The two most important international issues affecting radio in the 1900s were ship radio requirements and signal interference. Congress passed the Wireless Ship Act in 1910, which required that all major U.S. seagoing ships carrying more than fifty passengers and traveling more than two hundred miles off the coast be equipped with wireless equipment with a one-hundred-mile range. The importance of this act was underscored by the Titanic disaster two years later. A brand-new British luxury steamer, the Titanic sank in 1912. Although more than fifteen hundred people died in the tragedy, wireless reports played a critical role in pinpointing the Titanic’s location, enabling rescue ships to save over seven hundred lives.

Radio Waves as a Natural Resource

In the wake of the Titanic tragedy, Congress passed the Radio Act of 1912, which addressed the problem of amateur radio operators increasingly cramming the airwaves. Because radio waves crossed state and national borders, legislators determined that broadcasting constituted a “natural resource”—a kind of interstate commerce. This meant that radio waves could not be owned; they were the collective property of all Americans, just like national parks. Therefore, transmitting on radio waves would require licensing in the same way that driving a car requires a license.

A short policy guide, the first Radio Act required all wireless stations to obtain radio licenses from the Commerce Department. This act, which governed radio until 1927, also formally adopted the SOS Morse-code distress signal that other countries had been using for several years. Further, the “natural resource” mandate led to the idea that radio, and eventually television, should provide a benefit to society—in the form of education and public service. The eventual establishment of public radio stations was one consequence of this idea, and the Fairness Doctrine was another.

The Impact of World War I

By 1915, more than twenty American companies sold wireless point-to-point communication systems, primarily for use in ship-to-shore communication. Having established a reputation for efficiency and honesty, American Marconi (a subsidiary of British Marconi) was the biggest and best of these companies. But in 1914, with World War I beginning in Europe and with America warily watching the conflict, the U.S. Navy questioned the wisdom of allowing a foreign-controlled company to wield so much power. American corporations, especially GE and AT&T, capitalized on the navy’s xenophobia and succeeded in undercutting Marconi’s influence.

As wireless telegraphy played an increasingly large role in military operations, the navy sought tight controls on information. When the United States entered the war in 1917, the navy closed down all amateur radio operations and took control of key radio transmitters to ensure military security. As the war was nearing its end in 1919, British Marconi placed an order with GE for twenty-four potent new alternators, which were strong enough to power a transoceanic system of radio stations that could connect the world. But the U.S. Navy—influenced by Franklin Roosevelt, at that time the navy’s assistant secretary—grew concerned and moved to ensure that such powerful new radio technology would not fall under foreign control.

Roosevelt was guided in turn by President Woodrow Wilson’s goal of developing the United States as an international power, a position greatly enhanced by American military successes during the war. Wilson and the navy saw an opportunity to slow Britain’s influence over communication and to promote a U.S. plan for the control of the emerging wireless operations. Thus corporate heads and government leaders conspired to make sure radio communication would serve American interests.

The Formation of RCA

Some members of Congress and the corporate community opposed federal legislation that would grant the government or the navy a radio monopoly. Consequently, GE developed a compromise plan that would create a private sector monopoly—that is, a private company that would have the government’s approval to dominate the radio industry. First, GE broke off negotiations to sell key radio technologies to European-owned companies like British Marconi, thereby limiting those companies’ global reach. Second, GE took the lead in founding a new company, Radio Corporation of America (RCA), which soon acquired American Marconi and radio patents of other U.S. companies. Upon its founding in 1919, RCA had pooled the necessary technology and patents to monopolize the wireless industry and expand American communication technology throughout the world.⁷

Under RCA’s patents pool arrangement, wireless patents from the navy, AT&T, GE, the former American Marconi, and other companies were combined to ensure U.S. control over the manufacture of radio transmitters and receivers. Initially, AT&T, then the government-sanctioned monopoly provider of telephone services, manufactured most transmitters, while GE (and later Westinghouse) made radio receivers. RCA administered the pool, collecting patent royalties and distributing them to pool members. To protect these profits, the government did not permit RCA to manufacture equipment or to operate radio stations under its own name for several years. Instead, RCA’s initial function was to ensure that radio parts were standardized by manufacturers and to control frequency interference by amateur radio operators, which increasingly became a problem after the war.

A government restriction at the time mandated that no more than 20 percent of RCA could be owned by foreigners. This restriction, later raised to 25 percent, became law in 1927 and applied to all U.S. broadcasting stocks and facilities. It is because of this rule that in 1985 Rupert Murdoch, the head of Australia’s News Corp., became a U.S. citizen so he could buy a number of TV stations and form the Fox television network. In 2013, the FCC ruled it would allow exemptions to the 25 percent foreign ownership limit on a case-by-case basis.

RCA’s most significant impact was that it gave the United States almost total control over the emerging mass medium of broadcasting. At the time, the United States was the only country that placed broadcasting under the care of commercial, rather than military or government, interests. By pooling more than two thousand patents and sharing research developments, RCA ensured the global dominance of the United States in mass communication, a position it maintained in electronic hardware into the 1960s and maintains in program content today.