purple motes

U.S. incumbent local-exchange telephone companies' average cost per loop has risen equivalent to 1.9% per year from 1988 to 2007.   That's a 0.4% reduction per year in real (inflation-adjusted) terms.[1]    In contrast, computing costs and storage costs have probably been falling more than 40% per year in real terms over the past two decades.  Thus telephone companies' cost growth has been roughly an order of magnitude worse than that computing and storage cost trends.

Narrower telephone company cost categories have shown only slightly better cost trends.  Over the past two decades, telephone company network operations expenses and corporate operating expenses have fallen 2.6% and 1.5% per year in real terms, respectively.[2]   Network operations and corporate operations are general administrative functions for which information technology typically is crucial.  But large cost-performance improvements in information technology are not apparent in these telephone company cost accounts.

Reported telephone company network structure shows little indication of technological change.  The number of central office switches per telephone company state-specific service area (study areas or COSAs) has decreased little since the mid-1990s.   The number of switched access telephone lines per switch has increased little since the mid-1990s.   These indicators of network structure show no evidence of increasingly powerful network switchers / routers.

Switching technology in fact has gotten so powerful that it's not described in relation to telephone service.  Cisco's recently announced router, the CRS-3, has capacity equivalent to routing simultaneous video calls for every man, woman and child in China.   All U.S. telephone calls wouldn't be noticed within this one router's switching capacity.

Telephone companies' network operations costs far exceed this router's cost.  According to Cisco, the price of the CRS-3 starts at $90,000.   U.S. telephone companies' annual reported network operating expenses are about 73 thousand times as large as that price.  Costs other than than technological costs of providing telephone service account for most of telephone companies' costs.

The particular organization of businesses and markets can generate large costs.  For example, in the mid-1990s, annual advertising and marketing expenses for U.S. long-distance telephone services were comparable to the total capital budget for building a new national, high-capacity network.

With a different organization of communications companies and communications markets, telephone service costs could look like email service costs.

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Data: U.S. telcos non-traffic-sensitive costs and network structure, 1988-2007 (Excel version)

Notes:

[1] These figures are for non-traffic-sensitive costs per loop as defined under regulations for determining high-cost loop subsidies. See  47 CFR 36, Subpart F.  Incumbent local exchange telephone companies (ILECs) are local exchange telephone companies that provided service prior to 1996.

[2] Network operations expenses are the costs reported in account 6530 as defined in 47 CFR 32.6530.   Corporate operating expenses are costs reported in accounts 6710 and 6720, as defined in 47 CFR 32.6710 and 47 CRF 32.6720.  Again, these figures are for ILECs only.

1 Comment

From its beginnings, the U.S. telephone industry has included many small telephone companies.   Over time government programs have been established to subsidize small, high-cost telephone companies.[1]   Under the High-Cost Loop Support program, about $1 billion in subsidies were given in 2007 to incumbent local-exchange telephone companies (ILECs) that had relatively high-cost loops.[2]  The subsidy to a telephone company is proportional to the number of high-cost loops that the telephone company operates.  Subsidizing high-cost loops provides a greater incentive for their growth than would otherwise exist.

Growth in telephone company loop counts across the study-area loop-size distribution is generally consistent with subsidies stimulating loop-count growth.   Study areas typically contain the loops that a telco serves in a particular state.[3]   In 2007, the 50th, 70th, and 90th percentiles in the study-area loop-size distribution were study areas with about 3000, 10000, and 57000 working loops, respectively.[4]  Loop counts at these percentiles grew about 80%  and -15% from 1988 to 2001 and 2001 to 2007, respectively.  Loop growth at the 99th percentile was 52% and -30% from 1988 to 2001 and 2001 to 2007, respectively.   The 99th percentile represented a study-area size of about 2 million loops in 2007.  Hence loop counts in the largest study areas grew considerably less than loop counts in much smaller study areas.  In 2007, the larger study areas received no high-cost loop subsidy, while those smaller study areas received roughly $100 in high-cost subsidy per loop in 2007.   A similar difference in subsidy levels existed back to 1988.  Hence these data are consistent with an economically plausible effect: subsidizing high-cost loops stimulates growth of relatively more of them.[5]

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Data:  trends in ILEC study-area loop count distribution, 1988-2007 (Excel version); dataset containing loop counts for every ILEC study area, as well as other cost data, 1988-2007

Notes:

[1] These subsidies tend to be associated with universal service; in particular, providing service in rural areas.  However, any telephone telephone company that provides telephone exchange service to fewer than 100,000 lines is defined under U.S. law to be a "rural telephone company" even if it provides service only in urban areas.  See definition of "rural telephone company" in 47 CRF 51.5.

[2] Summed from the NTS Cost Dataset, annual support pay, 2007.  This figure is lower than Federal-State Joint Board's Monitor Report's figure for High-Cost Loop Support primarily because the NTS Cost Dataset does not include subsidies to competitive local-exchange telephone companies (CLECs).

[3] The NTS Cost Dataset description provides further information about study areas.  Study areas are the basis for the calculation of high-cost loop subsidies.

[4] Data are currently available through 2008.  However, AT&T did not report after 2007.   Growth rates are compared relatively to 2007, rather than 2008, to avoid effects from this reporting change.

[5] The growth pattern at the 10th and 25th percentiles is more varied.   Loop growth from 1988 to 2001 at the 10th and 25th percentiles was similar to that at the 99th percentile.   However, from 2001 to 2007, the reduction in loop counts at the 10th and 25th percentiles was similar to that at the 50th through 90th percentiles, and only about half as much as at the 99th percentile.   The smallest telephone companies may be less oriented to profit maximization than larger telephone companies and may be more capable of stabilizing their income streams.  Study areas with size less than or equal to the 25th percentile in the loop-size distribution served about 0.7% of all loops in 2007.

1 Comment

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

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

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

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

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

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

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

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

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

Offer Comments

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

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

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

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

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

Notes:

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

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

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

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

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

3 Comments

Prices for ongoing services often are much less clear than prices for retail-store products that have a price tag affixed to them.  Services do not have a natural physical unit, like an item that you pick up from a shelf.  Compared to a one-time purchase of physical products, an ongoing service purchase has much lower transaction costs for selling with a bundle of prices.  More generally, the shift toward a service economy involves significant changes in the definition of prices and the communication of price information.

Consider my telephone bill here in Arlington, Virginia.  In 1994, it contained two local-telephone-company service charges: "Residential line-main-message/measured Service" and "Touch-Tone Service."  In 2010, the number of local-telephone company service charges had increased to four differently described charges:   "Dial Tone Line," "ELS -- Unlimited Usage -- Flat Service," "Residence Local Usage Package Unlimited Flat/EAC Rate Svc" and "Sensible Minute."   I would guess that most telephone customers don't understand the definitions of these charges and don't understand how these charges relate to practical service choices that a telephone customer might make.

Charges semantically related to governments (taxes, fees, and other government-related surcharges) look similar to these service charges.   On my 1994 telephone bill, five separate charges related to governments were associated with local telephone service.  In 2010, the number of such charges increased to seven.[1]  Three of those seven charges semantically map directly onto three from 1994.   The remaining four in 2010 have only vague semantic relation to the other two in 1994.   I would guess that most taxpayers don't understand the definitions of these taxes and fees and don't understand the democratic political process that generated those taxes and fees.

Discussion of service rates tends to focus on changes in average or representative charges.  In inflation-adjusted dollars, my local telephone service charges increased 6% from 1994 to 2010.[2]    Taxes and fees increased 108%.   Moore's Law and astonishing leaps in communications technology offer hopes for a new economy.   The average charges on my telephone bill exemplify an old economy.

But in the semantics and ontology of its charges, my telephone bill testifies to new implications of service pricing.  Service prices are not naturally meaningful to customers.  That creates opportunities for web-based bill monitoring services to provide meaningful price information to customers.   To the extent that particular services are subject to a formal, administrative process of tariff regulation, controlling and communicating service pricing vocabulary could be a valuable regulatory tool.  More generally, concentrating government regulation on wholesale services may not be appropriate for modern service economies.   Balancing appropriate government regulation across wholesale and retail services might create more beneficial competition among commercial service-providers.

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Data: Telephone bill comparison, Arlington, VA, 1994 to 2010 (Excel version); US residential telephone rates in urban areas, 1994 (Excel version).

Notes:

[1]  The "Federal Subscriber Line Charge" is included here with charges semantically related to governments.  However, the local telephone company receives the revenue from this charge.

[2]  The FCC's urban telephone rate survey found that Bell Atlantic's representative local measured service charge in Richmond, Virginia, in 1994 was $13.59 per month.  However, the lowest charge was $5 month.   My charge was $9.23 per month.  This spread in prices highlights the difficulties of surveying telephone rates.

Offer Comments

While newspapers clearly are suffering economically, different sources of newspaper advertising statistics show different extents of decline.  The Newspaper Association of America (NAA) website reports a 27.94% year-on-year decline in newspaper advertising revenue for the third quarter of 2009 (2009 Q3).   Data from the U.S. Census Bureau's Quarterly Services Survey indicate a 14% year-on-year decline in newspaper operating revenue for 2009 Q3.   Evidence from the Census Services Survey for 2008 and plausible assumptions suggest a 17% year-on-year 2009 Q3 decline in newspaper advertising revenue.   Hence, compared to NAA statistics, reasonable estimates from the Census Services Survey imply a 10 percentage point smaller decline in newspaper advertising revenue in 2009.

The Census Services Survey data seem to me more credible than the NAA statistics.  The NAA has obvious self-interest in newspaper industry statistics.  The NAA does not report its statistical sources and estimation procedures.  The NAA statistics also include no estimates of the reliability of the reported data.  The Census Bureau, in contrast, is an expert government agency.  The Census Services Survey carefully describes the sampling and estimation procedures.  In addition, the Census Services Survey includes variability estimates.   The coefficient of variation for the reported 2009 Q3 newspaper operating revenue is 5.6%.  The coefficient of variation for general newspapers' advertising revenue in 2008 is 3.1%.  The standard error of the 2008/2007 general newspapers' advertising revenue change is 1.5 percentage points.   These statistics suggest that the true decline in newspaper advertising revenue year-to-year 2009 Q3 is probably between roughly 12% and 22%.[1]   The NAA figure is most likely an over-estimate.  The NAA's reporting of that figure to one-hundredths of a percentage point is misleading.

The NAA newspaper advertising figures have been much larger than Census figures, but the NAA figures are dropping rapidly relative to Census figures.  For 2008, the Census Services Survey showed $29.8 billion in newspaper advertising revenue.  The NAA figures showed $37.8 billion in newspaper advertising revenue.[2]  That's 27% higher than the Census figure.  However, in 2006 the NAA newspaper advertising revenue figure was 45% higher than the Census figure.    Some of the decline in NAA reported newspaper advertising may be an artifact of NAA's advertising accounting / estimation procedure.

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Data: U.S. newspaper advertising trend, with comparison between Census and NAA data (Excel version).  Large dataset of historical advertising expenditure by media.

Notes:

[1] The decline in annual newspaper advertising revenue was 10% from 2007 to 2008.  I've assumed a 2.5 percentage-point standard error in the decline in quarterly newspaper advertising revenue 2008 Q3 to 2009 Q3.  That number seems reasonable given the error bounds for the quarterly revenue figure, the annual revenue figure, and the change in annual revenue 2007 to 2008.  Twice the standard error, or 5 percentage points, defines a 95% confidence interval.  I've formed that interval around the point estimate of a 17% revenue decline.

[2]  That's the NAA figure for print and online advertising . Since the Census figures are establishment-based, newspapers online advertising revenue are included in the Census figures.  Hence the NAA print and online total is the relevant comparison.

Offer Comments

Despite the Great Depression traumatically beginning in 1929, calls per telephone grew 1%  in the U.S. from 1927 to 1932.  Across this period, gross domestic product (GDP) fell 39%, and urban prices fell 21%.   Since telephone rates are regulated, they tend to be nominally sticky.  Hence the real price of telephone service almost surely rose from 1927 to 1932.  Nonetheless, the number of telephones in service fell only 6%.  Calls, most of which are not charged per call, fell 5%. [1]

The relative stability of telephone use during the Great Depression probably didn't come from phones then being used for relatively important communication.  While only about a third of U.S. households had a telephone in the 1920s, calls per phone per day in 1927 (4.7) was only slightly below calls per phone per day in 1977 (5.1).  The share of business phones in 1927 (34%) was only slightly higher than in 1977 (25%).[2]   Phone use was quite similar in 1927, 1932, and 1977.   The increase in telephone calls from 1927 to 1977 came mainly from smaller households and more phones per household.   Access to a phone, not the importance of calls, seems to have determined call volumes.[3]

Communication shouldn't be expected to contract with economic contractions.  After all, misery loves company.  Bad times are a good stimulus for conversation.   Complaining has unlimited possibilities for growth.  Communication beats depression.

Data: U.S. telephone call volumes, 1912-2007 (Excel version).

Notes:

[1] All changes are from 1927 to 1932.   Data availability determined these years; they are years of telephone censuses.

[2] The number of business telephones fell less than the number of residential telephones from 1927 to 1932.  In the Bell System, the number of business telephones actually rose 2.3% from 1927 to 1932.   This evidence points to the economic importance of telephone service to businesses.  So too does more uniform business adoption of telephone service.

[3] The number of telephones per telephone household rose from about 1.15 in 1927 to 1.81 in 1977.   In addition, average household size fell from 4.01 persons per household in 1930 to 2.75 persons per household in 1980.

Offer Comments

Among ancient Roman mass media, pantomime had an attention share probably only slightly smaller than chariot racing and gladiator fights.   Ancient Roman pantomime presented emotionally fraught mythic episodes through the bodily movement of a mute, solo dancer.  Pantomime rapidly gained attention beginning about 23 BGC under the reign of Augustus.   Two pantomime dancers -- Bathyllus of Alexandria and Pylades of Cilicia -- quickly became celebrities.  Bathyllus favored lascivious burlesques and comedy.  Pylades specialized in solemn tragic scenes.  Both presented rapidly in succession different passions and characters.   They attracted huge numbers of enthusiastic spectators.

Just as many men keenly follow and support football teams while paying little attention to important public issues,  so too did pantomime fans.  Rivalries between Bathyllus' and Pylades' fans caused riots in Rome and prompted Augustus to rebuke Pylades.  Responding from the standpoint of a political adviser to Augustus, Pylades reportedly replied: "You are ungrateful, Master.  Let the people kill their time with us!"[*]   Put differently, Pylades urged Augustus to recognize the political value of having the population absorbed in entertainment.

Recently, a street-leading news source has put forward pantomime in a protest over the suppression of modern expression.  This pantomime redivivus blurs the classically contentious boundary between pantomime burlesque and rhythmic tragic movement.  It can be seen worldwide from now to at least the end of YouTube as it currently exists.  That's a gigantic circus, a huge colosseum.  Most of the seats undoubtedly will be empty.   This isn't pantomime in Roman mass media.

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[*] Reported in Cassius Dio, Roman History 54.17.4.  The above translation is from Beacham, Richard C. 1999. Spectacle entertainments in early imperial Rome. London: Yale University Press, p. 145.

Offer Comments

Communications services today are perceived to succeed or fail within months.  Within that time, fashion may be more important than economic fundamentals, and long-run patterns can easily be obscured.  Historical data helps to provide an alternate view.

Consider telephone service in the U.S. in 1927 and 2007.    In 1927, telephone service had been widely available for more than forty years.  Nonetheless, only about of third of U.S. households had telephone service.  By 2007, the share of households with telephone service had risen to about 95%.   Telephone service was a remarkable innovation.   But telephone service became nearly universal among U.S. household only after about a century of industry development.[1]

Business telephone take-up was more consistent than residential service take-up.  Residential phones per home and business phones per non-primary-sector employee are calculable statistics for considering variation in telephone take-up across states.  In 1927, residential phone take-up had 50-80% larger variation across states than did business phone take-up.   By 2007, residential phone take-up varied 10% less across states than did business phone take-up.[2]

Business communications service adoption probably depends more on economic fundamentals (economic advantage) and less on fashion than does consumer communications service adoption.  That suggests slower, but more even adoption for business communications services.

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Data: business and residential phone take-up across U.S. states, 1927 and 2007 (Excel version)

Notes:

[1] See estimates of the share of U.S. households with telephone service, 1920-2007.

[2] The statistics for 2007 are for telephone lines, not phones, and for households, not homes.  These differences probably do not explain the change  from 1927 to 2007 in take-up variation across states.  The 2007 data includes only ARMIS-reporting incumbent local-exchange company telephone lines.   In 2007, those lines amounted to about 77% of wireline local switched-access telephone lines.  How reporting coverage correlates with the business/residential line ratio isn't clear.

Offer Comments

Because large business customers are much larger and more geographically concentrated than large residential customers, business communications services tend to be more competitive than residential communications services.  Nonetheless, from 1980 to 2007, business lines rose from 25% to 37%  of public switched telephone lines of larger U.S. incumbent local-exchange telephone companies.[1]  Over that same period, the share of manufacturing employment in employment outside of agriculture, mining, and forestry (non-primary-sector employment) fell from 20% to 10%.   Employment in various service industries increased.  Service industries purchase more communications services than traditional manufacturing industries.  This structural shift toward businesses that demand more communications services probably at least partly explains the increasing share of business lines in incumbents' telephone service.

Aggregate demand for business telephone lines has been more robust than aggregate demand for residential telephone lines.  Incumbent providers' line counts for both classes of lines grew through the end of the twentieth century, then declined.  But the growth was greater for business lines and the decline, less.   Residential telephone lines per household was 0.94 in 1980 and 0.84 in 2007.   Business telephone lines per non-primary employee, in contrast, was 0.27 in 1980 and 0.41 in 2007.

Residential telephone growth prior to 1980 came up against economic and political constraints.   The share of households with telephone service grew from 33% in 1920 to 92% in 1979.   Possibilities for growth through providing residential telephone service to household that didn't have any service were thus mostly exhausted by 1979.  The number of telephones per telephone household grew from 1.1 in 1920 to 1.8 in 1979.   The Carterfone decision in 1968 formally allowed competition in the provision of end-user telephone equipment.[2]  Then the AT&T Modified Final Judgment took Bell Telephone companies out of the telephone equipment manufacturing business.  Thus selling end-user equipment (telephones) became less attractive to telephone companies.

Business telephone growth prior to 1980 benefited from structural economic change.   As early as 1902, many businesses that used telephone service had installed private branch exchanges.[3]  Yet in 1900, about a third of the workforce was engaged in agricultural pursuits.   Business telephones per non-primary-sector worker rose from 0.14 in 1920 to 0.47 in 1979.  That increase occurred in conjunction with agricultural employment falling from 29% of the workforce to 4% of the workforce.   The share of manufacturing employment was about the same, so the employment shift can be broadly understood as a shift from agricultural employment to service-sector employment.  Service-sector employment growth has been a constant for business telephone service growth across the twentieth century.

Data: U.S. telephone and economic structure statistics, 1920 to 2007 (Excel version).

[1]  See the all - summary worksheet in the data workbook.  These statistics are for local-exchange telephone companies providing service prior to 1996 (incumbent LECs ( ILECs)) meeting the FCC reporting requirements for ARMIS report 43-08.   The relevant requirement is revenue greater than a revenue threshold that was $100 million in 1992 and $138 million in 2007.

[2] After the Carterfone decision, subsequent regulatory battles delayed the mass-market sale of non-telephone company telephones for a decade.   Non-telephone company telephone sales amounted to about 1 million telephones in 1978, the first year of mass-market availability, and were expected to reach 2 million in 1979.  See Brock, Gerald W., The Telecommunications Industry: The Dynamics of Market Structure (Cambridge: Harvard University Press, 1981) p. 249.   Thus aggregate telephone-company telephones represented at least 99% of total installed telephones through 1979.

[3] In New York City about 1900, more operators were employed at private branch exchanges than in telephone company offices.  See Census Bureau, Telephones and Telegraphs, 1902, p. 49.

Offer Comments