the U.S. telephone industry has developed like agriculture

While everyone appreciates the importance of family farms, few realize that the U.S. has a lot of small local telephone companies.  A specific count of companies depends on distinctions among legal entities, operating companies, and holding companies; incumbent local-exchange companies (ILECs) and competitive local-exchange companies (CLECs), both of which can be part of one holding company; and wireline and wireless businesses.  But to see the big picture, you need to know only that, roughly counting, about 800 independently controlled companies provide essential local telephone service to U.S. residents.  About 600 of these telcos serve less than 10,000 customers.[1]

Early in the twentieth century, the U.S. had many more small local telephone companies.  About  51 thousand telephone companies in 1917 had  annual revenue less than $5000.[2]  These companies served on average 35 telephones per company, but in aggregate served 15% of all telephones. Today telephone companies with less than 20 thousand lines serve less than 4% of total telephone lines. Very small telephone companies extended telephone service to an amazingly large share of U.S. customers early in the twentieth century.

Much consolidation has occurred in the U.S. telephone industry over the past century. The turning point seems to have been the Great Depression.   The Great Depression hurt smaller telephone companies much more than larger telephone companies. From 1927 to 1932, the number of telephones that the Bell System served fell 0.5%,  the number of telephones that non-Bell companies with annual revenue greater than $10,000 (but much smaller than Bell companies) served fell 17%, and the number of telephones that companies with annual revenue less than $10,000 served fell 37%.[2] In 1917, the Bell system served 63% of all telephones.  In 2007, AT&T, Verizon, and Qwest (the main Bell descendants) served 83% of all telephone lines.  More than a thousand telephone companies were needed to account for that share of service in 1917.

The roots of the U.S. telephone industry in many small companies has important implications today.  The U.S. telephone industry has developed like agriculture in the transition to mechanized farming.  Because persons are much more reliant on a single telephone company for telephone service than they are on a single farm for food, regulating telephone companies is more important than regulating farms.  While 800 telephone companies is many fewer than existed early in the twentieth century, that’s still a large number of companies to regulate effectively.[4]  In addition, telephone company subsidies, like farm subsidies, have strong political support.  Telephone company subsidies present even more complicated problems than farm subsidies. Monolithic state-owned telephone companies may have performed relatively poorly, but they are far easier to change than 800 privately owned telephone companies.

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Data: U.S. telephone industry development workbook (Excel version).

[1] Based on consolidating common-control regulated service areas.  Here’s the resulting list of telephone companies. Because identification of common control appears to be crude, these figures are approximate.

[2] Data from the telco size distribution worksheet.  The term used in the Census report for 1917 is annual income.  The term “income” in that report apparently means gross revenue.

[3] Here’s information on trends in the U.S. telephone business across the Great Depression.  The data on changes in telephones served is from the “call volumes, 1912-37” worksheet in the associated data workbook.

[4] Consolidation in the U.S. telephone industry preserved to some extent differences across states in the number of telephone companies. Compare the state distribution of telephone operating companies in 1917 to the state distribution of regulated service areas in 2007.  Iowa had the largest number of telephone service entities in both 1917 and 2007.   Underscoring the regulatory challenge, Iowa has become a center of legal battles over telephone interconnection rates and practices.

COB-44: monuments of bureaucracy

Many persons mistakenly imagine bureaucrats to be slave-like drones.  But drones cannot erect towering monuments of bureaucracy like the Great Pyramid of Giza.  New archeological findings prove that the workers who built the Great Pyramid of Giza were not slaves, but workers honored for their work.

About 10,000 workers, working three-month shifts, took more than 30 years to build the pyramid. Today bureaucratic work has intensified to year-round shifts, and most bureaucratic projects typically take a decade before the business is finished.

But the nature of bureaucratic work — repetitive piling of similar pieces higher and higher — has not changed in the roughly 3,500 years since the Great Pyramid was built.  Adel Okasha, supervisor of the excavation, noted of the workers, “Their skeletons have signs of arthritis, and their lower vertebrae point to a life passed in difficulty.”  Many bureaucrats suffer from difficulties moving and have weak spines.  Poor sitting positions are a major cause of bureaucratic spinal problems.

Bureaucrats persevere, despite the hardships, because they understanding the enduring importance of their work.  Dieter Wildung, a former director of Berlin’s Egyptian Museum, observes, “The world simply could not believe the pyramids were build without oppression and forced labor, but out of loyalty to the pharaohs.”  Bureaucrats are stolidly loyal to their leaders and willing to sacrifice for their organizations. The result is astonishing monuments of bureaucracy readily visible today.

In other bureaucratic news this month, Theodore Dalrymple lectures on the great entrepreneurial economist and bureaucratic champion John Kenneth Galbraith. Galbraith, whose name is similar to Galbi, harvested a key insight:

Galbraith pointed out (though it was not a new insight, as he acknowledged) that large corporations’ managers developed interests of their own and, furthermore, that their powers often came to exceed those of the stockholders who actually owned the corporations. Not maximal profit to the stockholders, but maximal advantage to themselves, was the managers’ goal; in fact, the managers were bureaucrats, not entrepreneurs. The classical model was thus defunct as a reflection of reality. And perhaps more important to Galbraith was that the moral and economic superiority of private over public enterprise collapsed, for both were run by bureaucracies.

The unifying value of bureaucracy transcends trivial and hackneyed arguments about public versus private enterprise.  What’s good for bureaucracy is good for your country.

Claus von Zastrow vigorously defends educational bureaucrats at the Public School Insights blog.  We agree with his arguments.  Without educational bureaucracy, students wouldn’t be prepared to join the adult workforce.

Mencius Moldbug at Unqualified Reservations praises the work of bureaucrats.  Mr. Moldbug observes:

Almost all scientists today are bureaucrats. For scientists with administrative positions in professional societies, it goes without saying. But not all bureaucrats are evil, dishonest people. Far from it.

Quite far indeed.

Civil Liberties Australia pointlessly complains that bureaucrats requested a three-year sleep diary.  Sleep is important to bureaucrats.  It should be important to you, too.

Roman Jones at Blazing Torches reports that the European Commission (EU) has produced a children’s comic book telling the fictional story of two EU bureaucrats’ humanitarian work.  We believe such fiction is good for children.

Lim Teck Gee highlights injustices that the Malaysian bureaucracy has not yet alleviated.  Part of the problem seems to be that the Malaysian bureaucracy isn’t sufficiently diverse.  Bureaucracy should encompass all the persons in a country.

The U.S. Office of Personnel Management has renamed its “Federal Human Capital Survey” to “Federal Employee Viewpoint Survey”.  We applaud this change, which underscores the actual personhood of human capital. The news release concludes:

OPM will be encouraging the government’s Chief Human Capital Officers to use the data to help them with their workforces, and it is expected that agency managers will make a sophisticated assessment of their own human capital management and develop an action plan for improvement.

We believe that the name-change committee should produce an action plan before the Chief Human Capital Officers begin their planning meetings.

That’s all for this month’s Carnival of Bureaucrats. Enjoy previous bureaucratic carnivals here. Nominations of posts to be considered for inclusion in next month’s carnival should be submitted using Form 376: Application for Bureaucratic Recognition.

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Thanks to Paul Mannix for sharing the photo from which I derived the above image.

Sukeyasu Shiba's expansive inspiration

Imagine plucking a lute slowly and deliberately.  The impulse could arise from emotions within yourself.  But possibilities for inspiration other than the self also exist.  Sukeyasu Shiba’s Gagaku Universe, performed this past Wednesday evening by the Reigakusha Gagaku Ensemble at the Freer Gallery, drew inspiration from within and from without, from relations with objects and with others, and from specific, real places and from imaged scenes.  The whole universe was inspiration for this music.

An emotion from within is longing for home.  The work Chosa Join expressed a young girl’s longing for home after being called away for  service in the Chinese Imperial Court. The music was reconstructed from a manuscript found in the 5’th to 11’th century manuscript collection at Dunhuang, and it was played on instruments preserved from the Nara Period (8’th century) in the Japanese Imperial Treasury. The music easily moves persons far removed in time and place from its historical source.

A member of a clan of gagaku musicians stretching back more than a thousand years, Sukeyasu Shiba played a flute solo called Ichigyo no Fu.  The sliding, turning transitions between tones were exquisitely beautiful.  The phrasing of the music was in deep, long breaths that emphasized the performer’s body.  In the program, Mr. Shiba explained that the piece presented devotion to flute playing.  The piece did that not through technical virtuosity, nor through historical and familial authority, but by giving “full voice to the performer’s personal expressiveness.”  It thus related inner emotion to an external object.

Interpersonal communion was another source of inspiration.  About 1050 years ago in Japan, an gagaku musician who played a double-reed pipe yearned for the lute music of a blind monk.  For years he traveled a great distance hoping to hear it.  Finally, the monk, sensing the pipe musician hiding nearby, resolved to play. According to the program notes, the monk said, “Let me pluck my strings to his music.  Let him breathe through his instrument to my music.” [*]  As far from romantic as the distance that remained between the scarcely moving players, the resulting duet, Souan no Kai, presented beautiful, selfless music.

Other pieces expressed specific, real places and imaginary scenes.  Mr. Shiba described the first movement of his work Shotorashion with multiple senses other than sound:

Here is the solemn magnificence of the old Buddha Hall, shadowy with the slight chill and the fragrance of incense hovering in the air.  And the hanging mandala scroll with its faded colors bespeaks the weight of the years gone by.

Most persons probably wouldn’t know what sort of music that description implies. But having heard nothing, you might be able to imagine the sound of this scene:

Fujin — the God of Wind — rides high on the clouds, his mouth drawn into a great screech as he squeezes his huge bag of winds with such fearsome power that it feels as though at any moment he will come swooping down on the intruder.

The Reigakusha Gagaku Ensemble included two mouth organs (sho), two double-reed flutes (hichiriki) and two side-blown flutes (ryuteki).  They made sounds of fearsome power.

Unlike the music, the dancing incorporated in Shotorashion lacked inspirational scope.  Stephen Pier’s dancing was balletic, with some gestures from jazz and flamenco dance.  His emphasis on arm and leg lines, along with his placid torso, clashed with the forceful breathing of the music.  His dancing also seemed exclusively egoistic, with head movements anticipating and paralleling arm and leg lines.  That quality of movement would have been more appropriate for a performance of ancient Roman pantomime.  More weighted, floor-oriented modern dance would have made for a more appealing re-interpretation of gagaku dance.  Maya Sakai performed a mikomai dance.  This dance harmonized with the music, but added little to the over-all effect. A collaboration with a group like Shen Wei Dance Arts would produce more interesting work.

Sukeyasu Shiba’s Gagaku Universe presented a living tradition of Japanese classical music stretching back for more than a thousand years.  It communicates just how encompassing music can be.

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Sukeyasu Shiba’s Gagaku Universe, presented by the Reigakusha Ensemble at the Myer Auditorium, Freer Gallery of Art, Washington, DC, Feb. 24, 2010, as part of the Music From Japan Festival, 2010.


[*] This is the legend of Hiromasa Minamoto, who sought out the monk Semimaru at Mt. Osaka.

A video is included above.

long-run view of U.S. municipal communications networks

While successful municipal-owned communications networks can scarcely be found in the U.S. today, nearly all sizable U.S. municipalities owned and operated their own communications networks at the beginning of the twentieth century.  Municipalities built networks to communicate fire alarms and to communicate with police officers patrolling neighborhood beats. The first such network was a fire-alarm network built in Boston in 1852.  By 1902, 88% of municipalities with 10,000 residents or more had a municipal-owned fire-alarm signaling network. The corresponding figure for police-patrol networks was 32%. Larger municipalities were more likely to have both kinds of networks.[1]

Municipal fire and police networks had relatively little developmental dynamism.  In 1902, about a quarter century after the first commercial telephone exchange went into operation, only 2.5% of the boxes or signaling stations connected to municipal fire and police networks were telephone stations. Most stations used signaling systems based on older telegraph technology. The average size of fire and police networks were 52 and 85 stations, respectively.  Across the nearly ten thousand telephone operating companies that had sprung up by 1902, the average number of phones per company was 220. From 1902 to 1917, commercial telephone networks grew about four times as fast as fire and police municipal networks.[2]

At least some municipal fire and police networks continued in operation with rather crude technology up through the 1970s. Showing early signs of his engineering genius, my brother investigated how a fire alarm works by pulling a lever on a fire-alarm box in New York City in the early 1970s.  That caused fire trucks to come without any additional information being communicated.  Fire and police call boxes in Washington, DC remained in operation until 1976. Rather than evolving into electronic kiosks or nodes on wireless networks, they became historic artifacts now decorated with community call box art.

New municipal communications networks can have a more dynamic future than historic fire-alarm and police-patrol municipal networks.  Fire-alarm and policy-patrol networks were highly specialized and closely tied to specific city departments.  These networks never offered opportunities for the development of commercial businesses.[3]  These networks never structured themselves to be sold off to a commercial network provider.  New municipal communications networks need not follow those patterns.

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Data:  U.S. fire-alarm and police-patrol signaling network statistics, 1902-1917 (Excel version).


[1] Among municipalities with 50,000 or more residents, 75% owned both a fire-alarm and police-patrol electric network in 1902.  See coverage sheet.  Simple signaling is less useful in a police-patrol network than in a fire-alarm network. Hence a greater cost for a sufficiently useful police-patrol network may at least partly explain the lesser prevalence of police-patrol networks.  Here’s a DC police historian discussing use of police call boxes.

[2] The aggregate size of the commercial telephone system was also much larger than that of municipal fire and police networks. In 1902, the number of signaling boxes or stations in municipal fire and police networks was only 2% of the number of telephones in use.  Network mileage in the fire and police networks was only 1% of that in commercial telephone networks.  See historical development sheet.

[3] Early in the twentieth century, Milwaukee, Wisconsin, had a relatively large municipal network for a city of its size (see municipal network list).  Milwaukee’s municipal network may have made Wisconsin Bell uneasy.  The Census Bureau’s 1902 report on municipal networks noted:

In connection with the use of the telephone for fire alarms it may be noted that it has been the practice of the Wisconsin Telephone Company, of Milwaukee, to suggest in its telephone directory that patrons send in fire alarms by telephone.  The chief of police has lately requested the manager of the company to omit this suggestion from the book hereafter, for the reason that it frequently takes too long a time to notify the fire headquarters by telephone.  This delay, he states, gives the fire a change to gain headway before the department is able to respond to the call.

See Telephones and Telegraphs, 1902, p. 126.  Book lending is an example of a service in which as diverse organizations forms, including public libraries and purely commercial libraries, have co-existed over a long run.