Ties That Bind: Economic and Political Dilemmas of Urban Utility Networks, 1800-1990

Published by EH.NET (December 2001)

Charles David Jacobson, Ties That Bind: Economic and Political Dilemmas of

Urban Utility Networks, 1800-1990. Pittsburgh: University of Pittsburgh

Press, 2001. xii + 282 pp. $35 (hardback), ISBN: 0-8229-4133-3.

Reviewed for EH.NET by Hugh Gorman, Department of Social Sciences, Michigan

Technological University.

In this comparative study of issues surrounding the regulation and ownership

of “natural monopolies,” Charles Jacobson covers a lot of ground and does so

concisely. If one desires to better understand the various approaches that

legislators have taken to ensure the equitable and efficient delivery of

services over fixed networks of pipes and wires, this book is an essential

read. By smoothly integrating economic theory with the specifics of how that

theory played out in various cities for the delivery of water, electricity,

and cable television, Jacobson allows the reader to examine an array of

approaches and outcomes while gaining an appreciation for broader historical

patterns.

The structure of Ties That Bind is straightforward. Jacobson first

discusses the general type of issues that local officials and firms typically

face as they attempt to reach some agreement on how to ensure that the service

delivered over a fixed network is accessible, equitably priced, and reliable.

He then examines the development of networks in the United States for

delivering water, electricity, and cable television, with one chapter devoted

to each network. Furthermore, in each chapter, Jacobson focuses on the

experience of several cities, with Boston, San Francisco, Seattle, and

Pittsburgh taking on prominent roles. The comparative array that he creates by

examining the development of three different networks in several different

cities is a major strength of the book. Throughout, he nicely integrates

comparisons among the various cases.

Regardless of the city, time period, or service being delivered, the same

major questions dominate. What relationship should be established between

governments and utilities so as to ensure the most reliable, efficient, and

equitable delivery of services? In the absence of competition, what

disciplines a firm or government agency to make the investment necessary to

maintain and improve a network? In each case, more specific questions and

issues emerged as officials made specific policy choices. For example, if a

city turned to franchises, what could officials do if a firm could not or did

not live up to the conditions specified in its franchise? Should the affected

municipality purchase and operate the network or should it subsidize private

operations to cover the level of public service desired? By examining

differences in how such questions were answered, Jacobson helps readers make

sense of the various options available to decision makers and why they pursued

the strategies they did.

Jacobson emphasizes that in each case, the path of debate was influenced by

differences in period, place, political and economic context, and technology.

Not surprisingly, the evolution of policy decisions affecting the network for

delivering water to nineteenth century Boston was quite different from choices

associated with development of Pittsburgh’s cable television network during

the last third of the twentieth century. But Boston’s water experience also

differed from the water-related experience of San Francisco and Seattle. In

Boston, civic leaders moved fairly quickly to establish municipal ownership of

waterworks in a way that facilitated expansion and population growth. In San

Francisco, water supply and distribution facilities remained under the control

of a private firm until 1930. Seattle, which established itself as a

population center late in the nineteenth century, moved fairly quickly from

private to municipal ownership, with officials undoubtedly learning from the

experiences of other cities. Similarly, chapters on the delivery of

electricity and cable television examine the development of those systems by

comparing the experiences of several different cities.

Although the path of debate varies from case to case, broad patterns emerge.

In the case of water systems, the overwhelming importance of a reliable water

supply to public life typically led to municipal control. For example, in the

nineteenth century, city after city faced the challenge of getting local water

utilities to construct distribution systems large enough to be effective for

fighting fires but inexpensive enough to be affordable. Such concerns pushed

civic leaders toward municipal control of those networks. In the case of

electric distribution networks, tremendous advances in technology allowed

participants to avoid the most contentious issues. Furthermore, the

development of regional — and eventually national — electric grids moved

regulatory responsibility to the state level, resulting in a different set of

dynamics. In the case of still-evolving delivery systems for cable television,

the story is even more different. Unlike the other two networks, the demand

for cable is relatively elastic. It cannot be considered a vital service and

has faced competition from other sources of programming, including broadcast

television, resulting in fewer calls for municipal control.

Initially, one cannot help but wonder why Jacobson chose cable television over

a third utility that is more similar to water and electricity: natural gas. On

reflection, though, the decision to examine cable television is the better

choice. Not only does this choice result in the examination of networks based

on three different physical media — pipes, copper wire, and communication

cable — but it also results in three different time periods and broadens the

range of competitive factors. Furthermore, it allows one to place a current

policy issue, the regulation of cable-based communication services, in

perspective with debates associated with earlier “natural monopolies.”

Any serious participant in any debate concerning the regulation of a service

that depends on a fixed network would benefit from reading this book. Ties

That Bind is also the kind of book that graduate students interested in

subjects ranging from public policy and urban studies to business history and

monopoly law would find extremely useful in their efforts to gain historical

perspective. In the end, Ties That Bind is a great example of history

being used to inform public policy.

Hugh Gorman is assistant professor of environmental policy and history at

Michigan Technological University. He is the author of Redefining

Efficiency: Pollution Concerns, Regulatory Mechanisms, and Technological

Change in the U.S. Petroleum Industry (2001).