Clay Thomas Whitehead
Library of Congress
Jan. 11, 2013
- I am deeply honored to be asked to speak here on this august occasion. This is not a cause for alarm; I’ll be brief.
- The papers of Clay Thomas Whitehead are quite something, and I look forward to diving into them, learning more about the pivot point in U.S. history in which Tom played a central role, commanding an advance deployment that was both exciting and politically dangerous. This donation promises to be a treasure trove for scholars seeking to understand the emergence of competition in the communications sector, the forces that opposed it, the institutions that resisted it, and the policy entrepreneurs who ultimately made it happen. This we will add to our knowledge of the social bounty it has yielded, and the astonishing economic changes it continues to bring.
- Forty-five years ago, the world Tom saw was different. It was not just that the technologies we today enjoy were yet to be invented – indeed, many of them had been invented. But they could not be deployed. That was due to the structure of regulated information markets. There was one telephone carrier, there was one satellite service, there were three broadcast TV networks – broadcasting was the wildly competitive industry in the sector. [LENNY BRUCE, the comedian, WAS TELLING THE JOKE UNTIL HIS DEATH IN 1966—“Communism is a drag, man. It’s like one big telephone company.” The paradigmatic totalitarian dictatorship -- I mean the Soviet Union, not AT&T.] But no one seemed much bothered by this state of affairs. When regulators began, in 1968, to consider the possibility of cellular telephone systems, they quickly concluded that only one firm per market could ever provide this natural monopoly service – indeed, to be safe, the Federal Communications Commission proposed that each local license vested in AT&T—only vertically integrated monopoly would be viable. When cable TV operators had sought, in the 1960s, to compete with TV broadcast stations for eyeballs, the foray was reflexively quashed by regulators who feared that the upstarts would “siphon audiences,” undermining the business models of TV broadcasters licensed in the “public interest.”
- Such protectionist policies were not especially controversial. For many years, they even survived scrutiny by the U.S. courts. The conventional wisdom was that communications markets were natural monopolies, and that wireless services depended upon a mysterious and delicate coordination process that could only be properly administered by the State. Competitive market forces were, on the one side, impossible, and, on the other, wrong-headed. We had constructed a walled fortress for monopoly, protected by a double moat – brimming with Washington pirhana. [That species is not nearly so gentle as the Amazonian pirhana, I should add.]
- H.L. Mencken wrote that:
The liberation of the human mind has never been furthered by dunderheads; it has been furthered by gay fellows who heaved dead cats into sanctuaries and then went roistering down the highways of the world, proving to all men that doubt, after all, was safe.[Prejudices, 4th Series]
- Tom Whitehead was not a dunderhead. By the metrics of Mencken, he was a gay fellow, blessed with more than his fair share of exuberant doubt. From a perspective that others missed, a better vision emerged. Oh, the poor kitties.
Please allow me to assure my 7th grader, Lauren, that no cats were harmed in the implementation of Tom Whitehead’s regulatory reforms.
- In fact, while his strategies were well thought out, Tom didn’t lay quietly in the meadow pondering “the vision thing.” He was, rather, a man of action.
- In business, Tom took his vision to practical, hands on result. You’ve heard experts detail this – let me just add: Consumers in Europe had been denied even the modicum of program diversity available to U.S. TV viewers pre-cable. State broadcasting regimes offered all the programming people wanted, unless they wanted choice. Private TV stations were not to arrive in Germany until 1986. With the entrepreneur’s eye, Tom Whitehead saw the opportunity and seized the moment. In creating Astra SES, he brought news, information and entertainment to masses of eager video consumers in Europe and, today, around the globe – served by the world’s largest satellite TV platform.
- In government, Tom Whitehead achieved things even more challenging. He organized an extraordinary effort to bring communications policy to the highest reaches of Executive Branch policy making. That enterprise launched many a storied career, while laying the foundation for a change in policy mindset. The default position, just between about 1970 and 1975, switched. The question had been: Who needs more than one? By the time Tom had gone roistering down the highway, people in the know were asking: Why limit competition?
- In attacking the specific problem posed by the COMSAT monopoly, Tom made one of the most brilliant contributions to communications markets since Morse, Bell, or Marconi. By questioning the unquestioned, and adroitly maneuvering the bureaucratic landscape, Tom managed to pull the legs out from under the seemingly impregnable satellite communications monopoly. This was not just any old monopoly, by the way, but COMSAT -- a joint venture of AT&T and the U.S. Government, protected by exclusive franchise, supported by all the political interests that mattered. It turned out not to be a fair fight; Tom won handily. By 1975, competitors were legal, and rockets were launching. A half dozen private companies took Tom’s bet, investing in new satellites, slashing prices for transmission of data, voice and video, creating whole new markets.
- This triggered a tsunami, a tidal wave that crashed upon entry barriers in the markets that lay beyond. This directly brought cable TV competition into video. But it also served as a “proof of concept,” demonstrating that not only was doubting the monopoly status quo safe – it could produced walloping social gains, unleashing dramatic innovation. Entirely distinct thinking about how the communications world ought to be structured emerged, in awe of the new social architectures that spontaneously surfaced. “One” never seemed like such a large number after the skies opened to competition.
- Tom Whitehead’s vision is still moving markets. Thanks to liberalization of wireless in the 1980s and 1990s, rivalry controls mobile airwaves. No regulator could have imagined, or needed to authorize, the Blackberry, the iPhone, the iPad, the Android ecosystem, OnStar, Kindle, or the evolving machine-to-machine devices that economize on gas used by truck fleets and trace, with a cute little chip, your lost pet. Competitive forces now organize radio spectrum usage of intense complexity. Mobile services of stunning depth and breadth have emerged; wireless is proving the poster child for “creative destruction.” A recent Wall Street Journal story reported on the rival strategies of the giants in the mobile space focused exclusively on Google, Microsoft, Apple and Facebook. Not a one of these firms owns a single FCC wireless license or base station. Yet now entire commercial empires are float on the spectrum markets made possible by those who, when others could not, saw that competition could work.
- I thank Tom Whitehead for his voluminous contributions to our world, and I promise not to blame him for any of the thousands of text messages our 9th grader, Marilyn, might send on any given day. O-M-G. There is only so much vision possible to contain in one man. I am delighted that, with the amazing dedication of Margaret Whitehead in organizing, cataloguing, and indexing this documentary record, historians, economists, political scientists, policy makers and all students of communications may better understand our modern times – and the world to come. This work, now available for scientific inquiry through the U.S. Library of Congress, will yet illuminate new insights. Thank you, kindly, Mrs. Whitehead for this magnificent contribution to the American people, and to scholars everywhere.