Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age (45 page)

2.
As of June 2011, the Organisation for Economic Cooperation and Development (OECD) ranked America fifteenth among developed nations for wired Internet access adoption.

3.
Governments that have intervened in high-speed Internet markets have seen higher and earlier levels of adoption and lower subscriber charges. Many have required their telecommunications providers to sell access to parts of their network to competitors at regulated rates, so the competition will lead to lower prices. See Berkman Center for Internet and Society, “Next Generation Connectivity: A Review of Broadband Internet Transitions Around the World,” February 2010. Meanwhile, they are working toward, or already have, fiber-optic networks that will be inexpensive, standardized, ubiquitous, and equally fast for uploading and downloading. Many countries, not only developed nations like South Korea, Sweden, and Japan but also less-developed ones such as Portugal and Russia, are already well on their way to wholly replacing their standard telephone
connections with state-of-the-art fiber-optic connections that will even further reduce the cost to users, while significantly improving access speeds. See Susan Crawford, “The New Digital Divide,”
New York Times
, December 7, 2011.

4.
David Folkenfilk, “Comcast to Buy 51 Percent Stake in NBC Universal,” NPR, December 3, 2009,
http://www.npr.org/templates/story/story.php?storyId=121046318
.

5.
Peter Svensson, “Verizon Winds Down Expensive FiOS Expansion,”
USA Today
, March 26, 2010, available at
http://www.usatoday.com/money/industries/telecom/2010-03-26-verizon-fios_N.htm
.

6.
“What if the cable operators are forced to rebuild their networks with fiber to the home? The best answer is perhaps a question. Who would force them to? … With no competitor other than Verizon FiOS (which exists in just 14% of the US) able to offer speeds that are even remotely competitive, there seems little risk that the cable [distributors] would feel compelled to widely upgrade” (Bernstein Research, “U.S. Telecommunications and U.S. Cable & Satellite: Nature Versus Nurture,” May 2012, 139).

7.
Senate Committee of the Judiciary, Subcommittee on Antitrust, Competition Policy and Consumer Rights, The Comcast/NBC Universal Merger: What Does the Future Hold for Competition and Consumers? 111th Cong., 2d sess., February 4, 2010, 8–10.

8.
Folkenfilk, “Comcast to Buy 51 Percent Stake in NBC Universal.”

9.
Letter from Al Franken, United States Senator, to Marlene Dortch, Secretary of the Federal Communications Commission, Washington, D.C., June 21, 2010, available at
http://apps.fcc.gov/ecfs/document/view?id=7020510670
.

10.
David L. Cohen, “Comments on Comcast NBCU Joint Venture Due Today at FCC,” Comcast Voices: A Place for Conversations with Comcast (blog), June 21, 2010,
http://blog.comcast.com/2010/06/comments-on-comcast-nbcu-joint-venture-due-today-at-fcc.html
.

11.
David L. Cohen, “The Intersection of Politics, Business, and Public Policy,” posted by “SwarthmoreCollegePA,” December 5, 2008, Thomas B. McCabe Lecture at Swarthmore College,
http://www.youtube.com/watch?v=oZ2y2hcKHQM
, at 18:56.

12.
“Competition in the Media and Entertainment Distribution Market”: Hearing Before the H. Comm. on the Judiciary
, 111th Cong. 63 (2010) (Testimony of Jean Prewitt, President and CEO, Independent Film & Television Alliance).

13.
Cecilia Kang, “Landline Rules Frustrate Telecoms,”
Washington Post
, April 12, 2012, available at
http://www.washingtonpost.com/business/economy/landline-rules-frustrate-telecoms/2012/04/12/gIQAG2XvDT_story.html
.

14.
Brian Stelter, “With Verizon's $3.6 Billion Spectrum Deal, Cable and Wireless Inch Closer,”
New York Times
, December 2, 2011, available at
http://mediadecoder.blogs.nytimes.com/2011/12/02/with-verizons-3-6-billion-spectrum-deal-cable-and-wireless-inch-closer
.

15.
Alex Sherman, “Watching Netflix Could Lead to Higher Cable Bills,”
Bloomberg
, November 30, 2011,
http://www.bloomberg.com/news/2011-11-30/netflix-viewing-seen-swelling-u-s-cable-bills-next-year-tech.html
.

16.
“Canada Joins Global Ranking of FTTH Countries,” Fiber to the Home Council press release, February 16, 2012,
http://www.ftthcouncil.org/en/newsroom/2012/02/16/canada-joins-global-ranking-of-ftth-countries
.

17.
Diffraction Analysis, November 2011, on file with the author.

18.
Brendan Greeley and Alison Fitzgerald, “Pssst … Wanna Buy a Law?”
Bloomberg Businessweek
, December 1, 2011,
http://www.businessweek.com/magazine/pssst-wanna-buy-a-law-12012011.html
.

19.
Manuel Roig-Franzia, “Brooksley Born, the Cassandra of the Derivatives Crisis,”
Washington Post
, May 26, 2009, available at
http://www.washingtonpost.com/wp-dyn/content/article/2009/05/25/AR2009052502108.html
.

20.
U.S. Department of Commerce,
Exploring the Digital Nation: Computer and Internet Use at Home
(Washington, D.C.: U.S. Department of Commerce, November 2011), available at
http://www.ntia.doc.gov/files/ntia/publications/exploring_the_digital_nation_computer_and_internet_use_at_home_11092011.pdf

21.
Josh Barbanel, “Comcast Chairman Digs In,”
Wall Street Journal
, May 6, 2010, available at
http://online.wsj.com/article/SB10001424052748703961104575226831270560658.html
.

22.
Josh Barbanel, “Co-op Triple Play for Chief at NBC,” Wall Street Journal, July 6, 2011,
http://online.wsj.com/article/SB10001424052702304760604576428363664891984.html
.

23.
Bernstein Research, “Comcast: Torrents of Cash,” April 28, 2010.

24.
Ron Chernow,
Titan: The Life of John D. Rockefeller, Sr.
(New York: Random House, 2008), 208.

25.
Yinka Adegoke, “Malone: DirecTV Would Be ‘Compatible’ with a Telco,” Reuters, November 19, 2009, available at
http://www.reuters.com/article/2009/11/20/industry-us-libertymedia-malone-idUSTRE5AJ06K20091120
.

26.
Ron Chernow,
The House of Morgan: An American
Banking Dynasty and the Rise of Modern Finance
(New York: Grove, 2001), 56.

Chapter 1. From Railroad to Telephone

1.
Ron Chernow,
Titan: The Life of John D. Rockefeller Sr.
(New York: Vintage, 2004), 71.

2.
Charles Perrow,
Organizing America: Wealth, Power, and the Origins of Corporate Capitalism
(Princeton: Princeton University Press, 2002), 134.

3.
Frank Dobbin,
Forging Industrial Policy
(Cambridge: Cambridge University Press, 1997), 44–45.

4.
Lewis Henry Hany,
A Congressional History of Railways in the United States
,
1850–1887
, Bulletin of the University of Wisconsin no. 342 (Madison: University of Wisconsin, 1910), 49.

5.
Dobbin,
Forging Industrial Policy
, 54.

6.
Edward Winslow Martin,
Behind the Scenes in Washington
(New York: Continental, 1873), 271–74.

7.
Dobbin,
Forging Industrial Policy
, 58.

8.
Clarence D. Long, “Chapter 1: Introduction,” in
Wages and Earnings in the United States
,
1860–1890
(Ann Arbor: UMI, 1960), 4, available at
http://www.nber.org/chapters/c2495.pdf
.

9.
David A. Skeel,
Debt's Dominion: A History of Bankruptcy Law in America
(Princeton: Princeton University Press, 2001), 51–52.

10.
Peter Tufano, “Business Failure, Judicial Intervention, and Financial Innovation: Restructuring U.S. Railroads in the Nineteenth Century,”
Business History Review
71, no. 1 (Spring 1997): 28–29.

11.
William G. Roy and Philip Bonacich, “Interlocking Directorates and Communities of Interest Among American Railroad Companies, 1905,”
American Sociological Review
53, no. 3 (June 1988): 368–79.

12.
Louis D. Brandeis,
Other People's Money: And How the Bankers Use It
(New York: Frederick A. Stokes, 1914), 36.

13.
Chernow,
Titan
, 136.

14.
Worth Robert Miller, “Farmers and Third-Party Politics in Late Nineteenth Century America,” in
The Gilded Age: Essays on the Origins of Modern America
, ed. Charles W. Calhoun (Wilmington, Del.: Scholarly Resources, 1996), 235–60.

15.
Dobbin,
Forging Industrial Policy
, 74.

16.
Paul Teske, Michael Mintrom, and Samuel Best, “Federal Preemption and State Regulation of Transportation and Telecommunications,”
Publius
23, no. 4 (Autumn 1993): 73.

17.
Dobbin,
Forging industrial Policy
, 48.

18.
Robert Rabin, “Federal Regulation in Historical Perspective”
Stanford Law Review
38, no. 5 (May 1986): 1189–1326 (see esp. 1199–1202).

19.
William G. Thomas,
Lawyering for the Railroad: Business, Law, and Power in the New South
(Baton Rouge: Louisiana State University Press, 1999), 84–99; Dobbin,
Forging Industrial Policy
, 78.

20.
Ripley,
Railroads
, 452–53.

21.
Teske, Mintrom, and Best, “Federal Preemption,” 26.

22.
Peter George,
The Emergence of Industrial America: Strategic Factors in American Economic Growth Since
1870
(Albany: State University of New York Press, 1982), 155.

23.
“Populist Party Platform (1892),” available at
http://www.wwnorton.com/college/history/eamerica/media/ch22/resources/documents/populist.htm
.

24.
Theodore Roosevelt,
Presidential Addresses and State Papers: December
3
,
1901
to January
4
,
1904
, vol. 2 (Whitefish, Mo.: Kessinger, 2006), 556–57.

25.
Rabin, “Federal Regulation in Historical Perspective,” 1227–28.

26.
Sherman Antitrust Act, 15 U.S.C. §§ 1–7 (1890).

27.
Ron Chernow,
The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance
(New York: Grove, 2001).

28.
Chernow,
Titan
, 131–33, 226.

29.
Mitchel P. Roth,
Crime and Punishment: A History of the Criminal Justice System
, 2d ed. (Belmont, Calif.: Wadsworth Cengage Learning, 2010), 199.

30.
Brandeis,
Other People's Money
, 135–47.

31.
Jerry L. Mashaw, “Federal Administration and Administrative Law in the Gilded Age,”
Yale Law Journal
119, no. 7 (May 2010): 1370.

32.
Edmund Morris,
Theodore Rex
(New York: Random House, 2001), 60.

33.
“Private Divestiture: Antitrust's Latest Problem Child,”
Fordham Law Review
41, no. 3. (1973): 581; Carl N. Degler,
Out of Our Past: The Forces That Shaped Modern America
(New York: Harper and Row, 1984), 272.

34.
Chernow,
Titan
, 433.

35.
Sherman Antitrust Act, 15 U.S.C. §§ 1–7 (1890).

36.
Morris,
Theodore Rex
, 91–92.

37.
Chernow,
House of Morgan
, 106.

38.
Milton Handler, “Industrial Mergers and the AntiTrust Laws,”
Columbia Law Review
32, no. 2 (1932): 184–85.

39.
“1904: A Retrospect,”
New York Times
, January 8, 1905; Morris,
Theodore Rex
, 313–16.

40.
Carl Helmetag, Jr., “Railroad Mergers: The Accommodation of the Interstate Commerce Act and Antitrust Policies,”
Virginia Law Review
54, no. 8 (December 1968): 1493–94; A. J. County, “Consolidation of Railroads into Systems: A Review of Some of the Financial Considerations and Processes That Consolidation Under the Transportation Act Imposes.”
American Economic Review
14, no. 1, Supplement, Papers and Proceedings of the Thirty-sixth Annual Meeting of the American Economic Association (1924): 73–74.