Radio Broadcast (May 1928-Apr 1929)

I Hh MAROH Oh RADIO BEES ami> iMimPkHAHON qejCEEEEME paiho mNi.s Why the Persistent Cry of Monoply? THE struggle now shaking the foundations of the radio industry has long been brewing. On one hand is assembled a group of militant independent manufacturers, vigorously attacking an alleged monopoly whose grasping tentacles reach into every branch of the radio field; on the other hand, the radio mouthpiece of vast electrical interests, claiming, with injured innocence, that it was born out of patriotic motives and possesses its imperalistic power over the radio industry by virtue of its widespread and proper patent rights. Drawn into this conflict are the Federal Courts, the Federal Trade Commission, Congress, and the Federal Radio Commission. The consequences of this struggle may be farreaching. So great is the patent strength of the combination that little reliance is placed upon upsetting the validity of enough patents which it holds to free the industry of its domination. Nor is there any vast sum being spent in research to develop non-infringing vacuum tubes and associated circuits. Instead, attack has been made upon the methods used in taking advantage of its patent position and upon the fundamentals of the patent itself. Several bills before Congress propose drastic revision in the powers conferred upon all patent holders; one, for example, seeks to make revocation of patents the penalty for violation of antitrust laws so that companies conducting research and promoting progress will suffer more severely than those which simply copy designs and infringe patents. Another bill proposes that patents applying to vacuum tubes shall not confer upon their holders the same rights which apply to all other articles, a plain discrimination against one industry. Another line of attack is through the Federal Radio Commission. The commission is severely criticized by Congress, to which it reports, and by hostile station owners, for the privileges extended to the chain stations, partly owned by the combination. Bills proposing equal geographic distribution of broadcast transmitters are being written, requiring the destruction or curtailment of useful and popular broadcasting services. The operation, of such a law would inevitably require power reductions on the part of weaf, wjz, wgy, and kdka, all N. B. C. stations. No avenue is being overlooked to injure, directly or indirectly, any and every activity of the combination. Let us view the situation sanely. A wave of resentment has arisen against the power of the Radio Corporation of America and the huge electrical interests backing it. This power is based upon the ownership of patents, in themselves a legal monopoly. The restrictions imposed by patent holders are escaped either by abandoning the field, paying royalties, or devising new methods which do not infringe. Many companies in the radio industry have elected to pay royalties. There is no indication that any of the unlicensed independents are making any real effort to devise non-infringing designs. They elect to follow none of the three customary alternatives. Politics have further clouded matters in a fog of flaming oratory. Bills are proposed, with the intention of injuring the Radio Corporation of America, which, if passed, will accomplish that objective, but will also mutilate both the present broadcasting structure and the entire patent structure upon which American industry has been built. The. Radio Corporation of America should be punished for any crimes of which it is guilty, but it would be unfortunate if unwise legislation were enacted in the current anxiety to inflict punishment. The foundations for the present situation were laid shortly after the war. American communications had been greatly hampered, both during and after the period of neutrality, by foreign censorship and foreign ownership of cables and long-distance radio communications. Naval officials desired the establishment of an American owned transoceanic network and an American radio industry so that channels of communication and sources of supply for war needs would always be available. No one company had access to a sufficient number of patents to enable it to conduct a profitable transoceanic radio service or even to manufacture modern vacuum-tube transmitting and receiving apparatus. With the encouragement of high naval officials, the Radio Corporation of America was formed in 19 19. It was given rights, in a patent pool comprising the principal radio patent holders, to conduct transoceanic services and marine communication and also to sell transmitting and receiving apparatus to the handful of amateurs then operating. The pool consisted of the American Telephone & Telegraph Company and its subsidiary, the Western Electric Company, the General Electric Company, the Westinghouse RADIOMAR1NE CORPORATION ORGANIZED The ship-to-shore marine radio communications of the Radio Corporation of America were transferred to a new subsidiary, the Radiomarine Corporation with which was combined the Independent Wireless Company. Charles J. Pannill, former president of the Independent, is now vice-president and general manager of Radiomarine and J. P. Duffy, for years superintendent of the New York division of RCA marine, has been appointed superintendent of operations. Mr. Duffy is shown above 9 Electric & Manufacturing Company, and the Wireless Specialty Apparatus Company. Each company threw their radio patents into the pool and received license under all the patents, each for use in a particular and limited field of activity. The fundamental objective of the combination sought by the Navy was promptly accomplished. The world-wide communication system came into being. Had this been the only result of this pooling arrangement, there would be no conflict to-day. Radio broadcasting came in an avalanche of public enthusiasm in 1920 and 1921. Itis obvious to anyone who has read the original agreement, upon which the patent pool is based, that broadcasting was not contemplated when the pool was formed. But the patent structure which was thus built up has established an almost impregnable domination of the radio industry. Considering the immense research facilities of the group and the important patents which its various members have purchased, it is in a position to maintain that hold, unless its patent rights are abridged or modified. At the beginning of the radio boom seven years ago, few of the group's radio patents had been adjudicated. An independent industry grew up and flourished in total disregard of these patents. A few gestures were made by the group to make known its patent holdings, such as sending infringement warnings to manufacturers by registered mail regarding the Pickard crystal patents, but no effort was made to make the public conscious of the importance of the pool, its research facilities, and the patents which it held. Suits were filed which are only now being finally settled. With recent adjudications, all of the large producers, representing about three fourths of the industry's volume, have become licensees of the group. The remainder have been unable or unwilling to meet the license terms, with their minimum annual royalty guarantee of $100,000. The independent vacuum-tube industry has been virtually destroyed by the effects of one of the clauses of the license contract which requires that all licensed radio sets be equipped with tubes sold by the R. C. A. or Cunningham, a subsidiary. This clause has been adjudged as a case of restraint of trade under the Clayton Act. The R. C. A.'s justification might be among other things, that no one can make tubes without infringing their patents (adjudicated and unadjudicated), and hence there is no legal competition. This, briefly, and stripped of many ramifications, is the background of the situation. The combination was formed with a useful and patriotic purpose which has been successfully accomplished. Its existence was also instrumental in initiating the first permanent broadcasting and, more recently, in making possible a source of a comprehensive license to manufacture radio receiving sets without infringement of any but a few patents held outside of the group. Several members of the combination are responsible for vitally important research work, contributing to the modern standard of radio reproduction. Strongcompanies anddominent groupsexist in