Greetings from the State University of New York (SUNY) in the Republic of Korea. SUNY Korea is located in Songdo, a new city built out of the Yellow Sea. It was designed as a “smart city” and part of the Incheon Free Economic Zone (IFEZ), along with the Incheon Airport, often rated as the top airport in the world.

Since I’m opening up this conference, I thought it would be appropriate to introduce a juxtaposition with two statements that recently achieved significant currency in popular discussions. These are the “The World is Flat” by Thomas L. Friedman and “The World is Spiky” by Richard Florida.

I’m also going to introduce a third statement, “The World is Bubbly,” that points to problems associated with rising asset prices in urban areas and their economic ramifications. I am using “bubbly” to refer to the price inflation associated with urban real estate and how it influences the artistic, creative, and innovative forces that drive much of the economic energy of the city.

Urban environments are becoming storage facilities for global surplus wealth, and consequently, these investments are seriously challenging the economies of major cities. The carbon bubble, in particular, has been creating pockets of excess wealth in significant cities as investors crave the luxury brands, cultural amenities, and increasing security of cosmopolitan urban life.

Low-interest lending rates have also been a significant factor in general asset inflation as accommodating monetary policy by central banks has made borrowing cheap, allowing many others to also participate in asset bubbles. The flows of investment into expensive condos and high rent buildings are problematic because they are pushing out key aspects of the labor force, in particular, the “creative class,”[1] a prime economic catalyst that sets in motion much of the action and innovation in urban economic development.

This post examines the economic importance of cities, the centrality of creative workers, and problems attracting and retaining creative talent. It will critique the role of creative capital and the “spiky world” thesis and discuss issues related to the divide between creative workers and service workers. Also how jobs, income, housing, and transit remain key issues for the future of urban environments, especially in an era of real estate appreciation.

Jane Jacobs and The Economy of Cities

Let me first explain the underlying contention of this presentation. That is that cities are major engines of economic growth and innovation. They are spaces where people interact regularly, and information flows quickly. They attract people who appreciate the intensity of interactions and the cultural and economic opportunities available in urban environments. The renowned urbanist Jane Jacobs followed her classic The Death and Life of Great American Cities (1961) with a treatise on The Economy of Cities (1969) where she celebrated the diversity, the liveliness, the desires, the inefficiencies, and the creativity of urban areas.

Jacobs argued cities had been largely neglected as sources of economic growth. Richard Florida echoed this concern and placed emphasis on the creative class that is attracted to life and work in cities. My own concern follows Florida’s, but I’m concerned that as cities develop policies to become more attractive to the creative class, that they sow the seeds of their own demise by attracting excess real estate capital.

In support of the argument that cities are engines of economic growth is the data from Yale University’s G-Econ Project. They mapped data on global economic activity and provided estimates of “gross cell product” for the entire globe measured at a 1-degree longitude by 1-degree latitude resolution at a global scale. It shows that economic activity is predominately located in urban areas, confirming Jacob’s argument.[2]

The World is Flat

Thomas L. Friedman popularized the idea of global “flatness” in his The World Is Flat: A Brief History of the Twenty-first Century. It refers to the spread of opportunity afforded by a number of historical events and technologies. The collapse of the USSR combined with a set of complementary information and communication technologies (ICTs) around PCs, the World Wide Web, and its Netscape browser broadened the audience for the Internet and spurred the “dot.com” era.[2]

These tools made documents and files of all kinds manipulable and shareable, whether they were applications, pictures, text, or videos. Technology also became available for people to collaborate over long distances and from rural to urban areas without actual travel. By not only downloading webpages but also uploading files to cloud technologies and being able to work on them collaboratively, new alliances and interactions could take place.

For Friedman, technology is allowing people from more places to participate in the global economy, even if they reside in regions and countries generally considered peripheral environments. With fiber optic cables spanning land and sea and with satellite signals hopping across geographical barriers, it has become possible for people to connect and compete like never before.

Digital technologies have become “permissive” in that they allow organizations to collaborate, outsource, subcontract, offshore, supply-chain, in-source, etc. These processes are having a significant influence on the world economy and, in a sense, “flattening it.”

Capital is moving to places that had previously been unable to participate in manufacturing or services such as call centers. The result is a “level playing field” with opportunities opening up for previously restricted or hampered environments.

The World is Spiky

Richard Florida countered that the world is “spiky” because economic growth is primarily created in cities, and less so in suburban and rural areas.[3] Like Friedman, he acknowledged that the global economy is significant, but he promoted cities as the major economic generators. He cited the critical intellectual leadership of Jacobs and argued that urban areas are particularly energized by groups of highly educated and skilled workers he called the “creative class.”

He argued that cities would continue to be significant in the world economy primarily because innovation comes from producing spaces that attract and enhance clusterings of creative people. The presence of the creative class provides creative capital – the human ability to create new ideas. And, consequently, we get new business models, cultural forms, and advanced technologies, leading in some cases to whole new industries. Architects, artists, engineers, healthcare professionals, lawyers, scientists, writers, etc. are some of the contributing members of the creative class.

Florida argued the primary economic policy concern for any city, region, or nation is to ensure the constant influx of creative talent. The key to doing that is being mindful that the creative class gravitates to the three T’s: Technology, Talent, and Tolerance. Access to advanced technology, the talent to use it effectively, and an openness to all the different types of people that can contribute to a community are the keys to successful economic growth, especially in urban areas.[4]

The World is Bubbly

This thesis is that the dynamics of global finance capital are both following the creative class into cities and subsequently pushing them out. Increasing global flows of capital and low interest rates due to accommodating monetary policy have pushed up urban real estate, both in terms of vertical heights and inflationary prices.

Wealthy investors are attracted to urban lifestyles because of the availability of cultural activities, leading restaurants, and quality education. Bolstered by the “wealth defense industry” that provides everything from asset management, tax avoidance, foundation setup, to private security forces, capital has become transnational. Global wealth has been looking for appreciating assets to deposit their surplus wealth, preferably detached from the reach of any taxing governments. A preferred target has been “land bank” real estate properties in progressive cities.

While this is not particularly new to primary cities (New York, London, Paris, Seoul, and Tokyo), secondary cities (Boston, Chicago, San Francisco, Washington DC, Shanghai) and even tertiary cities like Vancouver and Austin have seen prices increase substantially in the past decade due to cheap global capital unhindered by national boundaries and regulatory constraints.[5]

Not surprising, Richard Florida’s “creative industry workers” are also attracted to the benefits of urban living conditions. But while creative workers are generally well paid, they cannot universally participate in the asset growth associated with real estate investment in major cities. Global flows of capital and low interest rates due to accommodating monetary policy has pushed up urban real estate, both in terms of vertical heights and inflationary prices, making the world “bubbly.”

Addressing the Urban Crisis

So, what to do about the situation? Below is an interview with Richard Florida on August 3, 2015, that I found interesting. The unedited audio from The Brian Lehrer Show on WNYC public radio can be found here.

Florida was talking along with Steven Pedigo, director of Creative Cities & Civic Innovation at New York University’s School of Professional Studies, about their analysis of New York City’s post-recession economy and the role of the creative economy. In particular, they talked about strategies to relieve urban inequality and how jobs, income, housing, and transit remain vital issues for the future of metropolitan economies.

In his 2017 book, The New Urban Crisis: How Our Cities Are Increasing Inequality, Deepening Segregation, and Failing the Middle Class-and What We Can Do About It, he addresses the growing crisis facing the creative class as well as blue collar and service workers such as police and fire protection that keep the city livable. In addition to the need for higher incomes, many place-based policies need to be addressed that include improving transportation and creating more affordable housing.

Postscript 2020

Three of the most important sources of investment “oligarchic capital” in luxury real estate have declined significantly. China has instituted strict currency controls and its citizens have expressed concerns about racism in the US. Russian oligarchs are struggling with reduced prices of oil, as are the princes of Saudi Arabia, especially in the wake of the coronavirus. Prices are going down as the carbon bubble continues to deflate and less surplus wealth is searching for urban real estate.

Citation APA (7th Edition)

Pennings, A.J. (2019, Jul 19) The World is Bubbly: Capital, Cities, and Creative People. apennings.com https://apennings.com/dystopian-economies/the-world-is-bubbly-capital-cities-and-creative-people/

Notes

[1] Richard Florida actually credits his editors with the term “creative class.”
[2] Robert Friedman (2005)The World Is Flat: A Brief History of the Twenty-first Century
[3] Richard Florida (2005, Oct) The World is Spiky. The Atlantic Monthly.
[4] Richard Florida, Charlotta Mellander, Kevin Stolarick. Talent, Technology and Tolerance in Canadian Regional Development. See also Richard Florida (2004) Cities and the Creative Class.
[5] Saskia Sassen pointed out in her Global City: New York, London, Tokyo that one of the characteristics of the modern global economy is that commodity and manufacturing activities have been spatially dispersed while management and marketing-related services such as accounting, advertising, finance, and management have been centralized in several urban “global cities.”

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Anthony J. Pennings, Ph.D., is a Professor at the Department of Technology and Society, State University of New York, Korea. From 2002 to 2012, he was on the faculty of New York University. Previously, he taught at Marist College in New York and Victoria University in New Zealand. He lives in Austin, Texas and has taught in the MBA program at St. Edwards University. He was also a Fellow at the East-West Center in Honolulu, Hawaii.

Category: creative cities, creative industries, digital destruction, digital geography, dystopian economies
Tags: creative class > Jane Jacobs > Richard Florida > Saskia Sassen > the world is bubbly > the world is flat > the world is spiky > Thomas L. Friedman

How the US Mobile Industry Came Together, Part II: The Grand Alliance

Posted on | July 21, 2019 | No Comments

Much like J.P. Morgan’s creation of telephone industry giant AT&T, the wireless industry was one of the information industries (along with cable TV, fiber optics and satellite TV) created mainly through the efforts of financier Michael Milken of the defunct investment firm Drexel Burnham Lambert. Milken helped the McCaw family assemble the wireless industry during the 1980s by raising money to purchase cellular licenses and to buy MCI Wireless for nearly $2 billion. McCaw Cellular Communications was later sold to AT&T Wireless Services in 1994, combining the nation’s biggest cellular carrier with the largest long-distance telephone company.

In a previous post, I explained how the wireless “mobile phone” business emerged about the same time as the breakup of AT&T, which had been under new anti-trust scrutiny since the Department of Justice (DOJ) filed suit in 1974. A year before, Motorola made the first mobile phone call and later in 1977, the FCC permitted them to build experimental systems in two major cities. In 1980 an AT&T report estimated that the market for mobile phones in 2000 would be 900,000 subscribers (The actual number of mobile phone subscribers in 2000 was 109.5 million). Consequently, when AT&T was forced to break up in 1982, it ceded the wireless business to the local phone companies. It was a significant strategic mistake that would cost them billions of dollars in the future.

Despite the limited market forecast, the FCC felt obliged to assign spectrum to the new mobile service. In May of 1981, they divided the 40 MHz frequency allocated to cellular into two segments in an attempt to create duopolistic competition. One segment would go to the local telephone company in each market, and the other would be open to non-telephone companies that wanted it.[1] This way, the phone companies could improve the service while the market could be “democratized.” If more than one company applied for the license, an administrative judge would review the company’s application. They would judge the merit of its plans and technical capability to provide the service coverage. On June 7, 1982, some 190 applicants applied for FCC licenses to provide cellular in America’s 30 largest cities. The applicants included a wide range of companies looking to make a play in the mobile industry, from the upstart McCaw Company to the former telegraph monolith Western Union. One of the most dramatic technological roll-outs of the 20th century was beginning but not without an additional twist in the method.

The year 1984 was a significant one for the development of the technological infrastructure in the US. Apple introduced the Macintosh computer; IBM bought Rolm, a pioneer of digital office technology; and AT&T was divided into a long-distance company, a manufacturing entity, and an assortment of regional local phone companies. 1984 was also the time the mobile phone industry began a series of dramatic changes. The telephone companies were starting to roll out their cellular services, and on April 10th Bell Atlantic made its first mobile call to comedian Bob Hope.

Progress also continued for the non-wire companies when in February of 1984, the “Grand Alliance” was born. This group consisted of the non-RBOC companies vying for the alternative cellular market. CellNet, Cox Cable LIN, MCI, Metromedia, Metro Mobile, MCI, The Washington Post Company, and Western Union signed several agreements to share or merge markets. They also made arrangements for rounds II and III of the FCC spectrum distribution.[2] The reason for the Alliance was the idea of “cumulative chances.” These companies began to agree to merge applications in a given market to increase the chances of one company getting control of a specific area and competing successfully against the local phone company.

In April however the FCC decided to allocate markets 31st to 90th via lottery, even digging up the same Ping-Pong drum used to select draftees during the Vietnam War.[3] Sown into the decision though, were the seeds of its own destruction. The FCC included three rules that ultimately would create chaos and lead to the elevation of McCaw. The government ruled that: 1) applicants could file duplicates of their applications; 2) they would not have to tie up capital; and 3) that the second through tenth place winners would be drawn at the same time. This last decision was made so the lottery would not have to be redone if the first choice became ineligible for some reason.[4] As a result, a new strategy began to form based on the notion of buying cumulative chances, and McCaw got the process started.

McCaw was spread quite evenly among cable, cellular and paging but by the summer of 1984, they began aggressively going after mobile. They took a risk and bought Knight-Ridder’s cellular applications for $1 million. They had no assurances from the FCC that the government agency wouldn’t declare the previous application ineligible and nix the idea of buying license applications in general. But when Round IV for the 91st to 120th largest markets began, over 5,100 applications arrived. Richard L. Vega and Associates had begun producing applications for $1,500 each whereas applications for Round I had cost about $300,000. The applications flooded the FCC’s headquarters and threw it into chaos. As a result, the FCC announced in late August that it would speed up the process and hold its Round II lottery on October 3. Shocked by the announcement, Telocator, the DC-based trade association for the cellular industry, formed The Counter-Alliance. Within a month, some 150 different businesses representing 700 various applications agreed to merge into 60 partnerships and take the process out of the FCC hands. McCaw aide John Stanton headed the Counter-Alliance and skillfully brought together the smallest of the FCC applicants with the promise of working out their differences and combining their “cumulative chances” into controlling interests.[5]

What would transpire in a New York City conference room is probably the most unheralded major telecommunications event of the 20th century. The Counter-Alliance put the smaller players back in the game but it also allowed McCaw to develop relationships that proved useful later for acquisitions. With Stanton reaching out to small license holders across the nation, McCaw was doing valuable research for future acquisitions. But that future was still unclear. In September, a “trading room” was formed at Rubin Baum law offices in NYC to work out what was called “Le Grand Deal”.[6] Representatives from Rounds II and III met in a conference room on Fifth Avenue to trade license applications in order to increase the chances that a company could control a single market, say Austin, Texas. Since the lottery would be drawn for the first 10 applications, the idea was that a single company could trade licenses in other markets in order to increase their chances to control other markets.

One crucial issue was equivalence. What would be the metric of value? How would the traders determine the value of each market? Their answer was the “POP,” a value determined by the 1980 population census. The traders worked out a formula that divided the population of an area by the number of license applicants. For example, Orlando, Florida, had a population of 700,000 people. Thirteen companies had applied for the FCC license in that area. So each application was allocated 55,000 POPs. A value of $3 per POP was used based on the McCaw-Knight-Ridder deal. Each could trade POPs for POPs.[7]

In the next post, I will discuss how McCaw Cellular became the dominant alternate cellular network by utilizing a new financial tool, the junk bond.

Notes

[1] While AT&T was the dominant phone company, GTE had a significant share and small companies such as the Warwick Phone Company in Warwick, New York also provided service.
[2] Alliance formation from James B. Murray, Jr. (2000) Wireless Nation: The Frenzied Launch of the Cellular Revolution in America. Cambridge, MA: Perseus Publishing. p. 77.
[3] Sale of McCaw Cable from James B. Murray, Jr. (2000) Wireless Nation: The Frenzied Launch of the Cellular Revolution in America. Cambridge, MA: Perseus Publishing. pp. 146-147.
[4] FCC three rules from James B. Murray, Jr. (2000) Wireless Nation: The Frenzied Launch of the Cellular Revolution in America. Cambridge, MA: Perseus Publishing. pp. 81-82.
[5] Counter Alliance from James B. Murray, Jr. (2000) Wireless Nation: The Frenzied Launch of the Cellular Revolution in America. Cambridge, MA: Perseus Publishing. p. 92.
[6] from James B. Murray, Jr. (2000) Wireless Nation: The Frenzied Launch of the Cellular Revolution in America. Cambridge, MA: Perseus Publishing. p. 92.
[7] Pop figures from James B. Murray, Jr. (2000) Wireless Nation: The Frenzied Launch of the Cellular Revolution in America. Cambridge, MA: Perseus Publishing. p.200-205.
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Anthony J. Pennings, Ph.D. is Professor and Associate Chair of the Department of Technology and Society, State University of New York, Korea. From 2002-2012 was on the faculty of New York University. Previously, he taught at Hannam University in South Korea, Marist College in New York, Victoria University in New Zealand. He keeps his American home in Austin, Texas and has taught there in the Digital Media MBA program atSt. Edwards University He joyfully spent 9 years at the East-West Center in Honolulu, Hawaii.

Category: mobile technologies, telecom policy and net neutrality
Tags: 40 MHz > BellSouth > Craig McCaw > Grand Alliance > James B. Murray > Jr. > O. Casey Corr > Pacific Telesis > Telocator > Wireless Nation > Wireless Nation: The Frenzied Launch of the Cellular Revolution in America

How the US Mobile Industry Came Together, Part I: Transformation of the Network

Posted on | June 27, 2019 | No Comments

The ubiquity, ease and sophistication of mobile “smartphone” services has proven to be an extraordinarily popular addition to modern social and productive life. We are now on the cusp of the 5th generation (5G) rollout of wireless services. It is different to gauge the characteristics of social change in the midst of such dramatic technological change, but mobile services have arguably extended our sense of self, allowed us to reintegrate caring (and some annoying relationships), and provided new ways to create and to learn.

This post addresses the transformation of the telecommunications industry and its expansion into mobile services. This was initiated by a series of actions that led to the breakup of the AT&T monopoly and opened the environment for the major business, regulatory and technological disruptions that led to the proliferation of smartphones and other portable devices. The next post will examine the emergence of the wireless industry which grew rather independently of the telcos, until the 1990s anyway. I delved into my notes first for the below explanation of the “breakup” of AT&T and how it opened up the telecommunications to new innovations, including wireless.

In 1980, IBM officially went into competition with AT&T when it offered its Satellite Business Systems (SBS) service, a partnership with Aetna Life & Casualty and Comsat. SBS was set up to provide “intranet” telecommunications services for banks and other businesses after the FCC deregulated satellite services in the early 1970s. Using new Ku band technology, SBS services such as data, facsimile, electronic mail, telephony and video conferencing could be transmitted directly to smaller antennas at the user’s premises. This meant that they could effectively bypass AT&T’s network and provide a type of direct broadcasting service, except with two-way capabilities. Jill Hills: “It seems to have been the entry of IBM via its SBS consortium into direct competition that altered AT&T’s attitude from formal toleration of competition to outright aggression in defense of its monopoly.”[1] The Consent Decree of 1956 had restricted AT&T from computer activities and now it saw IBM entering a potentially very lucrative market. With some US$1.26 billion invested in this competing satellite communications system that could circumvent Ma Bell’s existing facilities, it got the full attention of AT&T. [2]

Consequently, in the early 1980s, AT&T looked to the political realm for protection. “Action switched from the FCC to Congress as AT&T under its chairman, John de Butt, set about raising political consciousness of the FCC decisions.”[3] However, members of Congress did not rush to support AT&T, a potent contributor, as a number of criticisms were in the process of being raised. These primarily concerned:

1) competing equipment suppliers who wanted to break into the telecommunications and customer premise equipment (CPE) markets that were dominated by AT&T’s Western Electric;
2) business users, especially banks, who wanted more sophisticated services, including those offered by SBS, and;
3) competing carriers who found it difficult to compete against AT&T’s dominance of long distance transmission facilities and “local loop” telephony services. In fact, the government was looking to create a more competitive, privatized data-networking environment free from the dominance of AT&T. [4]

Deregulatory actions during the 1960s and 1970s cut into AT&T’s legislatively mandated monopoly on all telecommunications, but it was still by far the major service and equipment provider. The Justice Department had filed an anti-trust suit against Ma Bell in 1974, challenging its competitive practices and seeking to divest Western Electric, its manufacturing arm, in addition to its Bell Operating Companies. Then 1980, the FCC issued its Computer II Decision that was specifically focused on the future role of AT&T. It deregulated all data processing services and customer premises equipment allowing AT&T to enter other markets, although through a separate subsidiary. Despite some restrictions, this officially allowed AT&T to compete outside its traditional purview for the first time.[5]

Despite his ideological convictions, Ronald Reagan was noncommittal about the breakup, mainly because his Secretary of Commerce William Baldridge presented the threat of foreign equipment manufacturers entering the US market and also because his Secretary of Defense, Casper Weinberg, argued forcibly “that an integrated AT&T was desirable for national security.” However, his Justice Department was ideologically motivated enough to carry on with the divestiture, particularly William Baxter, the Assistant Attorney General for Anti-Trust.[6] Baxter argued in 1981 that the radical restructuring of the world’s largest company would forward the new administration’s promise of reducing regulation and promoting competition. In face of the opposition from the Departments of Commerce and Defense, the DOJ continued with its anti-trust case.

The result was a three-pronged approach. The Department of Justice continued its investigation of AT&T while the FCC sought, through Computer II, to distinguish between regulated basic service (both long distance and local loop services) and unregulated enhanced services such as data communications. The Republican Congress, led on this issue by Senator Packwood, chair of the Senate Commerce Committee, proceeded with a legislative solution along the basic/enhanced distinctions desired by FCC but with awkward accounting and regulatory requirements. Although passed by the Senate and supported by AT&T, the Packwood bill failed to make it through the House and it never became law. It was the Justice Department that won out, agreeing to a Consent Decree with AT&T in January of 1982. AT&T, facing the DOJ’s persuasive case, decided to settle. The result was a political decision bypassing the FCC and other traditional forms of telecommunications policy. Ultimately called the Modified Final Judgement (MFJ), it split AT&T into a competitive company consisting of a long distance carrier and a manufacturing arm and a set of regulated Bell Operating Companies (BOCs) that would provide local exchange services. AT&T and the Justice Department agree on tentative terms for settlement of anti-trust suit filed against AT&T in 1974.

The MFJ created 22 Bell Operating Companies, 7 Regional Bell Operating Companies (RBOCs or “Baby Bells”) and AT&T.

While the MFJ did not provide the total datacom solution wanted in the corporate world, it initiated the opening up what was previously a significantly closed telecommunications system. The next year, in a coffee shop in Hattiesburg, Mississippi. Bernard J. Ebbers, Bill Fields, David Singleton and Murray Waldron worked out details for starting a long distance company, LDDS (Long Distance Discount Service), the precursor to WorldCom. In 1984 President Reagan approved international competition for the INTELSAT international satellite system after petition from Orion to provide transatlantic telecommunications services for corporate users. But while significant liberalization was being made in the United States, countries around the world still held on to a government owned and controlled telecommunications system. In order for the new internationalization of financial services and digital commerce to be enacted, telecommunications changes needed to occur worldwide.

As a result of the Department of Justice’s 1982 Consent Decree, AT&T divested its Regional Bell Operating Companies (RBOCs) which retained control over the basic telecommunications exchanges and local lines in their respective territories. A Consent Decree means that all parties agree to the remedy. The RBOCs or “Baby Bells” as they were sometimes called were restricted from entering the long-distance interstate communications markets and also from manufacturing telephone equipment. The parent company was called ATT and it retained its continental Long Lines Division, research center Bell Telephone Labs (Bellcore) and Western Electric, its manufacturing arm. Two new subsidiaries were created to allow the company to expand into previously restricted areas. ATT Information Systems was an unregulated subsidiary offering, what was termed by the Second Computer Inquiry, “enhanced” services. These included information services and customer premise equipment, including computers.

AT&T had been involved with the creation of the mobile phone through its Bell Labs division but lost the initiative to Motorola in 1970s. It later effectively ceded the mobile business to the RBOCs after an AT&T report estimated the market for mobile phones in the year 2000 would be 900,000. In January of 1982, AT&T indicated that cellular would be given to the local companies, the RBOCs, after the FCC divided the 40 MHz it allocated to cellular into two segments. One segment would go to the local telephone company in each market and the other would be open to non-telephone companies that wanted it.

As a result of this bifurcated market, the mobile telephone industry emerged largely in this “other” market, thanks largely to the controversial financing methods of Michael Milken and the defunct investment firm Drexel Burnham Lambert. Milken helped the McCaw family assemble the wireless industry during the 1980s, raising raising money for the formation of McCaw Wireless which it sold to AT&T in 1994.

Notes

[1] Hills, J. (1986) Deregulating Telecoms: Competition and Control in the United States, Japan and Britain. p. 66. Quote on IBM’s threat to AT&T.
[2] Hills, J. (1986) p. 63. Investment figures on SBS.
[3] Hills, J. (1986) p. 66. Raising concerns about FCC to members of Congress.
[4] Dan Schiller. Telematics and Government. p. 92. Stance of US government towards AT&T.
[5] For example, the subsidiary could not use Bell Labs software. Hills, J. (1986) Deregulating Telecoms. p. 66.
[6] Brock, G. (1981) The Telecommunications Industry: The Dynamics of Market Structure. Harvard University Press. p. 156-157.
[7] Schiller, D. (1982), p. 163.

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Anthony J. Pennings, Ph.D. is Professor and Associate Chair of the Department of Technology and Society, State University of New York, Korea. From 2002-2012 was on the faculty of New York University. Previously, he taught at Hannam University in South Korea, Marist College in New York, Victoria University in New Zealand. He keeps his American home in Austin, Texas and has taught there in the Digital Media MBA program atSt. Edwards University He joyfully spent 9 years at the East-West Center in Honolulu, Hawaii.

Category: mobile technologies, telecom policy and net neutrality
Tags: 40 MHz > Casper Weinberg > Computer II > Consent Decree of 1982 > McCaw Wireless > Modified Final Judgement (MFJ) > William Baldridge > William Baxter

Metrics, Analytics, and Visualization

Posted on | May 21, 2019 | No Comments

Understanding metrics is a significant component in evaluating global media, social media, and culture industries. Measurements of magazine and newspaper circulation, book readership, as well as television and radio audiences, have each had a distinguished history in the media field. The Nielsen ratings, for example, have been a crucial part of the television industry and its ability to attract advertisers. The introduction of digital technologies has made them even more important, and Nielsen has expanded its monitoring activities beyond TV to PCs, mobile devices, and perhaps the automobile dashboard if the “driverless car” takes off.[1]

Search engines, social media platforms, and a myriad of new media applications on the web and mobile devices have increased the production of useful data, and new systems of analysis have augmented their utility. Analytics is directly involved in monitoring ongoing content delivery, registering user choices, and communicating with fans and other users. They also connect incoming flows of information to key organizational concerns concerning financial sustainability, legal risks, and brand management involved in digital media activities. This type of information is increasingly important for management of private and public organizations.

Organizations are beginning to acknowledge the importance of social media metrics across the range of corporate and non-profit objectives, especially those that involve legal, human resources, as well as advertising and marketing activities. These new metrics can be roughly categorized into three areas. At a basic level, they are granular metrics that quantify activities like the number of retweets, check-ins, as well as likes and subscribers. Strategically, metrics can also be useful for designing new products and services, facilitating support and promoting advocacy for an organization, fostering dialogues about products and services, and monitoring marketing/social media campaigns. Lastly, metrics are of particular concern to upper management as they can be useful to provide information on the sustainability of an organization.

Those in the “C-suites” (CIOs, CFOs, COOs, and CEOs) can use the information on an organization’s financial status, technical performance, and legal risks to assist management decision-making. Metrics present connections from social media investments to key concerns such product development, service innovation, policy changes, market share, and stock market value. Recognizing the increasing utility of metrics, management has increasingly appreciated digital dashboards as a way to collect and display data in a visually comprehensive way.

The increased attention on metrics has suggested an era of “big data” analytics has emerged in the digital media sphere. The collection of unstructured information from around the web (as opposed to pre-defined, structured data from traditional databases) presents unprecedented opportunities to conceptualize and capture empirical information from networked environments for various parts of an organization. Techniques such as pattern and phrase matching use new types of algorithms to capture and organize information from throughout the Internet, including the rapidly growing “Internet of Things” (IoT). The result is a transformation in the way commerce, politics and news are organized and managed.

Combined with artificial intelligence (AI) and natural language processing (NPL) for instance, cognitive systems like IBM’s Watson are disrupting industries like healthcare and finance. Watson made a spectacular debut by beating two human contestants on the TV game show Jeopardy, a challenging combination of cultural, historical and scientific questions. While Watson is struggling to catch on, AI is emerging in autonomous vehicles, voice recognition, game systems and educational technology. Apple’s Siri and Samsung’s Bixby are central to modern uses of smart phones. Amazon’s Alexa is becoming popular on kitchen counters around the US, shared by all members of the family. AI is likely to be a major influence on a wide range of cultural and experience industries.

Project managers and media producers can use the metrics to see connections between content/cultural products, audience participation, customer satisfaction, and market share. C-suites executives utilize the information on financial status, technical performance, and legal risks. Besides assisting management decision-making, analytics can provide useful performance information, and improve the development of new content products, cultural expressions, and experience-based services while targeting them to individual customers. While new developments like AI-assisted genre innovation and other machine incursions into the creative process are a justifiable means for concern, cognitive-logistical support for cultural event planners, film surveyors, and other creative content producers could be a welcome provision in the cultural/media industries.

This move to “big data” science requires the ability to conceptualize and enact strategies for data collection, analysis, and visualization. Employees and management should develop an appreciation for research and statistical thinking, as well as visual literacies and competencies for representing information and designing graphics that display data results in interesting and aesthetically appealing formats. The ability to identify and capture data from spreadsheets, the web and other online sources is important, as well as the ability to formulate pertinent questions and hypotheses that shape data research and models that can help explain or predict human or system behaviors.

Not everyone will be comfortable with these new types of data collection and intelligence-producing systems, but like them or not, AI and big data are encroaching rapidly on modern life.

Notes

[1] This is from a section in Pennings, A. (2017, October). Emerging Areas of Creative Expertise in the Global Digital Economy. [Electronic version] GDM Quarterly 1 (2), 1-11.

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Anthony J. Pennings, Ph.D. is Professor and Associate Chair of the Department of Technology and Society, State University of New York, Korea. From 2002-2012 was on the faculty of New York University. Previously, he taught at Hannam University in South Korea, Marist College in New York, Victoria University in New Zealand. He keeps his American home in Austin, Texas and has taught there in the Digital Media MBA program atSt. Edwards University He joyfully spent 9 years at the East-West Center in Honolulu, Hawaii.

Category: data analytics and meaning, digital media management

Lasswell and Hall – Power and Meaning in Media

Posted on | March 6, 2019 | No Comments

Harold Dwight Lasswell was one of the founding influences on the formation of the study of communication, media studies, and sociology. Stuart Hall was a Rhodes Scholar from Jamaica who helped pioneer an area of research at Birmingham Open University coined “British Cultural Studies.” Both contributed significantly to media studies during their tenures, and some of their contributions can be discussed by examining the phrase, first stated by Lasswell:

“Who, says what, in which channel, to whom, with what effect?”

Published in his 1948 essay, “The Structure and Function of Communication in Society,” the Lasswell model was easy to understand and works for various communication and media activities.[1] Noted for its emphasis on effects – how a message influences an audience member- psychology-oriented scholars picked it up to examine the media’s influence on human behaviors, including consumption, violence, and voting. It was coined just after the Second World War, when radio was still dominant, and social scientists were interested in the dramatic impacts of propaganda and advertising. Radio was important in mobilizing Allied and Axis populations during the 1930s.

The Lasswell model was often criticized for stressing linear, one-way information flows. Feedback and message-disturbing “noise” were not stressed, as they would be in new areas of study called cybernetics (Wiener, Forrester) and information theory (Shannon and Weaver). Hall offered another criticism: the Lasswell model minimized the role of power in the communication process.

Hall reworked Lasswell’s formula: “Who has the power, in what channels, to circulate which meanings, to whom (with what effect)?” He wanted us to examine the meanings of images in such a way as to show how different interests work to hold a preferred interpretation of that image. What organizations (news media, industry boards, advertising, government, etc.) and areas of specialization (journalism, medicine, finance, etc.) have the power to enforce and police such meanings?

Drawing on the academic area of semiotics, Hall emphasized that because the meanings in images are fundamentally flexible and fluid, “power” works to arrest or fix the meanings associated with the image. Brand management, political communication, and public relations are primarily about establishing a set understanding of media images and continually policing their interpretations.

Here is some of a lecture by Stuart Hall (see entire video) where he discusses how culture gives meaning to things. He argues that the human tendency to build maps of intelligibility and create classification systems jointly, works to create “commune”-ication. What he calls “signifying practices” in media production, such as image composition, narration, and editing work to make meaningful narratives and stories. At the end of this clip, he challenges the Lasswell model. (See the Media Education Foundation (MEF) for the video’s transcript)[2]

Hall’s work was especially interested in the relationship between language, power, and social structures. One way power operates to secure preferred meanings is through systems of classification. Classification often involves the establishment of standards and norms. Standardized classification systems ensure consistency and comparability, promoting uniformity in practices, measurements, or descriptions. One of the most powerful returns from generative AI are sets of categories or classifications.

Organizing the world into categories helps maintain order by discerning distinct differences in things and making sure they stay in certain boxes. He was interested in how language and media contribute to classifying and categorizing individuals and groups, reinforcing or challenging power dynamics. It is important to realize that culture creates and maintains these categories through differentiation and control processes. These include antidotes, jokes, memes, metaphors, stories, etc.

For Hall, classification is generative. Once a system of classification is created, it provides a framework that simplifies the understanding and management of diverse elements by grouping them together. Items fall into place or out based on shared or dissimilar characteristics. Classification provides a framework that simplifies the understanding and management of diverse elements.

Classification serves to maintain the order of the overall structure. In the US, the category of the presidency has recently been challenged by a series of elected candidates that upset traditional notions of who is eligible. George W. Bush was the son a previous president, raising issues of nepotism. Barack Obama, being black, challenged many Americans’ sense of who was racially eligible to be in the “Oval Office.” More recently, Donald Trump, who never held elected office or ran a large organization, was considered by many to be unfit and unqualified to hold the office. These category fits are important to people and a major source of social strife in modern society.

Hall’s primary interest was cultural studies. He helped shift the the study of culture from high culture to popular culture. “Culture, he argued, does not consist of what the educated élites happen to fancy, such as classical music or the fine arts.” The value in such studies is that they can tell about other parts of society that have been marginalized. They can tell us things about how race, gender, and economic classes are rendered in modern society.[3]

His work on Race: The Floating Signifier is a classic on the fluidity of meanings associated with representations of race. Here he expands his work on classification, drawing on the area of semiotics. Semiotics is based on the study of signs, divided into signifiers and signified; the thing and its meaning. He used this approach to examine how culture influences the way we see race as part of a system of classification that is used to order society and the types of people within it.

For Hall, race has physical characteristics, primarily, hair and skin color. But a range of meanings and values are associated with races. He uses a concept by Mary Douglas, “matter out of place” to describe the implications of those classifications. In her Purity and Danger: An Analysis of Concepts of Pollution and Taboo (1966), she argued that we constantly construct symbolic orders that evaluate and rank items and events. Hall recounts her example of dirt in the bedroom and dirt in the garden. One is “dirty” the other is natural. One is problematic and needs to be addressed at once, the other is invisible. A related example is the “back of the bus” that was allocated for black people during the height of segregation in the southern states of America.

For Hall, this is part of the Enlightenment’s project to bring all experience into observation and understanding. The panoptic view of Hall reiterates Michel Foucault’s admonition in Power/Knowledge (1980) that it is not so much that information is power, but rather, it is power that shapes information.[4][5]

Stuart Hall died on February 10, 2014. He was a major contributor to the creation of cultural studies, specifically the Birmingham School of Cultural Studies. He engaged the study of signs – semiotics – and warned that power secures preferred meanings. This keeps the understanding of images from sliding into other interpretations and thus empowering alternative groups or individuals who would benefit from another set of meanings.[6]

Notes

[1] Lasswell, H. D. (1948). “The Structure and Function of Communication in Society.” In L. Bryson (Ed.), The Communication of Ideas. (pp. 37-51). New York: Harper and Row.
[2] The transcript and the video Representation & the Media Produced & Directed by Dr. Sut Jhally. Edited by: Sanjay Talreja, Sut Jhally & Mary Patierno. Featuring a lecture by Stuart Hall Professor, The Open University and introduced by Sut Jhally University of Massachusetts at Amherst. Distributed by Media Education Foundation (MEF) that produces and “distributes documentary films and other educational resources to inspire critical thinking about the social, political, and cultural impact of American mass media.”
[3] Hsu, Hua. “Stuart Hall and the Rise of Cultural Studies.” The New Yorker, The New Yorker, 17 July 2017, www.newyorker.com/books/page-turner/stuart-hall-and-the-rise-of-cultural-studies.
[4] Foucault, M. (1980) Power/Knowledge: Selected Interviews and Other Writings, 1972-1977. Trans. Colin Gordon et al. New York: Pantheon.
[5] Mason, Moya K. Foucault and His Panopticon. 2019. Accessed March 6, 2019.
[6] Chandler, D. (2017) Semiotics for Beginners. Routledge.

Citation APA (7th Edition)

Pennings, A.J. (2019, Mar 6). Lasswell and Hall – Power and Meaning in Media. apennings.com https://apennings.com/media-strategies/lasswell-and-hall-power-and-meaning-in-media/

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© ALL RIGHTS RESERVED

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Anthony J. Pennings, PhD is a Professor at the Department of Technology and Society, State University of New York, Korea teaching broadband policy and the visual rhetoric of ICT. From 2002-2012 he was on the faculty of New York University where he taught digital media and information systems management. He also taught digital media at St. Edwards University in Austin, Texas, where he lives when not in the Republic of Korea.

Category: cultural Industries, meaning makers, media strategies, strategic communications, visual literacy and rhetoric
Tags: Harold Dwight Lasswell > Lasswell model of communication > Michel Foucault > Representation > Stuart Hall

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