Early cable television systems were little more than wire relays set up in small towns to receive broadcast signals from distant cities. The method was first used by early radio broadcasters in 1923. American inventor Philo T. Farnsworth performed one of the first public demonstrations of televised images in Philadelphia in 1934. NBC’s David Sarnoff followed with his own exhibition at the 1939 New York World’s Fair. By the late forties, with the advent of broadcast television, the New York Times reported several examples in which distant signals were brought into isolated communities via strategically placed antenna and wire strung from house to house. These early systems became known as "community antenna television", and later simply called "CATV".
Mahony City, Pennsylvania
One of the first recorded demonstrations of CATV occurred in Mahony City, Pennsylvania in the summer of 1947. John Walson, a maintenance man for Pennsylvania Power and Light Company, and the owner of an appliance store, had grown frustrated with his attempts to sell television sets to locals. The reception of network programs from Philadelphia, 85 miles away, in this Appalachian coal mining town was often sporadic, and sometimes non-existent. To boost TV sales, Walson erected an antenna on a nearby mountain and invited prospective customers to drive up with him for a demonstration. Once connected to a portable generator Walson kept in his truck, the antenna could receive up to three stations. These stations were usually viewed on a new television set driven up the mountain with the customer to complete the sale.
Walson's ambitious approach caused TV set sales to increase steadily. He then began stringing electrical wire down from the antenna to his warehouse, where demonstrations could be made to more customers. Interest was high enough that by the spring of 1948 Walson replaced his old antenna with a larger one, and substituted the electrical wire with a twin-lead strand. To this new wire he added amplifiers every five hundred feet to keep signal quality sharp. In time a surge in sales at Walson's appliance store and numerous inquiries about the service convinced him to expand the new television system.
In June, 1948 Walson convinced the manager of Penn Power and Light to letting him string wire along the company's power poles between the warehouse and the appliance store. Walson then put three television sets in the store's front window. Soon customers living along the wire run began asking him to bring service to their homes. As the demand grew, Walson replaced the twin-lead wire with more durable coaxial cable, and began charging customers $100 for each connection plus $2 a month for maintenance. Within a year, he had 727 subscribers.
By 1950 Walson's project had become a full time business. That year he signed an agreement with the power company allowing him to lease electrical poles for $1.50 each. By then a second community antenna system had been built to serve another section of Mahony City. This one was operated by William McLaughlin, the Chief of Police, but was partially owned by Jerrold Electronics Corporation, a large equipment supplier. This partnership became known as City Television Corporation of Mahony City. In 1953 the system offered five channels, and in 1970 was purchased by Walson. By then the ex-maintenance man's system had 85,000 subscribers.
Astoria, Oregon
At about the time Walson was erecting his first wire system, L.E. (Ed) Parsons, the owner of radio station KAST in Astoria, Oregon, was being convinced by his wife that television was the coming medium. Mrs. Parsons had just returned from the 1948 National Association of Radio and Television Broadcasters convention, and was determined to bring television to Astoria. Parsons had already tried to receive television signals from the nearest station, KRSC-TV, 125 miles away in Seattle, but to no avail. Parsons had performed a rigorous survey only to find that broadcast signals traveled to Astoria in narrow finger-like patterns. By chance these signals penetrated the nearby mountains just enough to give ghost-like reception to residents of the downtown hotel, where the Parsons lived. Although the signals were weak, Parsons received permission to erect an antenna on the hotel's roof and ran a wire into his apartment. Then he invited some friends over to view the first programs on Thanksgiving Day, 1948.
His friends' enthusiasm convinced Parsons to extend the make-shift system into the hotel's lobby and across the street to a music store. Like Walson, Parsons set up viewing areas, and began a new business. Unlike Walson, Parsons started a cooperative partnership in which owners could purchase lines and equipment for a connection fee and a monthly service charge. By 1949 the new cooperative was averaging 20 connections per month, and Parsons was forced to hire helpers to keep up with the growing demand.
Parsons' approach to community antenna television was different from Walson's in another important way. The radio broadcaster's instincts told him that his new relay system might be construed as unauthorized use of signals. In May, 1949, to shortcut any legal issues that may arise, Ed Parsons wrote Robert Priebe, the general manager of KRSC-TV in Seattle, explaining how his television system worked and asked for permission to rebroadcast television signals into Astoria. Priebe granted the request on three conditions: first, that the rebroadcasts be experimental: second, that there be no commercial use of the rebroadcast; and third, that permission would be revoked if the rebroadcast became detrimental to KRSC-TV.
The vagueness of these conditions was not lost on Parsons. What would be considered "detrimental" to the Seattle station? And what was meant by "commercial use of the rebroadcast”? In a sense, since Parsons was charging customers for connections, might a commercial use already exist? Despite the fact that Parsons implied the latter when he explained his fee structure, Priebe's reply included encouragement to continue the experiments and to keep him informed of Parsons' progress. When the Seattle station was sold in August, 1949, the new general manager reaffirmed the agreement.
Other community antenna operators seemed destined for bigger and better things. They were men who created the important links between the inventive loners providing television for friends and small-time entrepreneurs who recognized new markets.
Casper, Wyoming
One such individual was Bill Daniels. An ex-Golden Gloves middle-weight and Navy flyer who served in Europe and Korea, Daniels moved to Casper, Wyoming in 1952 to go into the insurance business with his brother. One evening, while passing through Denver on his way to New Mexico, Daniels stopped at a local bar to catch boxing televised from New York. The experience changed his life.
“In those days,...all three networks were on one station [in Denver], Channel 2. I found myself driving to Cheyenne and Denver on Wednesday and Fridays to watch the Pabst Blue Ribbon Wednesday Night Fights and the Gillette Cavalcade of Sports boxing shows...[That's when] I began to think there had to be a way to get TV to little towns like Casper.”
The solution for Daniels was to lease microwave service from the Denver phone company and form a partnership with a local TV engineer to offer community antenna service. After a Daniels' sales pitch, several oil men in Casper were interested enough to invest venture capital. Despite initially high overhead costs, including $8,500 a month rent to the phone company and a $125,000 cash bond, the partnership was almost an immediate success. Daniels described his first days.
“Once we got a cable hooked up into Casper, we leased space on phone company poles in the alleys...and ran the cable right into the homes. Hookup cost was $150. and the monthly charge was $7.50. It was a big hit. We couldn't wire homes fast enough.”
Refining his formula as he went, Daniels built several more antenna systems, while investing, selling and refinancing others. Soon his knack for salesmanship and business acumen attracted the attention of other CATV operators. In 1955 some of them founded the National Community Television Association, and one year later elected Daniels as the NCTA's second president. One of his first acts was to establish a lobbying office in Washington to represent the new industry's interests before Congress.
Daniels' term at the NCTA was important for another reason: it put him in contact with many people who wanted to buy, sell or invest in antenna or microwave systems. After his term as president ended, Daniels set up a brokerage firm in Denver to put such deals together. Acting as the principal middle man for many of the earliest transactions, Daniels helped create a new communications industry in the shadow of the major television networks. As one observer remarked,
“In the late '50's, when Bill Daniels began to interest investors in cable, he brought in people who were fairly sophisticated financially. From that point forward the industry became high profile, [and] more sophisticated.”
Winona, Minnesota and La Cross, Wisconsin
Edward Allen followed a path similar to Daniels. In 1958 Allen was the general manager and part owner of a radio station in Winoma, Minnesota. He was asked by early cable operators in nearby Mancato if they could hang test antenna on his radio tower. Allen's radio station had a six hundred foot antenna, which was situated on a six hundred foot hill. The cable people wanted to use the antenna to test a CATV system using television signals from Minneapolis, 100 miles away. But when a consulting engineer told the CATV investors that the signal quality was so poor no one would subscribe, the financing evaporated. Then Allen stepped in.
Allen talked to some friends, saying that CATV sounded like a good community service, as well as a good investment. Knowing little about community antenna systems, the investors asked Allen to get more information at the National Community Television Association convention in Washington, D.C. When Allen reported favorably, the investors agreed to provide the financing only if Allen left his radio station to run the new system. Allen agreed and built two of the first 12 channel systems in Winona in 1958 and in La Cross, Wisconsin in 1960.
In the early sixties Allen began using an innovative transistorized cable system developed by Spencer-Kennedy Laboratories of Boston, which did away with vacuum tubes and multiple amplifiers. In 1964 Spencer-Kennedy asked Allen to manage its five California systems east of San Francisco. Allen then sold his Minnesota and Wisconsin cable systems to Jack Kent Cooke. (Cooke was in the process of building ”Teleprompter”, and later purchased the Minneapolis Lakers and moved them to Los Angeles). In 1965 Allen moved to California just in time to witness the first battles over pay-tv, which will be discussed in a future episode. It was from this vantage point that the ex-radio broadcaster watched the new “Cable Television” industry begin its long political battle. Along the way, Allen co- founded the California Cable Television Association, remaining active until the late 1980’s.
The experiences of pioneers like Allen, Daniels, Parsons and Walson reflected the entrepreneurial spirit of cable television's early years. For the most part, however, cable’s free-wheeling days were short lived. By the late fifties large corporate investors, including many movie theater owners and radio broadcasters, were beginning to understand the potential of cable to circumvent the monopoly that broadcast television networks enjoyed in the United States. Soon the battle lines were drawn. People outside the television industry saw cable as a means to enter it. Those already in television began to perceive the new medium as a threat to their businesses. The protests of local television broadcasters, supported by a newly organized National Association of Broadcasters, a powerful lobby for the networks, eventually pushed the FCC to investigate.
Next Time: Cable TV Struggles to Survive
Copyright © 2007 R.E. Xavier
Friday
Episode 3: Radio to Television - A New Age Dawns
Even as radio companies were reaching the height of their influence, David Sarnoff, Bill Paley and others manuevered to introduce a new technology called “television” to mass audiences. But like the wireless, scientists worked futilely on early television experiments in isolated locations with minimal commercial support, some as early as the 1890’s. David Sarnoff was so sure about television that he organized a public exhibit at the 1939 New York World’s Fair. Then World War II intervened, and radio again took center stage.
Because of their influence over radio, NBC and CBS were relatively free to maneuver around each other when the time was right to exploit the new technology. The fascination with television after World War II, however, dovetailed with a steady decline in radio advertising revenue in the 1940s. By 1951 network radio ads had fallen by more than 50% from 1946. Both NBC and CBS hedged their bets by funneling radio money into television.
Other forces also came into play. Television’s first “gold rush” began with the FCC’s allocation of licenses in 1945, and was already dominated by the rivalry between NBC, the largest owner of network radio stations, and CBS, the leader in advertising sales from its popular radio shows. NBC took the lead by backing RCA’s design for “simultaneous” black and white television receivers that would only operate on RCA’s system, and soon developed plans for a color set. NBC then purchased five television stations under the new television rules. CBS invested over $60 million in its own “sequential” color system, but purchased only one TV station in 1946. Both companies then proposed to the FCC that their color systems be recognized as standards for television.
NBC and CBS each scheduled tests for FCC commissioners to make their case. In a press release NBC admitted some flaws in its tests, but emphasized the “compatibility” of RCA’s color system with existing black and white television sets, the majority of which RCA sold in America. Witnesses to the CBS tests described those images as “exceptionally clear and steady”, and noted FCC Chairman Charles Denny's enthusiasm.
Nevertheless, the commission favored RCA’s color system, stating “receivers that are built for the (CBS) sequential system would not be able to receive programs from television stations broadcasting on a simultaneous system.”, and noted that “many of the fundamentals (of CBS’s system) … have not been adequately field tested.” Months later, Chairman Denny resigned from the FCC and accepted a vice presidency at RCA.
Other developments further compounded CBS’s problems. Since the end of the war, the FCC was inundated with new applications for television licenses, and then numerous complaints from existing stations of “snow”, “ghosts”, and other forms of interference. Soon it was clear that the commission needed to revise the nation’s television standards. In May 1948 the FCC announced that changes in channel allocations were necessary before any more new licenses could be granted. As a result, the FCC ruled that all requests for licenses would be halted indefinitely, and no hearing dates for new applications would be scheduled until the current allocation table was revised. The license “freeze” would last until 1952.
The ruling had profound effects on the Columbia Broadcasting interests. Satisfied with CBS’ lead over NBC in radio, CBS President Paul Kasten and Vice President of Research Frank Stanton advised Paley in 1945 that there could be two color television systems, one on VHF, which NBC dominated, and another on UHF, an unused higher frequency band. The CBS executives were so confident in their assessment, and on the FCC’s decision to accept their proposal, that they passed on four opportunities to buy VHF stations in 1946 and 1947. The gamble failed miserably. In short order CBS was hit with the rejection of its color system, and the FCC “freeze” on new licenses.
Paley quickly discovered that existing television licenses steadily increased in value. As he later observed:
…when we came to buy the four more television stations CBS was entitled to under FCC rules, the value and price…increased tremendously. Nor was it only the price we would have to pay. The time, the effort, tensions involved were incalculable. When we wanted to buy, television station owners did not want to sell… It was a sellers’ market.
RCA and NBC were well positioned to take advantage of Paley’s miscalculation. In 1947 the New York Times estimated that RCA’s 90% market share in black and white television set production was worth almost $65 million annually even before color sets could be introduced. In September 1947, Sarnoff predicted the market for televisions would grow to 750,000 in the next year. In 1948 sales of TV sets actually reached 975,000, and by 1953, one year after the freeze was lifted, over 7 million were sold. Most were tuned to NBC stations.
Sarnoff’s further prediction that station investments and programming would grow also proved to be accurate. In 1951 Paramount Pictures used money from the forced sale of its theater chain to purchase NBC’s old “blue” radio network from a business man who purchased it in 1943, and immediately applied to purchase five television stations in the same cities. (NBC had neglected the stations it acquired during the divestment of the RCA partnership.) That year Paramount formed the American Broadcasting Company, or “ABC”, a third television network. RCA solidified its own position by extending the NBC network to include independent stations that would air NBC produced shows. The other networks soon followed.
In the 1950’s the commercial structure of American television began to emerge, made up of a new triumvirate consisting of NBC, CBS, and a newly created and distant competitor, ABC. As the license “freeze” lifted, each company purchased its alloted television stations, and created partnerships with independent stations they now identified as “affiliates”. The majors also produced their own branded shows, had their own stable of stars, and competed largely among themselves for advertisers. By the 1960’s the transference of control to television by remnants of the old radio group was complete, a situation that would bring immense wealth to the industry for the next two decades.
Television and Society
Outside the corporate boardrooms, however, the changes brought on by television were more profound. In the 1950’s many people sensed the impact television was having on American life. New York Times television critic Jack Gould noted that "[television]...is influencing the social and economic habits of the nation to a degree unparalleled since the advent of the automobile.” Gould based this observation on a series of reports from Times correspondents in 100 communities across the country. A dramatic change was occurring in the way Americans were spending their leisure time. Gould associated sharp declines in movie attendance and numerous theater closures to the introduction of television in large cities.
In New York, for example, the Times reported the closing of 55 theaters. In southern California 134 closed. In eastern Pennsylvania 70 theaters closed, followed by 64 in Chicago; and another 61 in Massachusetts. In fact, according to Gould, most major cities reported movie box office declines of 10 to 40 percent. In Hollywood the motion picture industry reported a loss of more than $90 million and nearly 5000 craft jobs between 1947 and 1950.
Gould reported that television was having a similar impact on radio. In an article entitled "TV Makes Inroads on Big Radio Chains", Gould noted that major radio network programs were losing "a sizable portion of their after-dark audience", resulting in revenue loses and the curtailing of some operations at all three network operations. The effects were felt in several cities. Evening radio listening in Philadelphia was off 25%, Gould reported. Detroit radio stations reported evening audience declines of 60%, and 30% loses before 6 pm. In Cleveland, a large radio station was forced to reduce its selling price from $3 million to $1.25 million because of the unfavorable market. Another radio station, WINX in Washington D.C., was sold for only $120,000 in 1951. It had been purchased for $500,000 in 1944.
Gould’s article prompted a full page reply in the New York Times by NBC, even as Sarnoff was preparing to inundate America with television sets. "Yes Mr. Gould", the notice began, "Television does have impact but...Network Radio Reaches More People in More Places At The Lowest Cost." NBC then claimed that network radio was still heard in 41.9 million homes, in 19.1 million cars, and "is the only open channel of communication open to all America".
While the degree of influence attributed to television during this period was significant, Sarnoff was correct: in 1951 only 62% of the population could watch television at all. The FCC’s license freeze left the nation with only 108 television stations serving 63 cities. When it was lifted in 1952, large urban areas, including New York, Los Angeles, Chicago, Boston, San Francisco, Philadelphia, Baltimore, Detroit and Pittsburgh, were served. But entire states, including Idaho, Montana, Nevada, New Mexico, North Dakota, South Dakota, Vermont and Wyoming had no channels at all. In Arizona, Arkansas, Maine, Maryland, Minnesota, Mississippi, New Hampshire, Oregon and Utah only one city was served by a television station.
This disparity was an incentive for some individuals to find ways of bringing distant TV signals into their homes. In many small towns appliance dealers, repairmen, electricians, ex-military radio operators, even radio broadcasters, set their minds to work. As viewers they had been attracted by television’s flickering images. Most of them merely wanted to see what the press was raving about. Their efforts are recognized today as the birth of cable television.
Next time: The Birth of Cable TV
Copyright © 2007 R.E. Xavier
Because of their influence over radio, NBC and CBS were relatively free to maneuver around each other when the time was right to exploit the new technology. The fascination with television after World War II, however, dovetailed with a steady decline in radio advertising revenue in the 1940s. By 1951 network radio ads had fallen by more than 50% from 1946. Both NBC and CBS hedged their bets by funneling radio money into television.
Other forces also came into play. Television’s first “gold rush” began with the FCC’s allocation of licenses in 1945, and was already dominated by the rivalry between NBC, the largest owner of network radio stations, and CBS, the leader in advertising sales from its popular radio shows. NBC took the lead by backing RCA’s design for “simultaneous” black and white television receivers that would only operate on RCA’s system, and soon developed plans for a color set. NBC then purchased five television stations under the new television rules. CBS invested over $60 million in its own “sequential” color system, but purchased only one TV station in 1946. Both companies then proposed to the FCC that their color systems be recognized as standards for television.
NBC and CBS each scheduled tests for FCC commissioners to make their case. In a press release NBC admitted some flaws in its tests, but emphasized the “compatibility” of RCA’s color system with existing black and white television sets, the majority of which RCA sold in America. Witnesses to the CBS tests described those images as “exceptionally clear and steady”, and noted FCC Chairman Charles Denny's enthusiasm.
Nevertheless, the commission favored RCA’s color system, stating “receivers that are built for the (CBS) sequential system would not be able to receive programs from television stations broadcasting on a simultaneous system.”, and noted that “many of the fundamentals (of CBS’s system) … have not been adequately field tested.” Months later, Chairman Denny resigned from the FCC and accepted a vice presidency at RCA.
Other developments further compounded CBS’s problems. Since the end of the war, the FCC was inundated with new applications for television licenses, and then numerous complaints from existing stations of “snow”, “ghosts”, and other forms of interference. Soon it was clear that the commission needed to revise the nation’s television standards. In May 1948 the FCC announced that changes in channel allocations were necessary before any more new licenses could be granted. As a result, the FCC ruled that all requests for licenses would be halted indefinitely, and no hearing dates for new applications would be scheduled until the current allocation table was revised. The license “freeze” would last until 1952.
The ruling had profound effects on the Columbia Broadcasting interests. Satisfied with CBS’ lead over NBC in radio, CBS President Paul Kasten and Vice President of Research Frank Stanton advised Paley in 1945 that there could be two color television systems, one on VHF, which NBC dominated, and another on UHF, an unused higher frequency band. The CBS executives were so confident in their assessment, and on the FCC’s decision to accept their proposal, that they passed on four opportunities to buy VHF stations in 1946 and 1947. The gamble failed miserably. In short order CBS was hit with the rejection of its color system, and the FCC “freeze” on new licenses.
Paley quickly discovered that existing television licenses steadily increased in value. As he later observed:
…when we came to buy the four more television stations CBS was entitled to under FCC rules, the value and price…increased tremendously. Nor was it only the price we would have to pay. The time, the effort, tensions involved were incalculable. When we wanted to buy, television station owners did not want to sell… It was a sellers’ market.
RCA and NBC were well positioned to take advantage of Paley’s miscalculation. In 1947 the New York Times estimated that RCA’s 90% market share in black and white television set production was worth almost $65 million annually even before color sets could be introduced. In September 1947, Sarnoff predicted the market for televisions would grow to 750,000 in the next year. In 1948 sales of TV sets actually reached 975,000, and by 1953, one year after the freeze was lifted, over 7 million were sold. Most were tuned to NBC stations.
Sarnoff’s further prediction that station investments and programming would grow also proved to be accurate. In 1951 Paramount Pictures used money from the forced sale of its theater chain to purchase NBC’s old “blue” radio network from a business man who purchased it in 1943, and immediately applied to purchase five television stations in the same cities. (NBC had neglected the stations it acquired during the divestment of the RCA partnership.) That year Paramount formed the American Broadcasting Company, or “ABC”, a third television network. RCA solidified its own position by extending the NBC network to include independent stations that would air NBC produced shows. The other networks soon followed.
In the 1950’s the commercial structure of American television began to emerge, made up of a new triumvirate consisting of NBC, CBS, and a newly created and distant competitor, ABC. As the license “freeze” lifted, each company purchased its alloted television stations, and created partnerships with independent stations they now identified as “affiliates”. The majors also produced their own branded shows, had their own stable of stars, and competed largely among themselves for advertisers. By the 1960’s the transference of control to television by remnants of the old radio group was complete, a situation that would bring immense wealth to the industry for the next two decades.
Television and Society
Outside the corporate boardrooms, however, the changes brought on by television were more profound. In the 1950’s many people sensed the impact television was having on American life. New York Times television critic Jack Gould noted that "[television]...is influencing the social and economic habits of the nation to a degree unparalleled since the advent of the automobile.” Gould based this observation on a series of reports from Times correspondents in 100 communities across the country. A dramatic change was occurring in the way Americans were spending their leisure time. Gould associated sharp declines in movie attendance and numerous theater closures to the introduction of television in large cities.
In New York, for example, the Times reported the closing of 55 theaters. In southern California 134 closed. In eastern Pennsylvania 70 theaters closed, followed by 64 in Chicago; and another 61 in Massachusetts. In fact, according to Gould, most major cities reported movie box office declines of 10 to 40 percent. In Hollywood the motion picture industry reported a loss of more than $90 million and nearly 5000 craft jobs between 1947 and 1950.
Gould reported that television was having a similar impact on radio. In an article entitled "TV Makes Inroads on Big Radio Chains", Gould noted that major radio network programs were losing "a sizable portion of their after-dark audience", resulting in revenue loses and the curtailing of some operations at all three network operations. The effects were felt in several cities. Evening radio listening in Philadelphia was off 25%, Gould reported. Detroit radio stations reported evening audience declines of 60%, and 30% loses before 6 pm. In Cleveland, a large radio station was forced to reduce its selling price from $3 million to $1.25 million because of the unfavorable market. Another radio station, WINX in Washington D.C., was sold for only $120,000 in 1951. It had been purchased for $500,000 in 1944.
Gould’s article prompted a full page reply in the New York Times by NBC, even as Sarnoff was preparing to inundate America with television sets. "Yes Mr. Gould", the notice began, "Television does have impact but...Network Radio Reaches More People in More Places At The Lowest Cost." NBC then claimed that network radio was still heard in 41.9 million homes, in 19.1 million cars, and "is the only open channel of communication open to all America".
While the degree of influence attributed to television during this period was significant, Sarnoff was correct: in 1951 only 62% of the population could watch television at all. The FCC’s license freeze left the nation with only 108 television stations serving 63 cities. When it was lifted in 1952, large urban areas, including New York, Los Angeles, Chicago, Boston, San Francisco, Philadelphia, Baltimore, Detroit and Pittsburgh, were served. But entire states, including Idaho, Montana, Nevada, New Mexico, North Dakota, South Dakota, Vermont and Wyoming had no channels at all. In Arizona, Arkansas, Maine, Maryland, Minnesota, Mississippi, New Hampshire, Oregon and Utah only one city was served by a television station.
This disparity was an incentive for some individuals to find ways of bringing distant TV signals into their homes. In many small towns appliance dealers, repairmen, electricians, ex-military radio operators, even radio broadcasters, set their minds to work. As viewers they had been attracted by television’s flickering images. Most of them merely wanted to see what the press was raving about. Their efforts are recognized today as the birth of cable television.
Next time: The Birth of Cable TV
Copyright © 2007 R.E. Xavier
Episode 2: RCA and the Emergence of American Radio Networks
The Story of American media continues.
RCA kept a low profile in its early years, but that did not suggest a lack of activity. At its birth in 1919 the company was granted free use of GE’s patents and became its sole agent for radios and equipment sales in the United States. RCA also acquired all government stations and ship installations formerly owned by American Marconi. This allowed the new company to undercut message charges by British interests that controlled the undersea cable.
The missing piece, however, was RCA’s access to patents outside General Electric’s control. As Owen D. Young later stated, General Electric, Westinghouse, AT& T, and United Fruit “…all had patents but nobody had patents enough to make a system.” The solution was clear: negotiate agreements between the patent holders. The goals were to join all the patents together under the RCA alliance, cut out any residual competition, and centralize radio manufacturing. The effects on broadcasting would reach further than Young could imagine.
The partners readily accepted the compromise. AT&T was sold RCA stock for the rights to its three-electron audion, a powerful receiver developed by De Forest for AT&T in 1912. Westinghouse contributed the “super heterodyne” circuit, invented by the young American inventor Edwin Armstrong in 1920, a device that radically amplified signals and suppressed interference. United Fruit contributed the rights to “crystal detectors” and long range antennae. Both were added to the consortium’s pool of nearly 2000 patents in 1921.
Dominating the production of receivers, transmitters, and components for radio sets further solidified the structure of the American radio manufacturing. As a result, the growing demand for radio sets reaped steady profits. By 1922 RCA sold 100,000 radios with sales of $11 million. A year later, production reached 300,000. In 1924 RCA sold 600,000 radio sets, and sales increased to $50 million. Each technology and the attendant patents gave RCA an insurmountable advantage in commercial long-distance communications and radio set production for the next two decades.
RCA’s business model, however, remained focused on radios, component production, and sales. The partners were apparently less interested in what was being broadcast. RCA remained equally oblivious to thousands of amateur radio enthusiasts and their transmitting equipment, and the growing number of amateur stations operating across the country, most of which were using RCA parts. There were also thousands more people listening, waiting for new broadcasts. The mass market for radio was about to explode.
The Birth of Radio Broadcasting
One of the amateurs was Frank Conrad, a Westinghouse engineer. Conrad had been a wireless telegrapher before the war, and returned to amateur work in his off hours. Because he had access to parts and equipment through Westinghouse, Conrad experimented by broadcasting music, and was able to set up his own station, 8XK, in Pittsburgh. By May 1920 a local newspaper was featuring reports of the concerts in its columns. In September that year, a department store displayed an ad describing Conrad’s radio concerts and pictures of radio sets it had for sale.
Conrad’s supervisor, Harry P. Davis, a Westinghouse Vice President, saw the advertisement and began to understand the significance. The amateurs were not only technically literate, but represented the first wave of what Davis described as a “limitless” market for radio sets that could be built with Westinghouse vacuum tubes. At Davis’s urging, Westinghouse approved the building of a more powerful station on company property. In October, 1920, two weeks after the company’s application for a license, the Department of Commerce issued call letters to the nation’s first “commercial” radio station: KDKA – Pittsburgh.
Westinghouse’s experiment in broadcasting intensified the “boom” that fueled the sales of radio equipment and parts manufactured by the RCA consortium. By 1924 the new industry reported combined sales of $358 million. It also began a wave of radio station construction by General Electric, AT&T, RCA, and Westinghouse across the country.
None of the RCA partners, however, could decide how to support the stations. The concept of advertising still only involved selling radios. Equally significant, all of the stations played their own music and made announcements independently. None shared programs, nor were any of the radio stations physically connected.
AT&T, a partner not involved in radio, came up with a lucrative but “dangerous” solution. Like the other companies, AT&T operated radio stations on the promise of selling more RCA radio tubes and sets in which it had an interest. As station costs increased, the company moved to exploit its key asset, a network of telephone lines that linked every major city in the country. In 1922 AT&T introduced a new revenue model called “toll broadcasting” at WEAF, its radio station in New York City. The “toll” referred to fees paid by companies for colorful descriptions of products and services to radio audiences. Soon these “commercials” involved well-known celebrities, and sometimes music, singing and comedy routines.
When RCA’s New York stations, WJZ and WJY, tried to adopt the “toll”, AT&T sued, claiming that under the consortium’s cross-licensing agreement RCA was prohibited from selling advertising time over AT&T’s telephone network. AT&T then declared itself the sole proprietor of “toll broadcasting”, and threatened to withhold use of its short and long-distance lines from RCA and the other partners if they did not drop toll broadcasting. As if to emphasize its position, in 1923 AT&T established a second radio station in Washington, D.C. and developed a special cable that linked it to the New York station, the first attempt at “networking” in the country.
RCA, General Electric and Westinghouse immediately protested to the White House, and asked for the appointment of an arbitrator. To bolster their case, the companies pointed out that in addition to AT&T’s audacious claim on “toll broadcasting”, Western Electric, a telephone company subsidiary, was preparing to bring a new radio receiver to the market, a violation of the manufacturing agreement signed earlier by AT&T. As radio set sales reached $50 million in 1924, the RCA group saw a direct threat to its core business.
Meanwhile, the Federal Trade Commission submitted a report to Congress charging AT&T, RCA, General Electric, Westinghouse and United Fruit with trade restraint, and (surprise!) of forming a monopoly to manufacture, sell and distribute radio equipment. This action created a second, more public round of scrutiny that was followed closely in the press through the beginning of hearings in October 1925.
In defiance of its partners, AT&T further developed its practice of selling commercial time. Stations that attempted to adopt the “toll” model without approval were sued in federal court with a demand to pay AT&T license fees for use of its telephone cables. A few stations actually paid fees of up to $3000 per year. Under criticism by the press, AT&T later offered its licensed radio stations free programming, and shared compensation from an expanding revenue pool.
In typical fashion, a backroom deal was struck to resolve the dispute between AT&T and the other RCA partners. Realizing that a public airing of their differences would only aid the FTC’s probe, the partners in 1926 agreed to a new broadcasting alignment. AT&T, fearing a loss of its commanding position in the telephone market, pledged to stay out of radio manufacturing, and granted the radio partners access to its lines and commercial advertising for a share of the revenue.
However, at the urging of David Sarnoff, RCA’s commercial manager, Owen D. Young, presented a further proposal. All the radio stations, including those owned by AT&T, RCA, G.E., and Westinghouse, would be placed into a new broadcasting company. This would require AT&T and the other partners to divest their stations, a side of the business with which they had always been uncomfortable, and in the process create a new division of labor. In August 1926, RCA coined the new company’s name: the National Broadcasting Company, or simply “NBC”. Incorporated on September 9, 1926, the new broadcasting giant immediately inherited the first national radio network, becoming the most dominant station owner in the country. David Sarnoff was named NBC’s first president.
The final days of the RCA alliance also began to unravel in 1926. Despite the findings of the Federal Trade Commission, the Navy and the Department of Commerce continued to oversee broadcasting, including activities of the RCA group. Soon a minor incident provided the spark. When a new competitor, Zenith Radio, was sued by the Commerce Department for using Canadian frequencies, the courts upheld Zenith’s challenge and voided the government’s authority to regulate the medium. Into this vacuum, the Department of Justice proposed a new bill to Congress establishing the Federal Radio Commission (FRC), to provide government oversight of radio for one year. Signed into law by Calvin Coolidge on February 23 under the Federal Radio Act of 1927, the commission was given few instructions, no engineering staff, and continued to rely on the Navy for support. The first FRC commissioners were equally unprepared. One resigned on October 8th. Another member died that same day. The commission’s chairman died in November.
Despite these setbacks, the commission’s charter was renewed in 1928, and made permanent in 1929. Following an inconclusive series of international radio conferences called by Herbert Hoover in the early 1930’s, the FRC was succeeded by the Federal Communications Commission in 1934. An investigation by the Department of Justice of the RCA group in November 1932 led to a settlement of the FTC charges and a formal dissolution of the partnership. By then the structure of broadcasting had been established. The early decisions by the federal government and the deals struck with RCA and its partners would have effects for years to come. Writing about this period, radio historian Susan J. Douglas observed,
"Radio technology was now embedded in interlocking corporate grids, and RCA became a civilian version of the military monopoly that had controlled radio during the war. …The results were improved radio components, a trend toward consolidation and centralization of the industry, and a (legitimization) in the press of monopolistic control."
The Birth of Radio Programming
Even as the RCA alliance was crumbling a new dynasty was being born. The advantages enjoyed by NBC through the civilian radio monopoly in the late 20’s gave the new network virtually an unlimited supply of capital to invest in radio stations. As the new revenue poured in, however, there were few incentives to be innovative in other areas, such as programming. This situation encouraged a new competitor.
Radio’s programming era may well have began when Arthur Judson, a well-known artist manager and theatrical agent, approached RCA’s David Sarnoff with a proposal to supply additional acts and other radio programs for the company’s stations. Sarnoff seemed uninterested, then stalled, delaying his decision, then rejected Judson’s proposal with little explanation. Outraged at what he interpreted as Sarnoff’s arrogance, Judson joined promoter George Coats to form United Independent Broadcaster in 1926. In April 1927 they merged with the Columbia Phonograph Record Company to create a competing network of 22 radio stations.
When funding for the new network began to run out, Judson and Coats sold the company to Jerome Louchheim, a subway contractor, and Isaac and Leon Levy, two wealthy brothers from Philadelphia. The new owners renamed the network, the Columbia Broadcasting System, or “CBS”. When capital continued to be problematic, the new partners turned to one of their advertising sponsors, the Congress Cigar Company, to buy the stations. William S. Paley, a 26 year-old advertising executive at the company, and the proverbial “cigar maker’s son”, was soon promoted by his father to president, based on William's success with a radio campaign a year earlier.
Paley’s reign at CBS from 1927 through the age of television in the 1980's is well documented. His radio years were notable for the uncanny ability to package and promote stars like Bing Crosby, Kate Smith, and Burns & Allen to a mass audience, and to pay for them and new radio stations with the proceeds from mass advertising. CBS did this by recognizing that radio listeners were no longer simply awed by the technology: they wanted to be entertained and comforted. In contrast to NBC’s slate of classical concerts and “serious” commentary, CBS provided musical comedy and lighter programs that ushered in the “Golden Age of Radio”, and had a special appeal to audiences in the depths of the depression in the 1930’s. CBS was one of the few companies to thrive in this environment. In the process, Paley’s strategy not only set the standards for radio entertainment, but also influenced how much radio artists could earn and the cost to produce their shows.
Paley’s company broke new ground in another important way. Unlike NBC's focus on radio stations and RCA's interest in manufacturing and selling radio parts, CBS concentrated on amassing creative talent. By doing so, CBS succeeded in integrated radio content production into the fabric of its own smaller network operations. As a result, CBS radio stars were often signed to long term contracts, becoming part of the first vertically integrated media company to include sound technicians and the apparatus that produced their shows, and broadcast engineers who sent radio programs out to CBS owned stations across the country. As this model proved successful, it was eventually adopted by NBC, and mirrored the strategies of film companies, which dominated movie production and neighborhood theaters under its own “Studio System”. Each version were attempts to control creative content and network distribution, which became standard business practices of media companies through the rest of the 20th century.
Only the advent of World War II and the emergence of television in the 1940’s could disrupt this system.
Next time: The Transition from Radio to Television
Copyright © 2007 R.E. Xavier
RCA kept a low profile in its early years, but that did not suggest a lack of activity. At its birth in 1919 the company was granted free use of GE’s patents and became its sole agent for radios and equipment sales in the United States. RCA also acquired all government stations and ship installations formerly owned by American Marconi. This allowed the new company to undercut message charges by British interests that controlled the undersea cable.
The missing piece, however, was RCA’s access to patents outside General Electric’s control. As Owen D. Young later stated, General Electric, Westinghouse, AT& T, and United Fruit “…all had patents but nobody had patents enough to make a system.” The solution was clear: negotiate agreements between the patent holders. The goals were to join all the patents together under the RCA alliance, cut out any residual competition, and centralize radio manufacturing. The effects on broadcasting would reach further than Young could imagine.
The partners readily accepted the compromise. AT&T was sold RCA stock for the rights to its three-electron audion, a powerful receiver developed by De Forest for AT&T in 1912. Westinghouse contributed the “super heterodyne” circuit, invented by the young American inventor Edwin Armstrong in 1920, a device that radically amplified signals and suppressed interference. United Fruit contributed the rights to “crystal detectors” and long range antennae. Both were added to the consortium’s pool of nearly 2000 patents in 1921.
Dominating the production of receivers, transmitters, and components for radio sets further solidified the structure of the American radio manufacturing. As a result, the growing demand for radio sets reaped steady profits. By 1922 RCA sold 100,000 radios with sales of $11 million. A year later, production reached 300,000. In 1924 RCA sold 600,000 radio sets, and sales increased to $50 million. Each technology and the attendant patents gave RCA an insurmountable advantage in commercial long-distance communications and radio set production for the next two decades.
RCA’s business model, however, remained focused on radios, component production, and sales. The partners were apparently less interested in what was being broadcast. RCA remained equally oblivious to thousands of amateur radio enthusiasts and their transmitting equipment, and the growing number of amateur stations operating across the country, most of which were using RCA parts. There were also thousands more people listening, waiting for new broadcasts. The mass market for radio was about to explode.
The Birth of Radio Broadcasting
One of the amateurs was Frank Conrad, a Westinghouse engineer. Conrad had been a wireless telegrapher before the war, and returned to amateur work in his off hours. Because he had access to parts and equipment through Westinghouse, Conrad experimented by broadcasting music, and was able to set up his own station, 8XK, in Pittsburgh. By May 1920 a local newspaper was featuring reports of the concerts in its columns. In September that year, a department store displayed an ad describing Conrad’s radio concerts and pictures of radio sets it had for sale.
Conrad’s supervisor, Harry P. Davis, a Westinghouse Vice President, saw the advertisement and began to understand the significance. The amateurs were not only technically literate, but represented the first wave of what Davis described as a “limitless” market for radio sets that could be built with Westinghouse vacuum tubes. At Davis’s urging, Westinghouse approved the building of a more powerful station on company property. In October, 1920, two weeks after the company’s application for a license, the Department of Commerce issued call letters to the nation’s first “commercial” radio station: KDKA – Pittsburgh.
Westinghouse’s experiment in broadcasting intensified the “boom” that fueled the sales of radio equipment and parts manufactured by the RCA consortium. By 1924 the new industry reported combined sales of $358 million. It also began a wave of radio station construction by General Electric, AT&T, RCA, and Westinghouse across the country.
None of the RCA partners, however, could decide how to support the stations. The concept of advertising still only involved selling radios. Equally significant, all of the stations played their own music and made announcements independently. None shared programs, nor were any of the radio stations physically connected.
AT&T, a partner not involved in radio, came up with a lucrative but “dangerous” solution. Like the other companies, AT&T operated radio stations on the promise of selling more RCA radio tubes and sets in which it had an interest. As station costs increased, the company moved to exploit its key asset, a network of telephone lines that linked every major city in the country. In 1922 AT&T introduced a new revenue model called “toll broadcasting” at WEAF, its radio station in New York City. The “toll” referred to fees paid by companies for colorful descriptions of products and services to radio audiences. Soon these “commercials” involved well-known celebrities, and sometimes music, singing and comedy routines.
When RCA’s New York stations, WJZ and WJY, tried to adopt the “toll”, AT&T sued, claiming that under the consortium’s cross-licensing agreement RCA was prohibited from selling advertising time over AT&T’s telephone network. AT&T then declared itself the sole proprietor of “toll broadcasting”, and threatened to withhold use of its short and long-distance lines from RCA and the other partners if they did not drop toll broadcasting. As if to emphasize its position, in 1923 AT&T established a second radio station in Washington, D.C. and developed a special cable that linked it to the New York station, the first attempt at “networking” in the country.
RCA, General Electric and Westinghouse immediately protested to the White House, and asked for the appointment of an arbitrator. To bolster their case, the companies pointed out that in addition to AT&T’s audacious claim on “toll broadcasting”, Western Electric, a telephone company subsidiary, was preparing to bring a new radio receiver to the market, a violation of the manufacturing agreement signed earlier by AT&T. As radio set sales reached $50 million in 1924, the RCA group saw a direct threat to its core business.
Meanwhile, the Federal Trade Commission submitted a report to Congress charging AT&T, RCA, General Electric, Westinghouse and United Fruit with trade restraint, and (surprise!) of forming a monopoly to manufacture, sell and distribute radio equipment. This action created a second, more public round of scrutiny that was followed closely in the press through the beginning of hearings in October 1925.
In defiance of its partners, AT&T further developed its practice of selling commercial time. Stations that attempted to adopt the “toll” model without approval were sued in federal court with a demand to pay AT&T license fees for use of its telephone cables. A few stations actually paid fees of up to $3000 per year. Under criticism by the press, AT&T later offered its licensed radio stations free programming, and shared compensation from an expanding revenue pool.
In typical fashion, a backroom deal was struck to resolve the dispute between AT&T and the other RCA partners. Realizing that a public airing of their differences would only aid the FTC’s probe, the partners in 1926 agreed to a new broadcasting alignment. AT&T, fearing a loss of its commanding position in the telephone market, pledged to stay out of radio manufacturing, and granted the radio partners access to its lines and commercial advertising for a share of the revenue.
However, at the urging of David Sarnoff, RCA’s commercial manager, Owen D. Young, presented a further proposal. All the radio stations, including those owned by AT&T, RCA, G.E., and Westinghouse, would be placed into a new broadcasting company. This would require AT&T and the other partners to divest their stations, a side of the business with which they had always been uncomfortable, and in the process create a new division of labor. In August 1926, RCA coined the new company’s name: the National Broadcasting Company, or simply “NBC”. Incorporated on September 9, 1926, the new broadcasting giant immediately inherited the first national radio network, becoming the most dominant station owner in the country. David Sarnoff was named NBC’s first president.
The final days of the RCA alliance also began to unravel in 1926. Despite the findings of the Federal Trade Commission, the Navy and the Department of Commerce continued to oversee broadcasting, including activities of the RCA group. Soon a minor incident provided the spark. When a new competitor, Zenith Radio, was sued by the Commerce Department for using Canadian frequencies, the courts upheld Zenith’s challenge and voided the government’s authority to regulate the medium. Into this vacuum, the Department of Justice proposed a new bill to Congress establishing the Federal Radio Commission (FRC), to provide government oversight of radio for one year. Signed into law by Calvin Coolidge on February 23 under the Federal Radio Act of 1927, the commission was given few instructions, no engineering staff, and continued to rely on the Navy for support. The first FRC commissioners were equally unprepared. One resigned on October 8th. Another member died that same day. The commission’s chairman died in November.
Despite these setbacks, the commission’s charter was renewed in 1928, and made permanent in 1929. Following an inconclusive series of international radio conferences called by Herbert Hoover in the early 1930’s, the FRC was succeeded by the Federal Communications Commission in 1934. An investigation by the Department of Justice of the RCA group in November 1932 led to a settlement of the FTC charges and a formal dissolution of the partnership. By then the structure of broadcasting had been established. The early decisions by the federal government and the deals struck with RCA and its partners would have effects for years to come. Writing about this period, radio historian Susan J. Douglas observed,
"Radio technology was now embedded in interlocking corporate grids, and RCA became a civilian version of the military monopoly that had controlled radio during the war. …The results were improved radio components, a trend toward consolidation and centralization of the industry, and a (legitimization) in the press of monopolistic control."
The Birth of Radio Programming
Even as the RCA alliance was crumbling a new dynasty was being born. The advantages enjoyed by NBC through the civilian radio monopoly in the late 20’s gave the new network virtually an unlimited supply of capital to invest in radio stations. As the new revenue poured in, however, there were few incentives to be innovative in other areas, such as programming. This situation encouraged a new competitor.
Radio’s programming era may well have began when Arthur Judson, a well-known artist manager and theatrical agent, approached RCA’s David Sarnoff with a proposal to supply additional acts and other radio programs for the company’s stations. Sarnoff seemed uninterested, then stalled, delaying his decision, then rejected Judson’s proposal with little explanation. Outraged at what he interpreted as Sarnoff’s arrogance, Judson joined promoter George Coats to form United Independent Broadcaster in 1926. In April 1927 they merged with the Columbia Phonograph Record Company to create a competing network of 22 radio stations.
When funding for the new network began to run out, Judson and Coats sold the company to Jerome Louchheim, a subway contractor, and Isaac and Leon Levy, two wealthy brothers from Philadelphia. The new owners renamed the network, the Columbia Broadcasting System, or “CBS”. When capital continued to be problematic, the new partners turned to one of their advertising sponsors, the Congress Cigar Company, to buy the stations. William S. Paley, a 26 year-old advertising executive at the company, and the proverbial “cigar maker’s son”, was soon promoted by his father to president, based on William's success with a radio campaign a year earlier.
Paley’s reign at CBS from 1927 through the age of television in the 1980's is well documented. His radio years were notable for the uncanny ability to package and promote stars like Bing Crosby, Kate Smith, and Burns & Allen to a mass audience, and to pay for them and new radio stations with the proceeds from mass advertising. CBS did this by recognizing that radio listeners were no longer simply awed by the technology: they wanted to be entertained and comforted. In contrast to NBC’s slate of classical concerts and “serious” commentary, CBS provided musical comedy and lighter programs that ushered in the “Golden Age of Radio”, and had a special appeal to audiences in the depths of the depression in the 1930’s. CBS was one of the few companies to thrive in this environment. In the process, Paley’s strategy not only set the standards for radio entertainment, but also influenced how much radio artists could earn and the cost to produce their shows.
Paley’s company broke new ground in another important way. Unlike NBC's focus on radio stations and RCA's interest in manufacturing and selling radio parts, CBS concentrated on amassing creative talent. By doing so, CBS succeeded in integrated radio content production into the fabric of its own smaller network operations. As a result, CBS radio stars were often signed to long term contracts, becoming part of the first vertically integrated media company to include sound technicians and the apparatus that produced their shows, and broadcast engineers who sent radio programs out to CBS owned stations across the country. As this model proved successful, it was eventually adopted by NBC, and mirrored the strategies of film companies, which dominated movie production and neighborhood theaters under its own “Studio System”. Each version were attempts to control creative content and network distribution, which became standard business practices of media companies through the rest of the 20th century.
Only the advent of World War II and the emergence of television in the 1940’s could disrupt this system.
Next time: The Transition from Radio to Television
Copyright © 2007 R.E. Xavier
Tuesday
Episode 1: Wireless Telegraphy and The Birth of American Media
Radio historians tell us that wireless telegraphy, the forerunner of radio, television, and the internet, was the first globally accessible communications medium. Most popular accounts, however, don’t mention that wireless was first regulated by the federal government in the early 1900’s because of its importance to America’s growing military presence in Asia, Latin America, and the Caribbean.
To insure the success of American foreign policy, which depended on long distance communications, the government also approved a monopoly on the manufacture of radio parts and equipment, and the ownership of domestic radio networks, by a handful of American corporations. The events leading to these decisions provide an instructive and unsettling lesson in how overlapping social, economic and political interests not only transformed America into an international power, but also positioned these companies as global players to control new communications technologies that developed later in the twentieth century and remain prominent to this day.
Government Regulation of Wireless
Wireless telegraphy evolved slowly through the 19th century based on the efforts of inventors scattered throughout Europe and the United States. A line of innovations, in fact, can be traced from British inventors Michael Faraday and James Maxwell, the American Amos Dolbear, the German scientist Heinrich Hertz, to the work of the young Italian Gugliemo Marconi. It was Marconi who is credited with conducting the first successful demonstration of wireless telegraphy outside London in 1894. His efforts to publicize the invention through an association with James Gordon Bennett Jr., publisher of the New York Herald, attracted the interest of the American Navy, which was willing to test the device for communication with its ships patrolling near the Philippines, Hawaii, and the waters off Cuba.
The clash between Marconi and the U.S. Navy was an historic turning point. Marconi was suspected of being an agent of the British government for an early contract to maintain transmitters for the Admiralty in its colonial outposts, and did not help matters by often stating his intention one day to monopolize all wireless communications. By 1895, the Navy under Secretary Theodore Roosevelt, an admirer of Alfred Thayer Mahan, a prominent advocate of American sea power, promoted a renewed policy of manifest destiny on a global scale. While still learning about Marconi’s wireless, the Navy had been reluctant to consider a “foreign” firm for long-range experiments, but relented when it realized that few alternatives existed. When Marconi abandoned the American tests early to assist the British during the Boer rebellion, the Navy’s nationalist sentiments solidified. This bias was supported by inventor’s demand that his equipment be leased rather than sold outright, which was attributed to Marconi’s desire to control the dispersion of wireless technology worldwide.
The Navy’s adoption of wireless, however, took many years to evolve. Despite the experiments of some officers working independently as early as the 1880’s, bureaucratic inertia and turf battles within the Navy Department delayed wireless use until after the outbreak of the Russo-Japanese War in 1904. This conflict first demonstrated the use of wireless in combat, and also highlighted the interference of wireless signals by non-combatants, which, it was argued, could affect the outcome of future wars. The Navy in fact blamed amateur radio enthusiasts early on for much of its problems with interference, noting that:
"Amateurs with their home-constructed equipment began increasing by the scores, and the interferences created by them in large metropolitan areas began to pose additional problems and complications."
American government agencies, including the Navy, had unknowingly contributed to the problem. In the chaotic atmosphere of early wireless development, there were many reports of amateur, commercial, and government wireless operators transmitting without controls. In late 1903, for example, the Department of Agriculture was already operating 50 transmitters, in addition to the Navy’s own 20 wireless stations. In 1904 the Navy built 20 more transmitters. None of the wireless stations coordinated their broadcasts, and in many cases government installations were built on the same property, increasing the likelihood that interference would cancel each other out.
Despite their involvement, government agencies continued to scapegoat amateur radio operators. Some amateurs were said to have contacted passing ships at will, at times spending evenings talking to naval vessels coming close to shore. In other cases, amateurs were accused of impersonating officers who issued bogus orders to naval vessels, leading historian Erik Barnouw to write: “…so many official messages (were) … blotted out that naval authorities became increasingly testy, then indignant, about amateur interference.”
By 1904 the issue of amateur interference took on strategic importance as political tensions heightened among the European powers and American foreign policy solidified. Signal interference and a rash of ship disasters, including the well publicized sinking of the Titanic in 1912, begged the question in the press: What if America was at war? Would the inability to communicate with a far-flung army and navy pose a threat to national security? Representing the Navy, Admiral George Dewey, the hero of the Spanish-American War, wrote pointedly:
"The principal defect of wireless telegraphy, the liability of interference, renders central control indispensable to the integrity and effectiveness of any wireless-telegraph station. Without control over the placing of other stations, any wireless-telegraphy station may be rendered absolutely useless either by accident or design."
The fate of wireless technology soon became a national priority. Lobbied by Dewey and the Naval establishment to bring “order” to the chaos, now blamed on amateur and commercial wireless stations, by then President Theodore Roosevelt, convened the “Interdepartmental Board of Wireless Telegraphy” in June 1904. The board was charged to consider the control of wireless radio by the government, and to find a solution to the bickering between agencies over use of the technology. It was no coincidence that naval officers dominated the “Roosevelt Board”.
In a report submitted less than one month later, the board recommended that all government wireless radio operations be centralized under Navy command, and that all commercial stations not be allowed to interfere with military operations. The effect on commercial and amateur stations was immediate. Since virtually all private installations were located near large bodies of water or major harbors, the Navy was given final authority to close down any private wireless station that interfered with its own. When Roosevelt endorsed the report on July 29, 1904 and immediately made the proposals law, the first regulation of wireless radio officially began.
Radio under a Government Monopoly
In spite of these controls, the early years of the 20th century was a time of innovation in wireless radio. Following breakthroughs by Americans Reginal Fessenden in voice transmission in 1906 and Lee De Forest’s new receiver in1907, radio was a favorite pastime of large groups of enthusiasts across the nation. Educators were among the most dedicated users, including some from Cornell, Dartmouth, Tulane, and Villanova. The extent of amateur involvement is also indicated by the testimony of Hiram Percy Maxim, the founder of the American Radio Relay League, the first organized voice of amateur radio. Speaking in 1917 at a hearing on radio legislation, Maxim noted the existence of 8,562 licensed amateur transmitters and 125,000 hobbyists with receiving equipment in the first decades of the 20th century.
The dominant figure in these early years, however, remained Marconi. Despite the enmity of the Navy, Marconi had incorporated his company in America, and in the process amassed a fortune through persistence and a subtle business strategy. His company, American Marconi, continued to collect royalties from leasing wireless equipment worldwide, at times to American amateurs and businesses. The firm also benefited from the bankruptcies of American inventors Fessenden and De Forest, its chief competitors, by buying out their patents and taking over their clients. Marconi also succeeded in acquiring the rights to other inventions through patent litigation in the courts, a course of action only American Marconi, with its vast resources, could afford to pursue.
Marconi’s success in the United States made the company a target of continued government scrutiny, and also of domestic competitors, all of whom promoted a campaign to “Americanize” wireless technology. When initial attempts to extend government controls on radio were rejected by Congress in 1916, the Navy secretly devised a new strategy: an American company “operating under a Government-authorized monopoly”.
No action was taken at that time, but the proposal raised an intriguing alternative. By consenting to a monopoly, the government could check Marconi’s advantage and extend its control of radio to support American foreign policy. The alternative also appealed to large electronics firms, which now anticipated a growing domestic market for parts, transmitters and receivers that wireless telegraphy and radio were beginning to reveal.
The most likely candidates for this new monopoly were well-known to the Navy Department. Since Marconi’s emergence, a group of American competitors, all important government contractors that supported the new foreign policy, gained prominence. These companies included General Electric and Westinghouse, long time rivals and producers of electrical turbines, vacuum tubes, receivers, and transmitting stations; AT&T, the inheritor of the nation’s telephone service and the owner of the only nation-wide system of transmission lines; and United Fruit, a commercial grower and owner of vast tracks of Caribbean land. Each had been sympathetic to the concern of Navy officials about radio interference and the lack of government controls. As the popularity of radio increased after the end of World War I, these companies, along with other commercial groups, the press, and some well-known intellectuals, called for increased economic planning and order in the economy and over the airwaves.
As pressure mounted for more action, a defining event occurred. In 1919 American Marconi proposed reopening war-time negotiations with General Electric to purchase the rights to the Alexanderson alternator, a device that greatly increased the range of wireless voice signals. The Marconi proposal called for the acquisition of 24 transmitters and development costs totaling $4 million to GE, and the rights to add more equipment if needed. GE would retain its manufacturing patent, but could only sell to Marconi. General Electric countered with a proposal for royalties, not a sale, reversing the tactic Marconi had used with the navy in 1900.
As the negotiations became deadlocked, the Navy asked General Electric to withhold action until it could review the proposal. GE’s general counsel, Owen D. Young, updated Navy Secretary Franklin D. Roosevelt on the details of the talks. Roosevelt quickly wrote back, “Due to the various ramifications of this subject it is requested that before reaching any agreement with the Marconi Companies, you confer with representatives of the (Navy) department.”
The “ramifications” Roosevelt meant were founded on the Navy’s fear that Marconi, through the purchase of GE’s device, would finally acquire a monopoly on wireless radio communications. Writing years later, a naval historian speculated that the blunt tenor of Roosevelt’s letter to Young also indicated an oral directive had been issued within the Navy Department to safeguard American radio interests at all costs. Higher levels of government were also attentive to Marconi’s gambit. During the same period, Woodrow Wilson had expressed his desire to Navy representatives for American control of radio as a check to Britain’s transatlantic cable and its colonial ambitions.
Young’s conferences with the Navy began in early 1919 and prompted General Electric’s board of directors to cease negotiations with Marconi. This decision led to further discussions with Navy officials, who suggested to General Electric their alternative: the formation of an American company that would establish an international communications system based on GE’s Alexanderson alternator. Young conferred with the General Electric board once again, and proposed to the Navy that only a company representing a consortium of like-minded partners could buy out Marconi’s American assets, and acquire a government charter authorizing a monopoly could make the “alternative” possible. The Navy agreed, but under pressure from Congress the concept of a charter was later dropped. General Electric was still satisfied with the government’s assurances, and gave its approval.
Young informed Marconi that G.E. would not sell the alternator at any price. Marconi’s general manager in America, E.J. Nally, appealed to the Navy, but was told plainly by Captain Stanley Hooper, Head of the Navy’s radio division, that the government wanted to “eliminate foreign influence from American radio operating companies.” Hooper then revealed the successor was to be a new American company, and advised Nally to divest Marconi of British influence by selling all its assets to G.E. Nally was soon resigned to the fact that “the only apparent solution to the problem was for this company…to buy out the British interests.” Young quickly consummated the purchase of Marconi and absorbed the company’s personnel into General Electric.
General Electric was critically shortsighted, however. It failed to see the true potential of radio technology. Young acknowledged as much to E.J. Nally, telling him General Electric was not interested in operating Marconi’s transmitting stations, only expanding the market for G.E. products, which included generators and radio receivers. At the same time, G.E. wanted to “maintain harmonious relations with the Government” so that it could obtain future Navy contracts. At the same time Young realized that the Navy’s offer to G.E. not only meant the elimination of British interest in American Marconi, but also provided a significant advantage over Westinghouse, G.E.’s chief domestic rival.
In reality, GE’s new relationship to its partners meant that competition with Westinghouse and other competitors would no longer be an issue. Since the government secretly authorized a monopoly for the new company, even its unlikely failure could be blamed on bureaucratic zeal, and not reflect on any of the partners. On the other hand, the monopoly’s success could benefit them all by virtually guaranteeing profits, revealing new markets, and provide unprecedented insulation from foreign competitors. GE, Westinghouse, AT&T, and United Fruit could not imagine, however, that the airwaves they would commmand would soon to be as valuable as what was to be transmitted over them.
Never the less, with the clearing of competition, the support of the Navy, tacit approval of the President, and assurances that wireless radio would remain American, Congress created the Radio Corporation of American, better known as “RCA”, on October 17, 1919. As stipulated in the agreement, General Electric transferred its Marconi assets and personnel to the new company. Owen D. Young, the deal’s chief architect, was made chairman of RCA’s board. E.J. Nally left Marconi to become RCA’s first president, then hired his young protégé, David Sarnoff, as RCA’s new commercial manager. Sarnoff would eventually become the “domo” of American radio in the 20’s and 30’s. A new era was about to begin.
Next Time: RCA and Emergence of American Radio Networks
Copyright © 2007 R.E. Xavier
To insure the success of American foreign policy, which depended on long distance communications, the government also approved a monopoly on the manufacture of radio parts and equipment, and the ownership of domestic radio networks, by a handful of American corporations. The events leading to these decisions provide an instructive and unsettling lesson in how overlapping social, economic and political interests not only transformed America into an international power, but also positioned these companies as global players to control new communications technologies that developed later in the twentieth century and remain prominent to this day.
Government Regulation of Wireless
Wireless telegraphy evolved slowly through the 19th century based on the efforts of inventors scattered throughout Europe and the United States. A line of innovations, in fact, can be traced from British inventors Michael Faraday and James Maxwell, the American Amos Dolbear, the German scientist Heinrich Hertz, to the work of the young Italian Gugliemo Marconi. It was Marconi who is credited with conducting the first successful demonstration of wireless telegraphy outside London in 1894. His efforts to publicize the invention through an association with James Gordon Bennett Jr., publisher of the New York Herald, attracted the interest of the American Navy, which was willing to test the device for communication with its ships patrolling near the Philippines, Hawaii, and the waters off Cuba.
The clash between Marconi and the U.S. Navy was an historic turning point. Marconi was suspected of being an agent of the British government for an early contract to maintain transmitters for the Admiralty in its colonial outposts, and did not help matters by often stating his intention one day to monopolize all wireless communications. By 1895, the Navy under Secretary Theodore Roosevelt, an admirer of Alfred Thayer Mahan, a prominent advocate of American sea power, promoted a renewed policy of manifest destiny on a global scale. While still learning about Marconi’s wireless, the Navy had been reluctant to consider a “foreign” firm for long-range experiments, but relented when it realized that few alternatives existed. When Marconi abandoned the American tests early to assist the British during the Boer rebellion, the Navy’s nationalist sentiments solidified. This bias was supported by inventor’s demand that his equipment be leased rather than sold outright, which was attributed to Marconi’s desire to control the dispersion of wireless technology worldwide.
The Navy’s adoption of wireless, however, took many years to evolve. Despite the experiments of some officers working independently as early as the 1880’s, bureaucratic inertia and turf battles within the Navy Department delayed wireless use until after the outbreak of the Russo-Japanese War in 1904. This conflict first demonstrated the use of wireless in combat, and also highlighted the interference of wireless signals by non-combatants, which, it was argued, could affect the outcome of future wars. The Navy in fact blamed amateur radio enthusiasts early on for much of its problems with interference, noting that:
"Amateurs with their home-constructed equipment began increasing by the scores, and the interferences created by them in large metropolitan areas began to pose additional problems and complications."
American government agencies, including the Navy, had unknowingly contributed to the problem. In the chaotic atmosphere of early wireless development, there were many reports of amateur, commercial, and government wireless operators transmitting without controls. In late 1903, for example, the Department of Agriculture was already operating 50 transmitters, in addition to the Navy’s own 20 wireless stations. In 1904 the Navy built 20 more transmitters. None of the wireless stations coordinated their broadcasts, and in many cases government installations were built on the same property, increasing the likelihood that interference would cancel each other out.
Despite their involvement, government agencies continued to scapegoat amateur radio operators. Some amateurs were said to have contacted passing ships at will, at times spending evenings talking to naval vessels coming close to shore. In other cases, amateurs were accused of impersonating officers who issued bogus orders to naval vessels, leading historian Erik Barnouw to write: “…so many official messages (were) … blotted out that naval authorities became increasingly testy, then indignant, about amateur interference.”
By 1904 the issue of amateur interference took on strategic importance as political tensions heightened among the European powers and American foreign policy solidified. Signal interference and a rash of ship disasters, including the well publicized sinking of the Titanic in 1912, begged the question in the press: What if America was at war? Would the inability to communicate with a far-flung army and navy pose a threat to national security? Representing the Navy, Admiral George Dewey, the hero of the Spanish-American War, wrote pointedly:
"The principal defect of wireless telegraphy, the liability of interference, renders central control indispensable to the integrity and effectiveness of any wireless-telegraph station. Without control over the placing of other stations, any wireless-telegraphy station may be rendered absolutely useless either by accident or design."
The fate of wireless technology soon became a national priority. Lobbied by Dewey and the Naval establishment to bring “order” to the chaos, now blamed on amateur and commercial wireless stations, by then President Theodore Roosevelt, convened the “Interdepartmental Board of Wireless Telegraphy” in June 1904. The board was charged to consider the control of wireless radio by the government, and to find a solution to the bickering between agencies over use of the technology. It was no coincidence that naval officers dominated the “Roosevelt Board”.
In a report submitted less than one month later, the board recommended that all government wireless radio operations be centralized under Navy command, and that all commercial stations not be allowed to interfere with military operations. The effect on commercial and amateur stations was immediate. Since virtually all private installations were located near large bodies of water or major harbors, the Navy was given final authority to close down any private wireless station that interfered with its own. When Roosevelt endorsed the report on July 29, 1904 and immediately made the proposals law, the first regulation of wireless radio officially began.
Radio under a Government Monopoly
In spite of these controls, the early years of the 20th century was a time of innovation in wireless radio. Following breakthroughs by Americans Reginal Fessenden in voice transmission in 1906 and Lee De Forest’s new receiver in1907, radio was a favorite pastime of large groups of enthusiasts across the nation. Educators were among the most dedicated users, including some from Cornell, Dartmouth, Tulane, and Villanova. The extent of amateur involvement is also indicated by the testimony of Hiram Percy Maxim, the founder of the American Radio Relay League, the first organized voice of amateur radio. Speaking in 1917 at a hearing on radio legislation, Maxim noted the existence of 8,562 licensed amateur transmitters and 125,000 hobbyists with receiving equipment in the first decades of the 20th century.
The dominant figure in these early years, however, remained Marconi. Despite the enmity of the Navy, Marconi had incorporated his company in America, and in the process amassed a fortune through persistence and a subtle business strategy. His company, American Marconi, continued to collect royalties from leasing wireless equipment worldwide, at times to American amateurs and businesses. The firm also benefited from the bankruptcies of American inventors Fessenden and De Forest, its chief competitors, by buying out their patents and taking over their clients. Marconi also succeeded in acquiring the rights to other inventions through patent litigation in the courts, a course of action only American Marconi, with its vast resources, could afford to pursue.
Marconi’s success in the United States made the company a target of continued government scrutiny, and also of domestic competitors, all of whom promoted a campaign to “Americanize” wireless technology. When initial attempts to extend government controls on radio were rejected by Congress in 1916, the Navy secretly devised a new strategy: an American company “operating under a Government-authorized monopoly”.
No action was taken at that time, but the proposal raised an intriguing alternative. By consenting to a monopoly, the government could check Marconi’s advantage and extend its control of radio to support American foreign policy. The alternative also appealed to large electronics firms, which now anticipated a growing domestic market for parts, transmitters and receivers that wireless telegraphy and radio were beginning to reveal.
The most likely candidates for this new monopoly were well-known to the Navy Department. Since Marconi’s emergence, a group of American competitors, all important government contractors that supported the new foreign policy, gained prominence. These companies included General Electric and Westinghouse, long time rivals and producers of electrical turbines, vacuum tubes, receivers, and transmitting stations; AT&T, the inheritor of the nation’s telephone service and the owner of the only nation-wide system of transmission lines; and United Fruit, a commercial grower and owner of vast tracks of Caribbean land. Each had been sympathetic to the concern of Navy officials about radio interference and the lack of government controls. As the popularity of radio increased after the end of World War I, these companies, along with other commercial groups, the press, and some well-known intellectuals, called for increased economic planning and order in the economy and over the airwaves.
As pressure mounted for more action, a defining event occurred. In 1919 American Marconi proposed reopening war-time negotiations with General Electric to purchase the rights to the Alexanderson alternator, a device that greatly increased the range of wireless voice signals. The Marconi proposal called for the acquisition of 24 transmitters and development costs totaling $4 million to GE, and the rights to add more equipment if needed. GE would retain its manufacturing patent, but could only sell to Marconi. General Electric countered with a proposal for royalties, not a sale, reversing the tactic Marconi had used with the navy in 1900.
As the negotiations became deadlocked, the Navy asked General Electric to withhold action until it could review the proposal. GE’s general counsel, Owen D. Young, updated Navy Secretary Franklin D. Roosevelt on the details of the talks. Roosevelt quickly wrote back, “Due to the various ramifications of this subject it is requested that before reaching any agreement with the Marconi Companies, you confer with representatives of the (Navy) department.”
The “ramifications” Roosevelt meant were founded on the Navy’s fear that Marconi, through the purchase of GE’s device, would finally acquire a monopoly on wireless radio communications. Writing years later, a naval historian speculated that the blunt tenor of Roosevelt’s letter to Young also indicated an oral directive had been issued within the Navy Department to safeguard American radio interests at all costs. Higher levels of government were also attentive to Marconi’s gambit. During the same period, Woodrow Wilson had expressed his desire to Navy representatives for American control of radio as a check to Britain’s transatlantic cable and its colonial ambitions.
Young’s conferences with the Navy began in early 1919 and prompted General Electric’s board of directors to cease negotiations with Marconi. This decision led to further discussions with Navy officials, who suggested to General Electric their alternative: the formation of an American company that would establish an international communications system based on GE’s Alexanderson alternator. Young conferred with the General Electric board once again, and proposed to the Navy that only a company representing a consortium of like-minded partners could buy out Marconi’s American assets, and acquire a government charter authorizing a monopoly could make the “alternative” possible. The Navy agreed, but under pressure from Congress the concept of a charter was later dropped. General Electric was still satisfied with the government’s assurances, and gave its approval.
Young informed Marconi that G.E. would not sell the alternator at any price. Marconi’s general manager in America, E.J. Nally, appealed to the Navy, but was told plainly by Captain Stanley Hooper, Head of the Navy’s radio division, that the government wanted to “eliminate foreign influence from American radio operating companies.” Hooper then revealed the successor was to be a new American company, and advised Nally to divest Marconi of British influence by selling all its assets to G.E. Nally was soon resigned to the fact that “the only apparent solution to the problem was for this company…to buy out the British interests.” Young quickly consummated the purchase of Marconi and absorbed the company’s personnel into General Electric.
General Electric was critically shortsighted, however. It failed to see the true potential of radio technology. Young acknowledged as much to E.J. Nally, telling him General Electric was not interested in operating Marconi’s transmitting stations, only expanding the market for G.E. products, which included generators and radio receivers. At the same time, G.E. wanted to “maintain harmonious relations with the Government” so that it could obtain future Navy contracts. At the same time Young realized that the Navy’s offer to G.E. not only meant the elimination of British interest in American Marconi, but also provided a significant advantage over Westinghouse, G.E.’s chief domestic rival.
In reality, GE’s new relationship to its partners meant that competition with Westinghouse and other competitors would no longer be an issue. Since the government secretly authorized a monopoly for the new company, even its unlikely failure could be blamed on bureaucratic zeal, and not reflect on any of the partners. On the other hand, the monopoly’s success could benefit them all by virtually guaranteeing profits, revealing new markets, and provide unprecedented insulation from foreign competitors. GE, Westinghouse, AT&T, and United Fruit could not imagine, however, that the airwaves they would commmand would soon to be as valuable as what was to be transmitted over them.
Never the less, with the clearing of competition, the support of the Navy, tacit approval of the President, and assurances that wireless radio would remain American, Congress created the Radio Corporation of American, better known as “RCA”, on October 17, 1919. As stipulated in the agreement, General Electric transferred its Marconi assets and personnel to the new company. Owen D. Young, the deal’s chief architect, was made chairman of RCA’s board. E.J. Nally left Marconi to become RCA’s first president, then hired his young protégé, David Sarnoff, as RCA’s new commercial manager. Sarnoff would eventually become the “domo” of American radio in the 20’s and 30’s. A new era was about to begin.
Next Time: RCA and Emergence of American Radio Networks
Copyright © 2007 R.E. Xavier
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