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Bell labs and centralized innovation

Published: 01 May 2011 Publication History

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Replaying the long-term costs of monopolized innovation.

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Michael Lesk

Tim Wu argues that monopolies will not do research that might change technology in ways that disrupt their business. He illustrates this with a discussion of the failure of Bell Laboratories to exploit the possibility of magnetic tape recording. This story is from a longer article by Mark Clark [1] that is acknowledged, but not cited in detail. What is unusual is that the objection to magnetic tape was second order: if people could record telephone calls, the use of the telephone might be discouraged. Of course, it did eventually become possible to record telephone calls, and AT&T's response was to insist that all telephone recording devices emit a special tone to warn the call participants (I have not heard those tones in decades). Wu points out that the monopolistic nature of AT&T enabled them to take a very wide look at the implications of their research. Nobody is surprised if the railways do not support research on airplanes or coal pipelines, or if the Postal Service does not fund research on fax machines. But, based on the management memoranda that Clark read, AT&T was looking at the whole social system around telephony, and attempting to discourage even remote threats to the enterprise. In short, the breadth of a monopoly can have advantages, such as AT&T doing its own software research, which gave us Unix; however, it also has disadvantages. Online Computing Reviews Service

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Published In

cover image Communications of the ACM
Communications of the ACM  Volume 54, Issue 5
May 2011
134 pages
ISSN:0001-0782
EISSN:1557-7317
DOI:10.1145/1941487
Issue’s Table of Contents
Permission to make digital or hard copies of all or part of this work for personal or classroom use is granted without fee provided that copies are not made or distributed for profit or commercial advantage and that copies bear this notice and the full citation on the first page. Copyrights for components of this work owned by others than ACM must be honored. Abstracting with credit is permitted. To copy otherwise, or republish, to post on servers or to redistribute to lists, requires prior specific permission and/or a fee. Request permissions from [email protected]

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Association for Computing Machinery

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Publication History

Published: 01 May 2011
Published in CACM Volume 54, Issue 5

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