Marketplace Has a Way of Making ‘Impossible’ Possible

For the last few weeks I’ve been wondering whether I’ve been deeply unfair to the nation’s phone and wireless companies. You see, I’ve been assuming that the only reason we couldn’t keep our old cellphone numbers when switching to new carriers was that the companies had obstructed the practice over fears that it would encourage customers to seek out better deals from competitors.

Then I learned, partly from watching T-Mobile’s Catherine Zeta-Jones haranguing on television, that the companies have been in favor of portable phone numbers all along. Not only that, the whole thing was their idea! Verizon’s website reminded me that thanks to LNP, or “local number portability,” I’d never have to commit a new number to memory, or call all my friends to notify them of a change, or print up new business cards. As Sprint’s website put it: “Imagine the benefits!”

Imagine my surprise, instead, when my curiosity about who had been blocking this obvious consumer boon led me to some old news reports. There I discovered that it was the telecommunications industry, after all. While consumer groups and the Federal Communications Commission kept trying to push this policy along, the industry kept raising objections. It claimed that the change was technically impossible, then technically difficult, then technically expensive to the tune of hundreds of millions of dollars. Perhaps the cleverest argument came from California’s own Pacific Telesis, which informed the FCC that the appeal of number portability had been “overrated.” Customers were more concerned with getting discounts than keeping their numbers, according to Pac Tel, though it didn’t explain why it couldn’t offer both.

Once the FCC overrode these objections and implemented local number portability in November, the industry decided to make the best of a bad situation by incorporating a regulatory order into its marketing campaigns. (For all the chatter about technical challenges, in most cases a number can be transferred to a new carrier within a few hours -- although it might take up to a few days if your old carrier is being a jerk about it.)

The lesson to draw from this is the folly of believing any industry’s claim that a technological advance or a regulatory change is “impossible.” History is full of these desperate appeals. The world is almost always better when they are discarded.

In the 1960s, AT&T;, then the monopoly owner of the telephone system, insisted that the transmission of digital data would hopelessly foul up its lines. Ma Bell flatly refused to cooperate with efforts to set up the network that would become the Internet, even when prodded by its developer, the Pentagon. As it turned out, not only did digital data move just fine, the network eventually produced billions of dollars in profits for the company and its offspring.

Fans of Microsoft Corp. -- and aren’t we all? -- will recall that the company claimed that it was “impossible” to remove Explorer, its Internet browser, from computers running its Windows operating system without hopelessly damaging Windows. This was a crucial issue in the government’s antitrust case against the software maker: that it had deliberately embedded Explorer within Windows to drive rival Netscape Communications out of business.

Microsoft even ginned up a videotape purporting to show that removing the browser left Windows a crippled beast. But the tape was proved a phony, and the trial judge chose to believe a government witness who testified that with Explorer uninstalled, Windows ran perfectly.

Among the most expert subverters of technological progress are U.S. carmakers, which have thrown tantrums about virtually every safety or efficiency advance in transportation science. Government regulation, or its threat, was necessary to force the installation of seat belts and air bags. The battle between government agencies and the Big Three over fuel efficiency for U.S.-made vehicles is never-ending, while Japanese manufacturers never seem to have a problem turning out cars and vans that get more miles to the gallon in almost every weight class.

The automakers’ truculence has reached a new height of absurdity with the hybrid engine, which shifts between gasoline and electrical power for gas mileage double that of conventional models. Such a gain is of no small importance in this state, where our daily consumption of 49.5 million gallons of gasoline is bumping right up against the capacity of all in-state refineries.

Clearly, the spread of the hybrid engine could do more to relieve California’s perennial gas crunch than most of the more costly alternatives on the table. But as the California Energy Commission remarked in a report last spring, the major obstacle to this technology has been, ahem, “the lack of significant manufacturer interest.”

The commission must have meant U.S. manufacturers, because Japanese automakers have established a hybrid beachhead with vehicles such as the Toyota Prius, a sedan that has become hard to acquire without joining a waiting list.

Government regulators probably could have goaded Detroit to show more interest by tightening fuel efficiency and emission standards. The Bush administration has instead thrown its weight behind the still-undeveloped technology of hydrogen power.

Most experts don’t expect hydrogen as a vehicular fuel to have any effect on the U.S. market until after 2020. In talking about building hydrogen fuel stations along all our major highways, our leaders can evoke a clean, distant future and safely finesse the grimy questions of who’s going to pay for developing the technology so it works safely or how a dramatically new technology might get established in the marketplace. Even the most ambitious present-day politician knows that the world after 2020 is almost certain to be someone else’s problem.

The auto industry, meanwhile, presumably likes hydrogen because it’s fancy enough to attract lots of government research spending, relieving them of the burden of putting up their own money. In his last State of the Union speech, Bush plumped for a $1.2-billion program to develop what he called a hydrogen-powered “Freedom Car,” evidently to cut the cost of driving down to the corner for an order of freedom fries.

The marketplace has a way of making impossible goals seem reachable. Having tripped over the sizable consumer interest in the Toyota Prius, Ford and General Motors are now busily designing hybrid versions of their popular SUVs, but Ford won’t start production of a small model until late next year, and GM’s won’t be available until 2007. By then, assuming they

haven’t been driven entirely out of business by the Toyota and Honda hybrid fleets, they will probably be able to turn a profit by selling customers on a technology they originally shunned.

Isn’t that always the pattern? Returning for a moment to the business of telephone number portability, as recently as last summer the telecommunications companies were still complaining that the changeover would cost them billions. Then they realized that the federal government would let them charge all their customers a monthly surcharge for the switch-over, whether they actually changed carriers and brought their old numbers along or not. Even better, the regulators wouldn’t set a ceiling on the fee or monitor whether it bore any relation to the carriers’ real expenses.

Sprint started raking in

$11 million a month, according to the Associated Press. The other companies have added similar fees to their monthly bills, proving that even an impossible technology, properly nurtured, can be a profit center.

Golden State appears every Monday and Thursday. Michael Hiltzik can be reached at

[email protected]. To read previous columns, go to latimes.com/Hiltzik.