The Master Switch: The Rise and Fall of Information Empires - Tim Wu (2010)

Part II. Beneath the All-Seeing Eye

Chapter 9. FM Radio

In the year 1934, Edwin Armstrong was at the height of his career in every sense. From a laboratory at the very top of the new Empire State Building in New York, with an antenna attached to the spire, Professor Armstrong was testing a new radio technology, firing radio waves at receivers dozens of miles away. The signal was clear and clean, producing an audio fidelity beyond anything heard before. “Actual measurements,” writes Lawrence Lessing, a radio historian, “showed clear reception out to at least three horizons—or a distance of about 80 miles.” Armstrong called his invention “frequency modulation” radio, or FM for short.1

The man who had put Armstrong in the Empire State Building was David Sarnoff, whom we met ringside at the Dempsey fight fourteen years earlier. Sarnoff was then an ambitious young executive obsessed with new technologies such as radio broadcasting. By now—as president of the Radio Company of America, the nation’s most important radio manufacturer and parent company of NBC, the preeminent broadcast network—Sarnoff was the single most powerful man in American broadcasting, the defining mogul of an information industry, whose importance was comparable only to that of Theodore Vail, Adolph Zukor, or a very few others. As such, he was also a symbol of the mass culture redefining American sensibilities.

As for Professor Edwin Armstrong of Columbia, he was a different archetype, one of the lone inventors who had long sustained the American approach to innovation. Working from his attic in Yonkers, he had already won fame developing three fundamental radio technologies—the regenerative circuit, the superregenerative circuit, and the superheterodyne receiver—the first of them while still an undergraduate. He was also something of a lively character, commuting to Columbia on a bright red Indian motorcycle. In the early 1920s, he’d become smitten with Sarnoff’s secretary and bought a French sports car, driving her away in it. Another time, in manic glee, he climbed the four-hundred-foot radio tower on the roof of radio station WJZ in midtown New York. Above all, Armstrong was an inveterate radio idealist, for whom the technology would always seem magical and of unlimited potential.2

As fellow early radio enthusiasts, Armstrong and Sarnoff had bonded on February 1, 1914, having spent the whole night picking up radio signals using Armstrong’s technologies. For years Armstrong would send Sarnoff a telegram on the anniversary of that day. Armstrong, in fact, owed his substantial fortune to Sarnoff, who in the 1920s had persuaded RCA to buy Armstrong’s patents. In the early days, it was possible, then, for both an inventor and a businessman to inhabit the camp of radio utopianism.

Sometime in the 1920s, Sarnoff had tasked Armstrong to design a “little black box” that might remove the static and distortions of AM radio. Armstrong had taken the direction, and now, nearly a decade later, he delivered, though his solution was not a “black box” but a new technology for transmitting radio waves. Duly impressed with the results, Sarnoff installed his old friend at RCA’s expense in the Empire State Building, the tallest building in the world, ordering that Armstrong be provided with anything he needed to perfect the technology.3

Yet as time passed, and the encouraging test results continued to mount, Armstrong noticed something strange. He had given Sarnoff an exclusive look at FM both out of personal loyalty and because the sale of his last patent to RCA had granted the firm an option on his next one. And what he had produced went beyond what had been asked; indeed, his innovation would give RCA the opportunity to take radio to its full potential. It would never occur to him that the Radio Corporation of America would want to do anything less. And yet the better the tests proved FM to be, the more distant and evasive RCA’s management seemed to become.

AM and FM compared. Modulating amplitude, as opposed to frequency, required far more power and created far more static.

As months passed, Armstrong grew impatient for an answer. Was RCA interested in the commercial development of FM radio or not? Still receiving only vague demur, one day late in 1934 he confronted Sarnoff in Rockefeller Center.

“Why are you pushing this so hard?” asked Sarnoff.

“There is a Depression on,” said Armstrong. “The radio industry needs something to put life in it. I think this is it.”

“Yes,” said Sarnoff, “but this is no ordinary invention. This is a revolution.”4

That was all Sarnoff would say. Armstrong again pressed him, but Sarnoff changed the subject. Armstrong returned to his lab and carried on with his tests, until he was politely asked to remove all of his equipment from the Empire State Building.5 From that day onward, over the next decade, in ways both subtle and not, Sarnoff and the rest of the AM radio industry quietly campaigned to relegate FM radio to irrelevancy.

•        •        •

Three important waves of innovation followed the great consolidation of broadcasting in the 1920s: mechanical television, electronic television, and FM radio transmission. And despite the importance of each technology, what is so striking is that none managed to produce an independent industry capable of challenging the dominant Radio Trust, comprising primarily RCA, NBC, and NBC’s industrial allies, CBS, General Electric, and Westinghouse.

Over two decades, from 1926 to 1946, each invention, and the inventor behind it, would fall victim to David Sarnoff and the radio industry. Sarnoff’s story is perhaps this book’s most compelling parable of the Kronos effect, and what bears most attention is the power of his particular methods. For while Vail and Zukor consolidated industries by means of financial pressure and corporate acquisition, Sarnoff managed his empire by using government to restrict inventions, and hence the future. In pursuit of this aim, the Radio Trust perfected the art of controlling both public discourse and federal regulation to the detriment of any would-be rivals. They grew to recognize a truth that had eluded Western Union in the 1880s: the best antidote to the disruptive power of innovation is overregulation. That is to say, the industry learned how to secure the enactment of seemingly innocuous and sensible regulations that nonetheless spelled doom for any rival. In fact, a careful review of the 1930s makes clear that the early FCC was among the most useful tools of domination that industry has ever invented.

FM RADIO

Why wasn’t Sarnoff, once a radio idealist himself, interested in FM? What Sarnoff wanted when he asked for a “black box” was something that would improve AM radio. But the creative muse has its own agenda, and what Armstrong wound up developing was no improvement on AM, but a replacement for it. FM radio was, in other words, a quintessential disruptive innovation. And whoever Sarnoff may once have been, by the 1930s he was a man who could ill afford to embrace a disruption of the AM radio economy, and in particular, the NBC system.

Now one must appreciate just how important a development FM was, both technologically and in respect of its potential to revolutionize radio broadcasting. Most of us know that FM is capable of a far higher fidelity in sound reproduction than AM. It’s a matter of less static: in the 1930s, when it appeared, FM was capable of signal-to-noise ratios of 100:1 or better, as compared to 30:1 for AM stations.6 But perhaps even more innovative was FM’s capability to broadcast using far less power than AM, thus obviating the high-wattage stations controlled by a few broadcasters. If managed correctly, Armstrong realized, the adoption of FM could clear the way for many more broadcasters than the large networks dominating the AM dial. Let out of its box, there was even some possibility that FM could make the FCC less relevant, as America returned to the lightly regulated, decentralized industry that was the original 1920s vision of the medium.

Beyond radio, FM technology held another promise: as a potential competitor to AT&T’s long distance lines—the most powerful communications network in the world. In the late 1930s, Armstrong experimented with small mountaintop relay stations to connect FM stations in different cities. If FM could connect radio stations, networks like NBC would potentially no longer need AT&T’s long lines to ferry their programming around the nation.7

Finally, Armstrong also believed that FM had applications for much more than just broadcasting music and news. At one eye-popping demonstration at his Empire State Building laboratory in 1934, he showed RCA that FM could carry a facsimile reproduction of The New York Times, and telegraph messages as well—a form of wireless fax! In other words, Armstrong foresaw not just better radio, but a multipurpose communications technology. While it may sound astonishing, even in our own times the full potential of FM radio remains untapped.*

You might think that the possibility of more radio stations with less interference would be generally recognized as an unalloyed good. More radio stations means more choices for the consumer and more opportunities for speakers, musicians, and other performers. But by this point the radio industry, supported by the federal government,8 had invested heavily in the status quo of fewer stations. Radio’s business model, as we’ve seen, was essentially “entertainment that sells”—shows produced by advertisers, with revenues dependent on maximizing one’s share of the listenership. Hence, the fewer options the better. Even the preeminent radio manufacturer RCA was not immune to this logic. More stations might mean more radios sold, but as owner of NBC, RCA now viewed the network’s interests as synonymous with its own. And so we see another instance of how vertical integration of an industry creates a vested interest in limiting free expression. Profit is tied not to the proliferation of many voices but to the propagation of a few—to the mass production of speech, as it were.

The campaign against FM radio in the 1930s and 1940s is a study in rhetoric as a weapon of industrial warfare. While it changed over time, the strategy pursued by Sarnoff and his allies was to belittle FM, talk it down, and generally promote a conventional wisdom that favored the AM industry. It shows, as we shall see, that perhaps the most effective way to gain power over the future is to dictate popular assumptions. RCA and other broadcasters did so by focusing on the promise of a new medium: television. The technology of FM was rarely mentioned in the radio industry’s endless promotion of the latest and greatest. When mentioned at all, FM, lauded as theoretically interesting, was also minimized as a mostly unproven technology, experimental and of marginal utility.

The message had a strong effect on two audiences, the first of these being the federal government. The government can act only on the basis of what it understands to be established fact. Much of what is called lobbying must actually be recognized as a campaign to establish, as conventional wisdom, the “right” facts, whether pertaining to climate change, the advantages of charter schools, or the ideal technology for broadcasting. Much of the work of Washington lobbyists is simply an effort to control the conversation surrounding an issue, and new technologies are no exception.

The facts, as the FCC was given to understand them, were that FM might eventually be a useful improvement on AM, but that its time had not yet come. And so, for six years after its invention, the FCC banned commercial FM broadcasting and limited experimental FM to a single narrow high-frequency band. In contrast to the early, unregulated days of AM radio, there was no way for an FM station even to get started without breaking the law. And even if one were so bold, with no radio manufacturer selling FM sets to consumers, there were no listeners. And without listeners, there was no industry.

Investors were the other target of the industry’s indoctrination program. Compounding a general scarcity of investment capital in the 1930s, rules banning commercial FM made it all the harder for would-be stations to attract investors. In fact, the very first FM radio stations were nonprofit ventures, financed by Columbia University at Armstrong’s urging, a precursor of Stanford’s funding of the Google search engine in the 1990s.

Only thanks to Armstrong’s tireless advocacy did the technology not die, and indeed begin to gain acceptance, including, eventually, allocation of spectrum for commercial use. He had a flair for the dramatic, and his demonstrations of FM’s wonders made headlines, undermining the efforts of the industry to suggest there wasn’t much to it. In 1935, he shocked the Institute of Radio Engineers with a low-power FM broadcast from Yonkers of remarkably high fidelity. “A glass of water was poured before the microphone in Yonkers; it sounded like a glass of water being poured and not, as in the ‘sound effects’ on ordinary radio, like a waterfall.” By such enthusiastic efforts Armstrong managed to convince a few like-minded people to found FM stations, and by 1941, yielding to the technological reality, the FCC allocated spectrum between 50 and 60 MHz.9

But, as mentioned, the disinformation campaign’s trump card was television, and the Radio Trust’s insistence that it, not FM, was the future. Many standard histories in fact ascribe the slow development of FM to the rise of television. Of course, there is no denying that television was the greater leap. But insofar as television never has supplanted radio, the Radio Trust was presenting a false choice. There was no reason for the federal government not to allow the development of both a new FM industry and a television industry. Except in the industry’s tale spinning, it never was a matter of one or the other.

The Second World War put the development of all consumer technologies on hold, even though FM did see adoption by the army and navy, to whom Armstong extended a free license to his patents. FM’s best chance to become what some called “radio’s second chance” would not come until immediately after the war, when the coast was finally clear for commercial use, and the new technology gained the grudging support of even RCA/NBC (or at least parts of RCA), which knew its utility all along and now wanted its share.10 Yet it can be no coincidence that in 1945 the FCC would also move to enact new rules, ostensibly for the benefit of the FM industry, yet much favored by the AM dial, above all NBC and CBS, the broadcast duopoly.

That year, the FCC announced that the FM frequency band would be moved from its original 50–60 MHz home to the now familiar 88.5–108 MHz range. The shift came with a few additional rules. At the networks’ urging, FM radio stations owned by AM stations were required to carry the exact same programming—so-called simulcasting—for the supposed benefit of the American consumer. And all FM networks were obliged to use AT&T’s network for long-range broadcasting, precluded from developing their own long distance lines or carrying long-range broadcasts. New limits were put on the maximum wattage of FM stations, which already required little power, thus neutralizing the advantage in range that FM stations naturally had over AM.11

The rules stoked controversy and drew heavy opposition from the infant FM industry and its allies. The FCC nevertheless defended them in terms reasonable on their face, but specious under their technical particulars. The band relocation and the wattage limits, for instance, apart from clearing bandwidth for television, were officially justified as protecting FM broadcasts from interference, particularly something called “skywave interference” that critics believed to be a bogeyman, but whose existence could never conclusively be disproved.

In its defense, the FCC had by now conceded that FM was the superior technology and described its rules as making possible a migration from AM. There was a defensible objective in preparing an orderly future for FM, in contrast to AM’s undesirably chaotic early days. But even if one assumes benign intentions, federal planning is never a good midwife for a new industry. And less charitably, one must allow that the whole concept of a migration was designed so that existing AM station owners would dominate the FM dial. Indeed, by 1949, 85 percent of the “new” FM station licenses had been extended to AM station owners, who tended to duplicate their AM programming on FM. In other words, the FCC managed to expand capacity while quashing the possibility of new programming and new voices. FCC, in short, would countenance FM only so long as it posed no threat to the powers of the existing industry.12

Generally, the 1945 FCC order was bad news for the infant FM industry, and the independent elements of AM radio. Its new wattage guidelines made obsolete 400,000 FM radio sets that consumers had already bought and required every FM station to buy a new transmitter. Officially, the FCC estimated that the effects of the order would set FM back four months. But despite the exertions of Armstrong and the fledgling industry to stay afloat, FM would not recover from these blows for decades. The exciting technology developed under the auspices of the industry in 1934, its technical superiority notwithstanding, was effectively dead by 1952.

In 1940, Armstrong had predicted that FM would supplant AM in five years. Actually, it would take until the 1970s for it to catch on, and until the 1980s to reach the popularity of AM.13 It cannot be denied that the emergence of television at the same time took some of the wind out of FM’s sails. It is likewise true that wholly replacing one technology with another does take time. But the studied efforts of the AM industry and the complicit restrictions imposed by the FCC, even if occasionally well-meaning, certainly retarded FM, preventing it from developing into anything more than AM in stereo. Its other remarkable capabilities—especially the potential for many new low-cost radio stations or long distance relays—remain unexploited even to this day. In Lessing’s description of what happened, “the vast concentration of economic power that marked the field of mass communications … had rolled over FM and crushed it into a shape less threatening to their monopolistic pattern of operations.”14

Professor Armstrong would never see his greatest invention reach mass acceptance. But what finally crushed him had less to do with the burdens of championing FM’s struggle than with his more personal battle against RCA and David Sarnoff. RCA had begun changing its tune about FM in 1946, when it saw the technology’s value for providing sound to television broadcasting. Sarnoff, understanding well the merits of Armstrong’s invention, decided to put FM receivers in RCA’s television sets. But instead of seeking the partnership of his old friend, Sarnoff and his firm decided simply to use Armstrong’s technology and wait for him to sue.

RCA’s official position was that in-house engineers had invented and patented a “different” FM. In reality, there was no such thing, and Armstrong, like Alexander Bell in the 1870s, was forced into litigation that would last the rest of his life. Unfortunately, though he was extremely stubborn, Armstrong was facing an opponent that was ready for him. RCA’s lawyers from the firm of Cahill, Gordon did what New York law firms specialize in: turning lawsuits into wars of attrition. It was a fight of man against corporation, with discovery and pretrial motions artfully employed to delay justice until the size of Armstrong’s legal bills alone threatened to determine the contest. The inventor’s deposition alone lasted over a year.15

It was during this litigation that Sarnoff and Armstrong came face-to-face for what was almost certainly the last time. Sarnoff was deposed by his own lawyers with Armstrong at the plaintiff’s table. Then Armstrong’s lawyer asked Sarnoff how the men knew each other, and Sarnoff with perfect sangfroid replied, “We were close friends. I hope we still are.” Later, when RCA’s lawyer asked him who had invented FM radio, Sarnoff expanded on the party line: “I will go further and I will say that the RCA and the NBC,” he testified, “have done more to develop FM than anybody in this country, including Armstrong.”

The denial that Armstrong had in fact invented FM was, if not the last straw, then very nearly the last. A man’s decision to end his life is inevitably a complex one and cannot easily be blamed on any one person or event. Yet it is clear that by the 1950s, whatever faith Armstrong had had in the fairness of the system—of business, of justice, or of life itself—was being chipped away by the travails of FM, which he had made his own. He was nearly bankrupted, as the lawsuit with RCA consumed the once great fortune from his earlier patents. His marriage (to Sarnoff’s onetime secretary) had also fallen to pieces over his refusal to settle. In 1954 it all became too much too bear. On February 1, forty years to the day from the night he and Sarnoff had spent searching for radio signals, he wrote a final note, dressed neatly, and walked out the window of his thirteenth-floor Manhattan apartment.

The story of FM radio gives some taste of what television’s inventors were in for, and a sense of David Sarnoff’s genius in the art of industrial combat. He saw not just that FM could replace AM, but that television would more generally replace radio, and by implication, destroy the Radio Corporation of America. He was a man who proved it is possible to defy both Joseph Schumpeter’s doctrine of creative destruction and, as he turned RCA into a television company, the adage that you can’t teach old dogs new tricks.

* As of 2010, the Federal Communications Commission was interested in licensing many more low-power FM stations; yet Congress, under pressure from broadcasters, passed the Radio Broadcasting Preservation Act of 2000, which made licensing of low-power stations much more difficult.