Thus, investment in technology alone will not likely result in major social benefits. Policymakers in these countries appear aware that public sector stimulus is needed to foster new educational and social service applications; there is widespread belief in the need to fund trials and demonstration projects. Yet seed money for pilot projects may not ensure long term implementation. Schools with International Services Digital Network (ISDN) access will benefit if the services they can access turn out to be cost-effective means of achieving their educational priorities. If the services are perceived as frills, or if there is no budget allocation to buy computers or pay monthly usage charges, connection to the information highway will mean little. Similarly, if insurers will not authorize payment for teleconsultations, or physicians are not authorized to practice beyond their borders, telemedical applications will remain limited. And if prices for connection and usage are beyond the reach of low income and rural residents, small businesses and nonprofit organizations, the much-heralded information society will be very narrowly based.
The U.S. communications industry has adopted the banner of the “information superhighway,” with the assumption that there is an enormous new market in information services. While these applications are generally viewed in the United States strictly in business terms, in other countries cultural impact is also a major concern. Both Canada and the European Union stress the need to use these networks to strengthen their own cultures. Yet, the proliferation of cable- and satellite-delivered channels in Canada and western Europe tells a different story: the demand for content is so great that operators turn to inexpensive sources of content to fill them, and this content is overwhelmingly American.
Another recurring theme is the “we will be left behind” argument. In the late 1980s, U.S. telephone companies sought to convince American policymakers that the United States was at a disadvantage because its citizens did not have Minitels, small computer terminals provided to French households by France Telecom. Yet Americans had much of the functionality of the Minitel through widely available facilities, including telephone access to audiotext services and growing access to personal computers equipped with modems. Today, Canada, the European Union and Japan are all concerned that they will be left behind the United States if they do not implement their own information infrastructures. Notably, the report to the European Union states: “The first countries to enter the information era will be in a position to dictate the course of future developments to the late-comers. But is this really so? It may be that their technology companies will have an advantage if they have a ready market for fast packet technologies, such as Asynchronous Transfer Mode (ATM) servers, set-top boxes, and multiplexers that can also be exported. But the real payoff for users will be from the application of these technologies to access and share information that can contribute to the development of their own societies and the competitiveness of their economies.
Promises and paradoxes
New technologies and services are alluring, but they also present challenges and paradoxes for the telecommunications industry, users and policymakers. Consider the following:
Technological Trojan Horses
o New technologies are introducing changes faster than policymakers can respond.
o “Callback” services (where calls between countries with high international tariffs are actually originated from a third country with much lower rates such as the United States) are undermining the traditional strategy of monopoly carriers in many developing countries that use high international rates to cross-subsidize domestic rates and generate income that can be invested in domestic infrastructure.
o Satellite broadcasting has introduced foreign and commercialized programs in western Europe and in much of Asia, forcing domestic broadcasters to innovate to hold on to their audiences. The Internet, seen by many policymakers as an important tool for their industries to remain competitive, opens the door to unfiltered information that may be considered inappropriate or illegal in their countries.
Competition and Consolidation
While telecommunications services are increasingly being liberalized to attract competitive providers, there is also a growing tendency to consolidate. The result may be only a few major players or consortia in the international environment, as well as a few providers in major domestic markets. These new oligopolies will be able to offer a greater range of services than their predecessors and may make it easier for users looking for “one-stop shopping” to meet their telecommunications needs. The danger, however, is that they will form cartels that will prevent significant competition in price, service, or innovation.
Access and Control
Some governments that see information technology as critical to their economic development strategy are at the same time concerned about the socio-political implications of access. One of the most ironic examples of the simultaneously held goals of modernization and control is Singapore, which is staking its economic future on becoming an “intelligent island.” The Singapore One venture intends to extend optical fiber optics throughout the island, to connect every business, home and school. Yet Singapore has retained tight control over individual access to information. The government applies broadcast content regulations to the Internet, holding Internet service providers accountable for content accessible to their customers. Also, it is illegal for individuals to install satellite antennas, so that Singaporeans cannot watch satellite-transmitted programs from regional satellites, including those uplinked from Singapore’s own industrial parks.
Cable television networks offer the advantage of controlling access so that network operators can charge for reception. In Singapore and China, another perceived advantage of cable is that information its citizens receive can be monitored. Another technology with paradoxical capabilities to expand and control choice is video compression. Using video compression, programmers can pack many television signals on a single satellite transponder, enabling television viewers to choose from hundreds of digitally compressed channels. Yet video compression also provides a cost-effective means for program distributors to precensor programs by editing different versions for different countries, then compressing and encrypting them for distribution on regional satellites. Viewers in each country will be able to see only the programs their governments have approved.
Universal Service as a Moving Target
New technologies and services are forcing policymakers to rethink their goals of universality. In both industrialized and developing regions, universal service has become a moving target, as policymakers must adjust their goals to make new services more accessible. For example, the U.S. Telecommunications Act of 1996 redefines universal service to include access to schools, libraries and health care facilities, and to include not only “basic” telephone service but also “advanced services,” a term whose definition will evolve over time.
Closing the gap
The World Bank estimates that investment in telecommunications in the developing world must double to meet the growing demand for telecommunications services. In spite of accelerated investment in many developing regions during the past decade, the vast majority of people living in developing countries still lack access to basic telecommunications. Yet there is cause for optimism. New technologies offer the possibility of technological leapfrogging, e.g., to reach end users through wireless local loops or small satellite terminals rather than stringing wire and cable. Digital transmission and switching are increasing reliability and lowering cost, as well as making it possible for subscribers in developing countries to use electronic mail and voice messaging, and to access the Internet.
The newly industrializing economies of eastern Europe, Asia, and Latin America are starting to close the gap. Their growing economies appear promising to the telecommunications industry and to investors who are looking for new markets. Most of these countries are also taking steps to encourage investment by privatizing their operators, providing investment incentives, and/or introducing competition.
Information gaps show least signs of shrinking in the poorest countries, two-thirds of which have less than one telephone line per 100 inhabitants. Telecommunications is not a panacea for countries with populations near the subsistence level as well as urgent demands on foreign exchange for food, fuel and medicine. Yet, as these countries develop market economies and seek to take maximum advantage of scarce expertise, they will need to invest in telecommunications. Of course, these regions are less attractive to investors than more prosperous economies; in general, they have also been the most reluctant to reduce their governments’ role as monopoly operator. Their networks are also the least efficient, in terms of reliability and the number of lines per telecommunications employee. Restructuring their telecommunications sectors to improve productivity and encourage investment will be necessary if they are to begin to close the gap.
New gaps?
As investment in telecommunications infrastructure increases, the gap between information haves and have nots may become based on price and choice, rather than technology. Countries that continue to favor telecommunications monopolies, or seek to control access to information, may limit user access even where technology is available. In most of Europe, access to the Internet is much more expensive than in North America. As one commentator states: “Digital Europe has many medieval features: road tolls and extortion-like taxes, witch hunts, an oppressed citizenry, and powers-that-be in feudal towers.” Access is much less affordable in many developing countries. Even professionals in many African countries cannot afford to use telecommunications services.
China may be the world’s largest market for telecommunications, but the government is reluctant to allow access to information from abroad. Although credited with introducing market reforms in the Chinese economy, Deng Xiaoping voiced his ambivalence about opening China’s doors to the world: “When the door opens, some flies are bound to come in.” Government attempts to control access include banning satellite antennas, blocking access to Internet sites, and impeding access to the Internet itself and to other means of electronic communication.
Clever users will inevitably find means to bypass these roadblocks, as shown by dissidents’ use of facsimile and electronic mail during the Tiananmen Square uprising in China, the proliferation of satellite antennas in countries where they are officially banned, and the widespread availability of supposedly illegal callback services that undercut international tariffs. Yet these strategies are likely to be limited to an elite few with the technical know-how or political connections to end-run the regulations. Only where governments recognize that suffocation is worse than a few flies will the gaps really disappear.
Remaining barriers
New technologies have eliminated distance for the international finance industry, which trades not only around the world but around the clock; for employees who collaborate on proj