<eng>The Rise of the Corporate State

The Anarchives (tao@lglobal.com)
Sat, 6 Apr 1996 00:11:30 +0000 (GMT)

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Date: Fri, 5 Apr 1996 23:52:28 +0000 (GMT)
From: The Anarchives <tao@lglobal.com>
To: anarchives@lglobal.com
Subject: The Anarchives... The Rise of the Corporate State

"the network is the computer, the computer is the brain."
The Anarchives Volume 3 Issue 8
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--/\-- Telecommunications
/ / \ \ Deregulation
---|--/----\--|--- and the
\/ \/ Rise of the
/\______/\ Corporate State

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Robert E. Allen, Chairman and C.E.O. of AT&T, with the recent passing of the U$
Telecommunications Act in describing AT&T's expansion plans said, "the fast lane
has opened up"1.
We are witnessing the continued acceleration of technological change, and the
simultaneous acceleration of AT&T's imperial penetration into all communication
AT&T's recent announcement of a divestiture, allows them the flexibility and
Ca$h necessary to traverse local and global markets. They have succeded with the
cross-subsidized marketing machine, and the value of a loyal and established
'brand'. AT&T has the world's largest intelligent network; a phiber-optik
network run by intelligent switches. AT&T competes with forces of evolution to
become the global central nervous system.

Unitel Communications, the second largest phone company in Canada, is also one
of the oldest phone companies in Canada. Originaly called CNCP, Unitel use to
comprise the communications infrastructure for the Canadian Railways.
With the advent of the eighties, most of the public sector, which included
allowing Rogers Communications, and AT&T Canada to invest in CNCP, which was
then renamed Unitel.
Last summer, Unitel went through a minor 'debt crisis' and the two leading
Canadian investors backed away. Due to foreign ownership restrictions AT&T was
limited to 33% ownership of Canadian based Unitel. So four Canadian charter
banks eagerly took on partnership with the International telecommunications
conglomerate. Banks of course are the phone companies' biggest clients.
The reorganization of ownership was followed by the reorganization of Unitel's
board of directors. Barbara MacDougal who served in the Mulrooney Cabinet under
the portfolios of state and privatization, was named as a Director on the Unitel

While the hoopla of the information economy held the headlines, Unitel began
changing it's name to AT&T Canada, and moved it's head offices from Toronto to
Halifax, restructuring itself as an unlimited liability corporation. With this
special legal status Unitel has a virtual bungee cord, enabling them to plunge
deep into the red, while attached to the international conglomerate that can
write the debt off as foreign investment in communication infrastructure.
AT&T can offer 25% off at all times, undercutting the Stentor Companies, while
the Manhatten parent swallows Unitel's $1 Billion dollar debt into their $US 80
Billion dollar annual revenue.
They'll match existing services and introduce new ones. Their progress is based
upon the medium of the intelligent network that can manage diverse information
networks. AT&T sponsors the Art Gallery of Ontario, while introducing networks
that will transform society.
The wonders of the trans-national corporate state, subverting what remains of
our democracy. The name of the game is monopoly, and the medium is the machine;
the thinking evolving corporate machine.

As of January 1997 we will be living in a new regime. The new socio-economic
organization of society will begin with the phone bill.
Local telephone services will undergo rate-rebalancing, and pricing will be
based upon either pay-per-call or pay-per-minute. Our democratic rights have
been subverted and supplanted with consumer rights.
This change deliberately has devastating effects on popular/progressive
organizations and movements. While these groups are increasingly becoming
involved in media activism, engaging and using the media as a political tool,
regulation of the media is evolving to enhance and enforce the status-quo.
With pay-per-call, you receive 30 calls a month, and each additional call is 25
So how many phone calls does it take to organize a union? How many phone calls
does it take to organize a single meeting or a seminar? How many of our phone
calls are answered by machines or voice-mail?

We are told that the rationale behind 'usage sensitive pricing' is enabling the
empowerment of the consumer. Certainly this has been the drive behind recent
legislation in the US and Canada which also 'empowers the consumer' by giving
them the technical ability to censor television violence.
The liberal media and civil liberties groups are all up in arms, crying
'censorship' over the implementation of the V-Chip (which blocks TV violence)
and US legislation that bans the use of profanities on electronic networks. In
doing so the media are fulfilling their systemic function of diverting public
attention from the real issues, and the real role of power within the
communications system.
This so-called 'attack on civil-liberties' is nothing more than a red-herring.
Capitalist front-men like John Parry Barlow of the Electronic Freedom Foundation
are just jumping around, distracting the people from the real power play of
telecommunications deregulation.

As the century draws to a close we are in the middle of a media revolution that
challenges existing structures of order and control. The reigning communication
czars are scurrying to both protect their own empire and conquer what emerges as
the new one.
Media are converging, uniting to become some distortion of an 'Information
Superhighway' that will deliver our dreams for a marketable monthly price.
Emphasis is shifting from the medium used to process information, to the utility
used to transport it. Communication conglomerates are all jockeying to become
the company to wire the highway into the home.

With rate-rebalancing, local telephone service regulation is transferred from
the public institution of the Canadian RadioTelevision Telecommunications
Commission (CRTC) to the private institution ambiguously termed 'the market'.
Rate-rebalancing is the elimination of the long-distance subsidy that enables
reduced flat local rates. A subsidy on local telephone service is not compatible
with free trade and the will of the market.
Here we see that communication policy has been transformed into state-sponsored
industrial policy, and the regulation of communications shifts from a social
purpose to an industrial purpose. (Winseck 1995)

Historically speaking the date 1984 is a recurrent and symbolic fixture in the
telecommunications arena. In that year the neo-conservative Mulrooney government
was elected in Canada, and the Canadian telecommunications regulatory system
followed the American model by dropping 'natural monopoly' status, and thereby
introducing the possibility of competition. With the potential for an open
telecommunications market, the neo-conservatives had the prerequisite for
pursuing free trade.

"After 100 years of innovation, the telecommunications industry has achieved its
potential as an enabler, energizer, and liberating force. Today, it's an
industry at the hub of the political, economic, and social structure of global
society, propelling momentous change."2
Telecommunications are the corner stone of any empire. Harold A. Innis' final
book, "Empire And Communications," was an examination of the inherent
relationship between communication systems, the management of trade, and the
construction of political empires.
The new world order is based upon the deregulation of telecommunications, the
liberalization of trade barriers, and thereby the globalization of capital.
It is therefore no surprise to learn that:
"Department Of Communication officials played key roles in negotiating the FTA
and NAFTA, briefing foreign governments and industry representatives about the
Canadian telecommunications environment, visiting provincial agencies to promote
competitive telecommunications regimes and the linkage between
telecommunications and regional economic development, and in elaborating
domestic regulatory policy." (Winseck 1995)

Within the period of neo-conservative rule in Canada, the Department of
Communications, which is itself responsible for the CRTC, was absorbed into the
Ministry of Industry.
The CRTC consistently demonstrated their position as being in the back pocket of
the telecommunication companies. In the rare exception where the CRTC ruled
against the dominant interest, their decisions were overturned by the Federal
During the implementation of the neo-conservative agenda "the CRTC executed the
government's implicit policy absent a legislative mandate. As an article in the
Financial Post pointed out, the Minister of Communications <Flora MacDonald> had
intervened more times 'in 20 months than all her predecessors in the past 20
years.'" (Winseck 1995)

I recently had a meeting with Robert McChesney, an American media analyst.
His concern was with the recent US Telecommunications Act, which he claimed was
"perhaps one of the most corrupt pieces of legislation in U.S. history,
effectively written by and for business." (McChesney 1996)
He also said that it was 'the most important legislation in a generation.'
Robert related an interesting story on the champion of the U.S. Information
Superhighway, Vice-President Al Gore. Gore was originally elected to office with
a vision of a 'public' information infrastructure. Original he saw public
institutions taking an active role in building the impending information future.
However in late 1993, Gore swiftly changed his focus from a public
infrastructure, to a superhighway built by market forces. McChesney claimed that
at this point Gore received a substantial amount of political campaign
Now with the successful passing of the US Telecommunications Act in February of
96, the American market is almost completely deregulated.
In a knee-jerk reaction, monopolies are deregulated to encourage competition.
However what we are witnessing is not a competition among equals, or even a
competition amongst oligopolies. Rather we see the battle of monopolies, a
competition to become the new monopoly.
Competition among the telecommunications industry translates directly into
concentration of the industry. In the short time since the US legislation was
passed, NYNEX and Bell Atlantic have announced mergers, and US West has enacted
a $US 5.8 Billion dollar merger with Continental Cablevision, a major US cable
In New Zealand when telecommunication deregulation and rate-rebalancing occurred
in 1989, Telecomm, the existing government monopoly, was bought by a consortium
which included American giants: Ameritech and Bell Atlantic. In the five years
following the deregulation, local phone rates went up by over 81%.
It's no wonder that telecommunications competition is referred to as 'the waltz
of elephants'.

Last fall I received an email from my friend Marita Moll who is a founding
member of both the Public Information Highway Advisory Council, and the Alliance
for a Connected Canada, two public interest groups trying to engage in the
current telecommunication decision-making process. In this email she requested
that I (and the many other recipients on the mail-list) print out a part of the
email and send it off to the Secretary General of the CRTC.
In between downloading a web-page, sorting my laundry, and reorganizing my
hard-drive, I printed out the form-letter, signed it, and posted it off to the
With that one simple action I registered for the CRTC 'public-process' 95-56,
concerned with 'universal affordable access' in the face of deregulation of the
local market.
Little did I suspect at the time that over the following few months I would
receive over 12 pounds in documents, thousands and thousands of pages, filled
with lame legislative legalese.

The Stentor Companies, a consortium of the Canadian regional telecommunication
monopolies (Bell, BCTel, MT&T, AGT, etc.) in parallel with this process have
introduced a series of pricing proposals for local telephone service.
These include pay-per-call: 30 free calls a month, and each additional call is
25 cents, with a $9 cap for heavy users, and pay-per-minute: 240 free minutes a
month, with 25 cents for each additional five minutes with a $9 cap.
The phone companies proclaim that universal affordable access already exists,
and market regulation will help ensure that it continues to exist. Market
regulation of course is only possible with the introduction of usage sensitive
One of the key players in the process of telecommunication deregulation has been
AGT (Alberta Government Telephone), who were privatized in 1990. Their
submission in this proceeding was by far the largest, a full five and a half
pounds, in which the corporation included paid studies by marketing groups as
well as academics from MIT, Texas, and New Zealand, all praising the benefits of
market regulation. The neo-conservatives in Alberta are as eager as any to
dismantle the national public communications system.

In participating in this current process, it has been interesting to witness
the stark contrast between the interests of the industry/private sector, and the
interests of the public.
Julia Shu of the Coalition for Public Information summed it up best by stating:
"Measured service, be it pay-by-the-minute or pay-by-the-call, is not a desired
option by any segment of Canadians and will only further decrease the
opportunity for financially disadvantaged Canadians to participate fully in the
new knowledge-based society and economy." (Reply Submission of the Coalition for
Public Information - 95-56)
Similarly the submissions made collectively by the Francophone Consumers'
Association, the National Anti-Poverty Organization, and OneVoice, the National
Senior's Network, also address the issues from a public interest perspective:
"Flat-rate local calling is considered an essential aspect of basic telephone
Stentor's position is inherently contradictory. On one hand, Stentor argues that
usage-based charges are the main problem for low income customers. On the other
hand, Stentor members offer usage-based charges as a 'budget' option for low
income customers." (Submissions of: FNACQ/NAPO/One Voice)
Even to overemphasize the obvious the Public Interest Advocacy Centre released a
study which stated that 85% of the Canadian public prefer flat-rate local
telephone services.
However the Stentor Consortium has only responded with business as usual, with
the complete rejection of the public's concerns:
"The status-quo is not an option. As the Commission and government have
recognized local rates must move closer to costs in order to promote efficient
and effective competition." (Stentor's Reply Submission)
Ironically the Stentor Consortium uses 'status-quo' in alluding to the defeated
institution of the nation-state, and with it the exodus of the national elite,
as they scurry to join the ranks of the new world order, as "competition has
achieved ideological status within the CRTC." (Winseck 1995)

When I attended the regional hearings in Toronto in late February, I was not
shocked to find that most of the participants were white men in suits, in
addition to myself being the youngest participant in the proceedings, perhaps by
as much as ten years. Seemingly the only people who were not white males were
those representing some of the public interest groups, effectively excluded from
the final decisions anyway.
Robert McChesney in speaking on the recent decision-making process in US
telecommunications legislation explained that:
"the debate over communications policy is restricted to elites and those with
serious financial stakes in the outcome. It does not reflect well on the calibre
of U.S. participatory democracy." (McChesney 1996)
I was able to sympathize as clearly the current CRTC 'public hearings' were in
fact not public at all, but rather dominated by political and technical elites.
What was even more disturbing was that by introducing usage sensitive pricing
these elites were subverting our democratic rights with consumer rights.

Democratic rights are inherent and unlimited. You always have them, and you can
always exercise them, at least in a democracy.
Consumer rights on the other hand are not inherent and they are limited. They
are based upon the pay-per-use model, as your rights are determined in relation
to your participation in the economic marketplace. Thus the more you pay the
more you play.
The concept of one person one vote is replaced with one dollar one vote.
Consumer rights subvert democratic rights by introducing a quantitative factor,
achieving a finite definition of our entitled rights, and limiting the extent to
which we may exercise them.
Universal access to the technology will exist, but the use of the technology
will be limited.
Democracy depends upon free and open access to information, which becomes
severely limited, if not negated by proposed pay-per-use pricing structures.
Your right to speak still exists, but how much you get to say is determined by
your economic standing. Sound familiar?

It is perhaps not surprising to reflect that the largest consumers of
telecommunication services are the banks and big business. It therefore makes
sense that they are also the biggest proponents of consumer empowerment.
These powerful interests need to deregulate the local telephone monopoly,
because these companies will also be the largest consumers of new information
based services, which can only be offered under 'market' regulation.
When the communications system was regulated by public institutions, universal
access was ensured for all citizens. Each telecommunication service had to be
available for all Canadians. With current market regulation, services such as
'Intelligent Assistants' and video-conferencing are not considered universal,
but available only for those who can afford them.
The current hearings for universal affordable local access are merely an
appeasement, a token action to ensure that Canadians receive the minimum level
of telecommunication services, while the societal elite benefit from a wide
range of new, 'empowering and enabling' telecommunication services.

An editorial in the March 16 Globe And Mail made the argument that: "The CRTC no
longer has much of an excuse for extensive regulation." The pay-per-view
philosophy is synonymous with the market philosophy, which itself is synonymous
with the technological philosophy. The editorial continued by stating: "The same
system of control via documentation applies to pay-per-view services." Don't
worry the consumers will tell us what they want, don't worry the market will fix
it, don't worry technology will solve all of our problems. Why? Simply because:
"They can refuse to buy it. They can turn it off. And soon, we can turn off
content regulation by the CRTC as well."
It's interesting and ironic to also find the following passage, written by
William Thorsell, the publisher of the Globe, on the same page as the editorial
calling for the dismantling of the CRTC:
"In so doing, the media 'manufacture consent' in the public for the actions of
the powerful, portraying the elite's selfish interests as public ideals around
which good-hearted people can rally."

In participating in this process I have concluded that the deregulation of the
local telephone market, is the final piece of the puzzle, in the
neo-conservative agenda of replacing the Canadian nation-state with the
trans-national corporate state. As we approach 1997, we witness the twilight of
our sovereignty as a nation.
Yet it is at this point in the analysis that I welcome the words of my good
friend Jay Terpstra, who keeps reminding me that "nothing's ever really changed.
What matter does it make whether it's the corporate state or the nation state.
In our struggle for freedom we still find ourselves fighting the state!"

Works Cited:
McChesney, Robert; "The Internet and U.S. Policy" in Journal Of Communication,
Winter 1996, pp. 98-122
Winseck, Dwayne; "Power Shift? Towards a Political Economy of Canadian
Telecommunications and Regulation" in Canadian Journal of Communications, Winter
1995, pp. 81-106


1) From Speach Given on February 8 1996
2) Jean Monty, Chairman and CEO of Northern Telecom

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