Keeping the U.S. Computer and Communications Industry Competitive Convergence of Computing, Communications, and Entertainment (1995) / Chapter Skim
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4 Promoting Competitiveness: Policy Issues and Obstacles
4 Promoting Competitiveness: Policy Issues and Obstacles
Pages 65-87
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From page 65... ...
At the same time, there is pressure on government to act both to relax existing laws and rules and to enact new ones-because information technologies are evolving more rapidly than ever before. Central to the policy debate are the prospects for an enhanced information infrastructure, which galvanized private- and public-sector attention during 19931994.i Legislative efforts during that period constituted the first major attempt since passage of the Communications Act of 1934 to alter the goals and frameworks for state and federal regulation and the constraints on business entry by common carriers provided by the Communications Act of 1934 and the Modified Final Judgment codifying the breakup of AT&T.2 Although telecommunications reform legislation failed to pass in 1994, new legislation was introduced in 1995.
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From page 66... ...
, suggesting that between 1993 and 1995 both interest in market entry and concern about constraints had grown among the various players in the digital convergence arena. Despite concerns about the impact of regulation on the cost and profitability of a given investment, comments by several participants suggest a broad recognition that absent government intervention, the owners of key capabilities control timing and access.
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From page 67... ...
Current U.S. policy restricts foreign ownership of broadcast media to 25 percent,4 and some countries are introducing reciprocal restrictions or program quotas to limit U.S.
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From page 68... ...
~ bag in Cleveland can be a bag in Tokyo. So the digital revolution allowed sc~iccs lo imagine themselves [o be global cnlc~dscs, and now [ha Made negotiators He sagging [o say [hat means arc have [o in[cgra[c and bbcrahzc ~csc mocks and bring [hem [o~c[her.
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From page 69... ...
Moreoever, explained Fuller in another interview, "By its very nature, an information utility or an internetwork will be global as well as national in scale, and issues of geography will become less important." As Cowhey noted, the 1993-1994 public statements of President Clinton and Vice President Gore focused attention on information infrastructure across the industrialized world, making it folly~to assume that only the United States would place emphasis in that area. Indeed, the "G7" industrial countries held their first ministerial summit devoted to a single industry when the European Union hosted the February 1995 "G7 Ministerial Conference on the Information Society." The European Union particularly championed the event in order to build political support for European regulatory reforms necessary to catch up with the United States.
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From page 70... ...
. Tempering the discussion of competitive advantage and disadvantage, Borrus suggested that evolving international business relationships may become more complex and cooperative.
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From page 71... ...
Eli Noam has said that international asymmetries hamper the global system of systems, which will function effectively only if it is competitive at each stage, and if regulation establishes nondiscrimination. At present, the information infrastructure stands at uneven levels of development in technology and policy across the globe; most countries still have an established monopoly communications provider, and outside of the United States monopoly remains the dominant communications paradigm.
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From page 72... ...
The United States has to show that this digital revolution does speak to larger concerns about making schools work, making hospitals work, and making it possible for people to share in the benefits of information technology, not just in New York, and Washington, D.C., and London, and Tokyo, but also in the many poorer countries of the world. Borrus also pointed to the need to address international asymmetries in technology access.
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From page 73... ...
But Borrus captured the terms of the policy discussion when he wrote that trading blocs need "~1) to agree on a set of principles that endorse reciprocal access to regional markets, investment opportunities, and supply base technologies; (2)
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From page 74... ...
Since digital transmissions are increasingly global, and since our evolving national information infrastructure is effectively part of a global information infrastructure, some mechanisms will be needed to handle the problem of differences among countries as to what constitutes a copyright infringement. For example, the concept of a parody as a fair use does not exist in all countries.
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From page 76... ...
And regulators have not allowed the dominant telephone companies to get into cable television.~° But even this barrier may fall, as Bell Atlantic Corporation's progress in pursuing judicial and
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From page 77... ...
These features have figured in the development of regulatory reform legislation, and they are also at the heart of initiatives relating to standard setting for voice, video, data, and multimedia services as well as to the formatting and transfer of various kinds of information and documents. For example, the Cable Act of 1992 provided for measures to foster greater compatibility between consumer electronic devices and cable television systems, resulting in digital convergence-related standard setting by the Federal Communications Commission (FCC)
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From page 78... ...
PERSPECTIVES ON REGULATION Colloquium participants suggested that government policies with respect to digital convergence should be guided by two general principles: first, that relaxation of traditional forms of regulation and increased market competition are beneficial in general; and, second, that there will continue to~~be a need for government intervention, but in different forms and areas than in the past. For example, many referred to growing (perceived)
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From page 79... ...
The NTIA, in a 1993 report, maintained that freeing telephone companies to provide cable programming would stimulate competition in the video market and provide incentives for infrastructure development, and, furthermore, any resulting increased demand for video programming could stimulate international trade (NTIA, 1993~. Wildman has argued that, given the substantial costs of desired network upgrades and the nation's dependence on private investment to cover them, policy restrictions on the business opportunities of information providers should be reduced.~3 This is the essence of the arguments advanced by telephone companies, although companies differ in their preferences for what restrictions are most critical to relax.~4 Foreshadowing if not encouraging recent legislative and rulemaking debates, the NTIA had recommended relaxing restrictions on networks owning cable systems,is common ownership of television stations and cable systems in the same market, national multiple ownership,~7 and foreign ownership.
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From page 80... ...
So the alte~natives are to make private carriers common carriers, which is not realistic: it really means making every corporate, private network, every value-added service provider into a common carrier. You can also have some kind of a hybrid arrangement of which you can think in terms of at least 8 or 10 different hybrids.
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From page 81... ...
Although volatile cost estimates reflect political considerations and business maneuvers, and although~concerns have been raised about various risks, proponents argue that much of the investment would be made anyway,2i and that the payback to investors (let alone to society generally) will be worth it.22 Apart from its controversial price-capping strategy a relatively new approach to the regulation of information industries the Cable Television Consumer Protection and Competition Act of 1992 demonstrates to members of the colloquium steering committee that Congress is often more amenable to retrospective "police" work than to forward-looking action on communications issues of the future.
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From page 82... ...
The Clinton administration has said it is "committed to developing a broad, modern concept of universal service-one that would emphasize giving all Americans who desire it easy, affordable access to advanced communications and information services, regardless of income, disability, or location" (IITF, 1993, p.
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From page 83... ...
Noting that the federal government is a major force in technology development,27 Gilder suggested that government's role in the digital convergence should be that of an "aggressive, for~vard-looking consumer," purchasing the best possible technologies for interconnecting its supercomputer centers and other facilities. Such connections would maximize efficiency, according to Gilder, who has contended that the government typically "discovers a technology after its moment is passing" (Kelly, 1993~.
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From page 84... ...
has provided specific suggestions along those lines, arguing that local telephone companies should be required to "interconnect their facilities with those of more specialized providers on reasonable and nondiscriminatory terms" (NCTA, 1993a)
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From page 85... ...
The statements outline numerous broad goals but provide few details; the Information Infrastructure Task Force is laying the groundwork to develop proposals in a number of areas, and proposed legislation is proceeding through the Congress as this report is written. The organization of several budget elements under the NII umbrella in the FY 1995 budget request added to the emphasis on this area, as do the new emphasis on information infrastructure technology and applications within the High Performance Computing and Communications Initiative and the expansion of the new Telecommunications and Information Infrastructure Assistance Program for developing access by schools, libraries, hospitals, and clinics.
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From page 86... ...
18. David Nicoll, National Cable Television Association, personal communication, December 13, 1993.
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From page 87... ...
The initial goal was to link military users and contractors with remote computer centers so they could share software and hardware; today, more than half the hosts are commercial, while many others are in education and nonmilitary research. The National Science Foundation has provided the fixed-cost network "backbone," but by early 1994 the direct federal subsidy had shrunk to an estimated 3 percent of total Internet costs, and even that small share is to be eliminated.
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