Back When Saying “I love you” Cost Thirty Dollars

Posted By on September 26, 2013 in News |

Say what you like about your monthly phone bill, we live in a golden age of telecommunications.

Take our daughter’s recent trip to Portugal. She traveled with her laptop, which is practically fused to her fingertips by now. At the end of a long day of swimming, cooking, and visiting with relatives, she’d retreat to the privacy of the guest bedroom, launch Skype, and give us a call. The internet connection wasn’t great, so instead of videoconferencing, we’d settle for a high quality voice-to-voice connection.

I was ambivalent about talking with her every night. Part of me felt that she ought to be far away, if she was going to be far away. If that makes sense. One of the great lessons of travel, it seems to me, is that being alone doesn’t have to mean feeling lonely.

Even so, the larger part of me missed her. I was always happy when the iPad chirped to announce her incoming call. It was lovely to hear her voice, to hear strange music and sometimes the rhythmic nasal sounds of Portuguese in the background. Those long chats made the world seem very small, the Atlantic Ocean a mere splash of blue ink on a map.

And the best part? The phone calls were free! That is, if you discount the cost of Internet access, both here and at her relatives’ house. Not to mention the laptop and the iPad. But setting those costs aside as “fixed,” the fact was that we could talk as long as we wanted without any thought of running up a huge bill.

I can remember a time, not too long ago, when a phone call to Europe was reckoned in dollars per minute, the kind of thing reserved for a rushed “Happy birthday!” or a few words of consolation after a bereavement.

But even those absurdly expensive minutes were a relative bargain compared to the very earliest calls to the Old Country.

There has been more or less instantaneous communication with Europe since the laying of the second transatlantic cable in 1866 (the first cable, laid in 1858, fizzled after a few weeks and was abandoned). Instantaneous doesn’t mean cheap. The 1866 cable could transmit information at the magisterial rate of 8 words per minute — which was 80 times faster than the 1858 cable! And each of those words was precious indeed. The Anglo-American Telegraph Company, the brainchild of American businessman Cyrus Field, initially charged $10 per word, a price which steadily dropped over the years as more cables, and thus more capacity, was brought online.

$10 per word — in 1866 dollars!

The astronomical price of a telegram limited the use of the cable to governments, big business, the press, and the very wealthy. Financial markets, in particular, were quick to adopt the new technology. Gone were the days when knowledge of the price of goods had to suffer a two week lag, the speed of the fastest steamship. Fortunes were made and lost in those two weeks. Now New York would know within minutes — or an hour, at most — about movement in the London markets, and vice versa.

But even those few lost minutes were costly. Eventually, a faster and more direct communications technology arose: the telephone.

I was surprised to learn that international phone calls were possible as early as the 1920s. The first transatlantic cables weren’t suitable for voice communication, so those early calls were placed by radio, the signal being retransmitted from station to station.

It wasn’t until 1956 that the telephone industry solved the problem of extremely long distance calling and laid its own cable across the Atlantic. That first telephone cable, TAT-1, had 36 channels. On its first day of service, TAT-1 carried 588 calls from London to the U.S., and 119 calls from London to Canada.

Once the concept was proven, British, Canadian, and U.S. telecommunications companies built more cables as joint ventures.

Developments such as direct dial between countries in the 1970s and fiber optic cables in the late 1980s steadily improved international phone service, while at the same time lowering the cost.

For a while, satellites carried a decent share of phone traffic, but at a significant premium. These days, nearly all of our transatlantic telephone and Internet traffic travels by fiber. There’s still a tiny lag, reckoned in the milliseconds. But even 100 milliseconds is too slow for today’s financial markets. Two new cables are currently scheduled to be laid by private companies, with the goal of shaving the latency down to 60 milliseconds or so. You can be sure that hedge funds and investment banks will be standing in line for that 40 millisecond advantage over their competitors.

As for me, I’m happy to ride on the back of these gigantic institutional investors, especially if it means faster, better, and cheaper face time with our little girl.