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Current & Recent Research at Penn Law

File: [View Document]
Author: Yoo, Christopher S.
Janson, Michael A.
Citation: The Wires Go to War: The U.S. Experiment with Government Ownership of the Telephone System During World War I, 91 TEX. L. REV. 983 (2013) (with Michael A. Janson).
Date Published: 2013
Date Posted: 05/15/2012
Subjects: Labor Law
Law and Business
Law and Economics
Law and History
Law and Regulatory Systems
Law, Technology and Communications
Public Law and the Constitution
Keywords: Legal History
Mass Media Law
Regulated Industries
Science and Technology
Communications Law
Computer Law
Constitutional Law
Electronic Commerce
Government Contracts
Government Regulation
Information Law
Labor Law
Law and Technology
One of the most distinctive characteristics of the U.S. telephone system is that it has always been privately owned, in stark contrast to the pattern of government ownership followed by virtually every other nation. What is not widely known is how close the United States came to falling in line with the rest of the world. For the one-year period following July 31, 1918, the exigencies of World War I led the federal government to take over the U.S. telephone system. A close examination of this episode sheds new light into a number of current policy issues. The history confirms that natural monopoly was not solely responsible for AT&T’s return to dominance and reveals that the Kingsbury Commitment was more effective in deterring monopoly than generally believed. Instead, a significant force driving the re-monopolization of the telephone system was the U.S. Postmaster General, Albert Burleson—not Theodore Vail, President of AT&T. It also demonstrates that universal service was the result of government-imposed emulation of the postal system, not, as some have claimed, a post hoc rationalization for maintaining monopoly. The most remarkable question is, having once obtained control over the telephone system, why did the federal government ever let it go? The dynamics surrounding this decision reveal the inherent limits of relying on war to justify extraordinary actions. More importantly, it shows the difficulties that governments face in overseeing industries that are undergoing dynamic technological change and that require significant capital investments.