arbitrage is in time.

The second thing to understand about transmission is that it has to run somewhere. A signal travels on a physical line that is laid across particular ground or particular seabed and comes ashore at a particular beach, and whoever owns that route can read what passes along it and can cut it. Britain understood this earliest and built accordingly, routing an imperial cable network that touched only territory it controlled. The payoff came within hours of the declaration of war in 1914: the cable ship Alert left Dover on the night of 4 August and before morning had cut the five Channel cables connecting Germany to France, Spain, and the Azores, severing German telegraphy to most of the world and forcing its overseas traffic onto the radio transmitter at Nauen, where it could be intercepted. That is the route by which the Zimmermann telegram was read, and the route by which the United States was brought into the war. The first offensive operation of the First World War was conducted against this commodity.

Its third structural feature is economic. Once a line is built, carrying one more message over it costs very nearly nothing, so almost the entire cost of the business is the fixed cost of construction. A good with enormous fixed and negligible marginal costs tends to a single supplier as a matter of arithmetic rather than of conspiracy, and the regulatory history of telecommunications in the twentieth century is one long attempt to manage that fact — the dominance of Western Union, the Bell System's accommodation with the federal government in 1913 and its court-ordered breakup in the 1980s, the state post-and-telegraph monopolies of Europe and their privatization, and the auctioning of radio spectrum as a way of selling access to a medium that cannot be divided physically. No other commodity in the Atlas is natural-monopoly territory to quite this degree, and none has been so continuously the subject of state ownership, state licensing, or antitrust.

The present arrangement is more like 1866 than is generally assumed. Essentially all intercontinental communication still travels as light through a cable lying on the ocean floor: over six hundred submarine cables are in service or planned and the system runs to more than 1.5 million kilometers, while satellites carry a fraction so small that the Federal Communications Commission puts them at well under one percent of American international capacity. The cables break about two hundred times a year, and roughly two-thirds of those breaks are caused by fishing gear and ships' anchors. What has changed is who owns them. For a century cables were built by consortiums of telephone carriers who sold capacity to anyone; the largest investors in new capacity are now the content companies whose own traffic fills them. The firms that own the wire and the firms that own what moves across it are converging again, which is the arrangement that the whole twentieth-century apparatus of common carriage and antitrust was constructed to prevent.

Boundaries.The division from News is content against carriage: the newspaper, the wire service, and the dispatch itself are News — Reuters is tagged there, and sits in that tag's own anchor, notwithstanding that Reuters was built on the telegraph — while the wire, the tariff, and the network are here. The division from Electrical equipment is form against function: a handset, a switchboard, a transmitter, or a satellite considered as a manufactured object is Electrical equipment, and the transmission sold over it is this tag. Entries about the generation or supply of the current are Electric power; entries about the chips in the switching gear are Semiconductors. An entry about orbital slots or spectrum as allocable rights carries this tag, since what is being allocated is the right to transmit.