services will develop.2 With regard to the commercialization of interactive multimedia networks and devices, the panel came to the following conclusions:
Interestingly, information industry executives surveyed by Deloitte & Touche also had a generally favorable view about the role of government in promoting investment in the NII. Approximately 62 percent thought the net effect of government actions by 1998–2000 will be positive (41 percent) or neutral (21 percent) "in terms of encouraging investment, fostering research and development, and promoting the rapid spread of advanced information, communications, and entertainment offerings."3
Are expectations for building the information superhighway realistic? In several key respects, the answers to that question will rest with those individuals who will be asked to put up the significant sums of capital needed to upgrade the NII, and particularly ubiquitous local telecommunications networks where the lion's share of these costs will be incurred.
If shareholders believe that risk-adjusted returns on investment in advanced network technologies will remain competitive with returns on alternative investment opportunities, then those technologies will be deployed and the new service features they make possible will be brought to the market in a timely manner. If, on the other hand, shareholders do not regard prospective returns on network investment to be high enough to compensate for risk incurred, then lesser amounts of discretionary capital spending will be committed to new network technologies. In that event, telephone company deployment of new technologies will slow, possibly to the point of lagging user expectations and needs. This could be especially problematic for developers and users of new multimedia service applications requiring substantially more bandwidth than is readily available over the public switched-telephone network (PSTN).
The balance of this paper analyzes relationships between shareholder returns, network investment, and the deployment of the types of advanced network technologies that will make up the NII. It begins with a discussion of recent trends in each and their implications for future investment. The paper concludes with a brief discussion of steps that telecommunications policymakers must take to create a more technology-friendly market environment.