Anthony J. Pennings, PhD

WRITINGS ON DIGITAL ECONOMICS, ENERGY STRATEGIES, AND GLOBAL COMMUNICATIONS

CONTENDING “INFORMATION SUPERHIGHWAYS”

Posted on | July 16, 2016 | No Comments

During the 1980s, before the reality of the Internet, a new communications infrastructure was initiated based on digital technologies. Propelled largely by growing demand for new microprocessor-based business services and fuelled by the availability of low-grade “junk bonds,” companies like MCI, Tele-Communications Inc. (TCI), Turner Broadcasting, and McCaw Cellular raised over $20 billion dollars to lay a fiber optic networks and implement new digital services such as videotext and interactive television.

Soon several modes of telecommunications were competing for the title of “information superhighway,” a popular metaphor for the changes happening to data communications and the potential for expanded telecommunications services such as interactive television. Generally attributed to then Senator Al Gore, the term was co-opted by the Bell companies who finally saw new opportunities coming with the digital revolution. For instance, Bell Atlantic and TCI attempted to form a merger that would offer interactive information services and video-on-demand over both cable and telephone lines.

Although the Internet was already twenty years old, it still had not achieved the type of technical robustness needed to capture popular and commercial attention. Wireless communication was growing, but still primarily used by an elite business class due to the lack of dedicated spectrum and wide-scale infrastructure problems. Cable TV was also a contender, with an extensive subscriber base and having built up its coaxial and fiber infrastructure during the late 1980s. Satellite was also in the running, with dramatically increased power capabilities resulting from the continuing development of solar power. The ability to efficiently transform sunlight into signal radiating power allowed smaller and smaller “earth station” antennas to pick up broadcast and narrowcast signals. A longshot were the power utilities that had developed technology to transmit data along its electrical lines. They lacked installed capacity but had good maintenance teams, billing systems, and ready access to homes and other buildings.

Which technology was going to rise to this status? Despite two decades of existence, the Internet was relatively archaic with no World Wide Web and few high-speed backbone networks. Wireless systems lacked the spectrum or infrastructure for broadband transmission over significant geographic domains. Interactive television was becoming a possibility as the FCC rolled back restrictions on the common carriers providing content, but despite ADSL over copper and fiber-to-the-home, software and content factors proved major limitations.

Interactive consumer services got their start with videotext offerings, but the terminals were large and awkward, and it only displayed textual information. Telephone companies soon began testing other electronic services. For instance, Bell Atlantic and TCI attempted to form a merger that would offer interactive information services and video on demand.

“Telcos” created a new technology for enhancing telephone lines called ADSL (Asynchronous Digital Subscriber Line) that could provide video over existing copper lines to the home. They were also intensively lobbying Washington DC to create a favorable regulatory environment for their new endeavors, specifically trying to derail the 1984 Cable TV Act that excluded them from offering television services.

Divested from ATT in the early 1980s and deprived of the lucrative long-distance services, the Regional Bell Operating Companies (RBOCs) such as Ameritech, Bell Atlantic, BellSouth, and others sought to take advantage of their monopolies over local telecommunications by providing such services as ISDN and interactive television.

By the early 1990s, the Baby Bells were conducting tests using ADSL (Asynchronous Digital Subscriber Line) to provide video over existing copper lines to the home. Disillusioned by the costs of providing fiber to the home, telcos looked to leverage their existing plant. ADSL could send compressed video over the established telephone lines. It was suitable to this task because it could send data downstream to the subscriber faster (256Kbps-9Mbps) than upstream (64Kbps-1.54Kbps) to the provider.[1]

The Bell telcos were also intensively lobbying Washington DC to create a favorable regulatory environment, specifically trying to derail the Cable Communications Policy Act of 1984 that excluded them from offering television services. Bell Atlantic even attempted to merge with cable TV giant TCI in anticipation of their control of the new information highways.

The Cable Communications Policy Act of 1984 triggered strong concerns that the cable TV industry was becoming too strong in relation to other parts of communications/media industry. Growing horizontal and vertical integration as well as a subscriber rate encompassing over 60% of American homes threatened the telecommunications companies, which began to press their own claim to the household imagination.[2]

The information superhighway, as envisioned by the Bell Atlantic-TCI merger, ran into a roadblock when Congress overrode President Bush’s veto of the 1992 Cable Act. The new rules allowed Clinton’s FCC administration to lower cable rates. TCI’s stock dropped and the deal fell through. The FCC had implemented new econometric models that allowed them to reduce cable TV rates in select markets around the country without reducing cable companies revenue. When the FCC announced its new rulings in February 1994, both companies announced that the new regulations had killed their deal.[3]

Well, we know how this story turns out. With its TCP/IP software, the Internet became the world’s “information superhighway.” Its ability to connect differing computers and operating systems had given it unprecedented connectivity in the computer world, and over the course of the 1990s, it became the preferred conduit for communications and netcentric commerce.

Notes

[1] Speed rates on ADSL are listed as their more current rates as provided by Heidi V. Anderson, “Jump-Start Your Internet Connection with DSL,” in How the Internet Works, Part I. SMART COMPUTING REFERENCE SERIES. p. 105
[2] Logue, T. (1990) “Who’s Holding the Phone? Policy Issues in an Age of Transnational Communications Enterprises,” PTC ’90 Pacific Telecommunications Council Annual Conference Proceedings, Honolulu, Hawaii. p. 96.
[3] Hundt, R.E (2000) You Say You Want a Revolution: A Story of Information Age Politics. Yale University Press. pp. 30-34.

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AnthonybwAnthony J. Pennings, PhD is Professor and Associate Chair of the Department of Technology and Society, State University of New York, Korea. Before joining SUNY, he taught at Hannam University in South Korea and from 2002-2012 was on the faculty of New York University. Previously, he taught at St. Edwards University in Austin, Texas, Marist College in New York, and Victoria University in New Zealand. He has also spent time as a Fellow at the East-West Center in Honolulu, Hawaii.

Category: democratic political economies, digital media economics, global communications, telecom policy and net neutrality
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    Professor at State University of New York (SUNY) Korea since 2016. Moved to Austin, Texas in August 2012 to join the Digital Media Management program at St. Edwards University. Spent the previous decade on the faculty at New York University teaching and researching information systems, digital economics, and strategic communications.

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