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An interesting read!

Any lawful device: 40 years after the Carterfone decision
By Matthew Lasar | Published 2 years ago

Two score gone

Forty years ago today the Federal Communications Commission issued one of the most important Orders in its history, a ruling that went unnoticed by most news sources at the time. It involved an application manufactured and distributed by one Mr. Thomas Carter of Texas. The "Carterfone" allowed users to attach a two-way radio transmitter/receiver to their telephone, extending its reach across sprawling Texas oil fields where managers and supervisors needed to stay in touch. Between 1955 and 1966, Carter's company sold about 3,500 of these apps around the United States and well beyond.



In the end, however, Carterfone's significance extends far beyond the convenience that Thomas Carter's machine provided its users over a decade. It is no exaggeration to say that the world that Ars Technica writes about was created, in good part, by the legal battle between Carter, AT&T, and the FCC's resolution of that fight-its Carterfone decision. The Carterfone saga starts as the appealing tale of one developer's willingness to stick to his guns. But it is really about the victory of two indispensable values: creativity and sharing.

Neither just nor reasonable

The dominant telephone company in the United States fiercely opposed Carterfone. AT&T and the last surviving independent telco, the southwest's General Telephone, told their customers that they should not use the attachment because it was a "prohibited interconnecting device." To be fair, that was true, legally speaking. Americans bought the vast majority of telephone equipment from AT&T's Western Electric company because they had to, specifically because of FCC Tariff Number 132: "No equipment, apparatus, circuit or device not furnished by the telephone company shall be attached to or connected with the facilities furnished by the telephone company, whether physically, by induction or otherwise."

Thomas Carter thought that this was bunk. He took AT&T and General Telephone to federal court, arguing that their warnings to consumers represented a violation of the Sherman Anti-Trust Act. In 1966 the United States Court of Appeals for the Fifth Circuit agreed that they would decide the suit -but not before the FCC reconsidered Tariff Number 132. The agency then appointed an investigator to look into the matter.

AT&T may have thought it had an ally in the FCC circa 1966, but that was no longer the case. The Commission had been chastened by an earlier controversy over a device called the Hush-A-Phone. This ridiculous proceeding involved AT&T's objection to a small plastic receiver snap-on which allowed business phone talkers to chat more quietly. The FCC took an astounding seven years to thoughtlessly back Ma Bell on the issue, only to see its decision slapped silly by an appellate court. "To say that a telephone subscriber may produce the result in question by cupping his hand and speaking into it, but may not do so by using a device which leaves his hand free to write or do whatever else he wishes, is neither just nor reasonable," the bemused judges observed in 1956.



Now the best that AT&T's clever lawyers could do was convince the FCC to let them write a new policy with a codicil allowing for non-electric applications like Hush-A-Phone. But the phone giant still insisted that Carterfone posed a danger.

It was June 26, 1968 when the FCC acted on Carterfone. Robert F. Kennedy had been buried two weeks earlier. In Czechoslovakia, followers of the "Prague Spring" fought against Communist rule. Students revolted against mindless bureaucracies at Columbia University, in Paris, in Seoul, in Mexico City. In these stormy times almost no one noticed as the FCC's Commissioners quietly rebelled against the world's biggest telco, unleashing the future.

Unlawful in the past

Before explaining the FCC's Carterfone decision, it should be noted that the historic ruling should not have been necessary. AT&T should never have been allowed to own Western Electric in the first place. President Harry Truman's Attorney General tried to undo this monopolistic wrong in the late 1940s. But, as the telecommunications historian Gerald Brock notes, during the early Cold War AT&T pleaded for anti-trust relief in the interest of national security. Its endlessly ingenious attorneys argued that a full fledged anti-trust decree would disrupt the corporation's management of Sandia atomic weapons Labs-this at the height of the Korean War.

And so in 1956, the corporate-dominated Eisenhower administration settled for a "Consent Decree" with AT&T. The deal "enjoined and restrained" the phone giant and its subsidiaries from doing anything except providing common carrier service or, in the case of Western, manufacturing components for anything besides common carrier service. In other words, the AT&T monopoly had been contained, to borrow the old Cold War phrase, but still wielded overwhelming power over the nation's telecommunications system. Two years after the consent decree, Thomas Carter began selling his Carterfone machines.

When the FCC finally ruled on Carterfone, the agency said that it had considered five questions. Did the public need Carterfone? What impact did it have on the ability to the telephone system to provide interstate service? Did Tariff 132 correctly apply to the device? Should it? Or, if not, what action should the Commission take now?

To questions one and two, the FCC delivered clear and decisive answers. The public indeed benefited from the application. It did not harm the publicly switched telephone system. But the agency went much further than simply giving Carterfone a waiver. This time the FCC ruled that although Carterfone did violate Tariff 132, that was not the attachments' fault.

"We hold," ruled the Commission, "that application of the tariff to bar the Carterfone in the future would be unreasonable and unduly discriminatory. However... we also conclude that the tariff has been unreasonable, discriminatory, and unlawful in the past, and that the provisions prohibiting the use of customer-provided interconnecting devices should accordingly be stricken."

AT&T fought on. Its lawyers tried to get state utility commissions to override Carterfone within state boundaries, but the FCC insisted that the policy overruled state regulators. The telco insisted that companies could only exercise their newly won Carterfone rights if the applications that they developed connected to the network via an AT&T approved linking device. Eventually the agency declared these plug-ins unnecessary. For a while AT&T tried to charge a fee for using the non-AT&T telephones that consumers could now use thanks to Carterfone. But as Brock points out, most customers "simply plugged them in and ignored the notice that the local telephone company should be notified before using the telephone."

Within a few years of the FCC's Carterfone decision, America had become a motley world of funny receivers, slick switch boxes, and rickety answering machines. More importantly, consumers quickly embraced the "modulate/demodulate" device, otherwise known as the telephone modem. A 1999 FCC policy paper noted the significance and justly gave the agency credit for the proliferation of this application. "The Carterfone decision enabled consumers to purchase modems from countless sources," the agency concluded. "Without easy and inexpensive consumer access to modems, the Internet would not have become the global medium that it is today."



Carterfone's progress

Take a look at the FCC's best rulings, and there you will find Carterfone. You will find it, for example, in the agency's 1998 decision to let consumers pick and choose their own cable set top boxes. "Subscribers have the right to attach any compatible navigation device to a multichannel video programming system," the Commission declared. "We conclude that the core requirement, to make possible the commercial availability of equipment to MVPD subscribers, is similar to the Carterfone principle adopted by the Commission in the telephone environment."

Carterfone is inherent in the FCC's 700Mhz auction Block C concept, with its requirement that consumers can connect any broadband device to that portion of the mobile phone spectrum. Carterfone is basic to the proposal that a merged XM/Sirius must let developers build any kind of receiver linking to the new broadcaster, including receivers that also play mp3 files and connect to the Internet.

But a good idea doesn't enforce itself. If Skype's petition to the FCC asking the agency to apply Carterfone principles to the mobile Internet prevails, it will be because hundreds of thousands of citizen/consumers have made it clear to the government that it must. It is not acceptable, as Skype argues, for the big telcos to use their influence over handset design "to maintain control over and limit subscribers rights to run software communications applications of their choosing." But it won't actually be unacceptable unless consumers exercise enough control over the regulatory process to make it so.

In the end, Carterfone says that it is our telecommunications system, not AT&T, Verizon, and Comcast's. We finance the system with our subscription, application, and investment money. We support it with utility easements, regulatory breaks, and government contracts paid for by our taxes. We make it work because we are its workers. We make it exciting with our innovations, technical and social, big and small.

We do not begrudge the CEOs of these great corporations their legal positions. But they are, as Andrew Carnegie would put it, stewards of the system, not its owners. They are not there to tell us to Go Away. They are there to keep the system running while we discover it, use it, develop it, innovate it, game it, finesse it, and reinvent it to our heart's content. The great enterprise of telecommunications is no better than our right to participate in it as individuals.

That is the meaning of Carterfone. Ars Technica wishes all our subscribers and readers a happy June 26th. Happy Carterfone Day.

Original article found HERE.
 
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