In doing some research for my last blog post, I came across this article, which was quite interesting. In it, Prof. Carlson describes the relationship between William Orton, who was President of Western Union in the 1870s and Gardiner Hubbard, who was a backer (and father-in-law) of Alexander Graham Bell). The conventional wisdom is that Orton turned down the opportunity to purchase the telephone patent because he did not see its business potential. As this article points out, the situation was far more complicated and was rooted in a longer term relationship between these two men who had vastly different visions of what the communications industry should be.
In a nutshell, Orton was heavily invested in the business model that was extraordinarily profitable to Western Union (and its shareholders) because he had a large role in building it. Hubbard, a Boston lawyer who was new to this industry, was deeply skeptical about the wisdom (from a public policy perspective) of allowing a critical infrastructure like telegraphy to reside in private hands under monopoly control. He was interested in a re-thinking of the communications industry; for him, this meant placing telegraph stations in post offices in addition to railway stations. This, he reasoned, would make telegraph more accessible, drive down prices, and thus allow the telegraph to be used for social as well as business purposes. He proposed that Congress would fund this new network. This did not succeed, largely due to the efforts of Orton, but Hubbard continued his pursuit of technologies that would enable communications be more accessible, which led him to support Bell. In the end, Orton's dislike of his rival of many years may have contributed to him turning down the telephone patent, though his (Orton's) decision made business sense in the short term.
It is ironic that the technology backed by Hubbard would end up being the next great private infrastructure monopoly. I wonder if that outcome would have Gardiner Hubbard spinning in his grave ...
To me, there are parallels here with today's broadband environment. Was Hubbard like the advocates of subsidized broadband?