UNION INTERNATIONALE DES TELECOMMUNICATIONS INTERNATIONAL TELECOMMUNICATION UNION UNIÓN INTERNACIONAL DE TELECOMUNICACIONES New York, 5 May 1993 New Alliances for the New Age of Global Markets A Presentation by Pekka Tarjanne Secretary-General, International Telecommunication Union to the Business Week 1993 Future of World Communications Symposium I would like to begin by thanking the organizers for inviting me to give the opening remarks to the 1993 Business Week Symposium on the Future of World Communications. The topic chosen for this year's symposium is certainly timely. It seems that each week, when I open my favourite industry newsletters, I am greeted by headlines announcing a new "joint venture" or "strategic alliance". The aim of these undertakings is almost always the same - to conquer "global markets" , usually estimated to be worth millions, if not billions, of dollars. Not infrequently, somewhat smaller headlines report the collapse of other alliances which were launched with similar fanfare just a few weeks previously! It is a good thing we can turn to serious magazines like Business Week for well-researched and responsible appraisals of the true situation! Beneath the headlines, things are clearly changing. In the next few minutes, I will give you my perspective on the changing environment for world telecommunications. However, before doing this, I would like to say a few words about the organization I represent, the International Telecommunication Union, or ITU. The ITU is the oldest alliance in the telecommunications business. It was founded 128 years ago, in 1865, when it became obvious to 20 European countries that telegraph services would be more useful if they were standardized, so that messages could be sent uninterrupted from one country to another. Today's ITU, I am happy to say, is much bigger in scope and much broader in its objectives. The ITU membership currently includes 178 countries and more than 300 corporations. This latter number includes all the major equipment makers and service providers in the telecommunication business, as well as the most important research institutes. These organizations currently contribute about 10% of the ITU budget. In addition, they make an enormous contribution in kind to the ITU through the work of their technical experts. Although it is difficult to quantify, the value of their contribution in kind certainly exceeds the value of their direct cash contributions. The ITU alliance has three main goals: first, to continue our original work of developing global telecommunication standards; second, to ensure that the radio frequency spectrum and the geostationary satellite orbit are managed as efficiently and fairly as possible; and third, to promote the growth of the global telecommunication network. The telecommunications industry is a principal beneficiary of our work, as are all the companies and user groups that rely on global communications. But we also have a broader mission. One of our objectives is to achieve universal access to basic telecommunication services. This will enable people everywhere to enjoy the right to communicate, and to participate in the economic and social development of the world community. This perspective, I would argue, should not be forgotten in thinking about "the new age of global markets". In sum, the ITU's mandate and membership puts the organization in a unique position. Because we work with the public and private sectors on a daily basis, we understand the needs of the business community and government. And we can situate these needs in the broader perspective of global development, thanks to our position as the leading international telecommunications forum. So, how do things look from our perspective? On the one hand, it is clear that there are powerful forces driving the telecommunications industry in the direction of global markets for communications goods and services. Some of these markets may even become "free" as suggested in the conference program. They will certainly be freer than in the past. But there are other forces which constrain this development and complicate the picture. There should be no surprise in this state of affairs. As a former physicist, and the current head of a multi-lateral organization, I am constantly reminded that "for every action there is an equal and opposite reaction"! There is no doubt about the fundamental driver in world telecommunications today - the force of the marketplace. Over the past two decades, the combined impact of technology developments, policy decisions by governments, and the requirements of major business users have completely altered the structure of the telecommunications industry. Telecommunication operators have been separated from government administrations in many countries. Product and service monopolies have given way to competition. New players have entered the telecommunications industry at every network level, from local to international, and in every service category, from basic to value-added. Corporate communication systems have become an important segment of the telecommunications industry, a segment which has largely developed outside the boundaries of the traditional public network providers. Some big business users of telecommunications have become operators of their own international private networks, in order to maintain strategic control of their information resources, or because of dissatisfaction with the offerings of the traditional carriers. New telecommunication systems and services are emerging which are no longer "inter - national", but truly global. The proposed LEO mobile satellite systems are one example of this new phenomenon. So are the strategic alliances and mergers and acquisitions that are being put in place by major national operators with the aim of offering "one stop shopping" to customers in different countries. As part of this process of structural evolution, the role of government in telecommunications has changed - in the developed countries which account for 80% of the world telecommunications industry , as well as in many of the most dynamic economies in the developing world, particularly in South-East Asia and in Latin America. Instead of being a PTT operator like in the old days, governments in future will become policy-makers and regulators - just as they always have been in the United States. Does it follow from all these changes that telecommunications is becoming "a business like any other" characterized by free and open markets and a much diminished role for governments? The evidence suggests that this is not likely to be the case, at least in the foreseeable future. The developments I have described have not lessened the interest of governments in telecommunications. In fact, the public interest in telecommunications may have increased. What issues will concern governments when they turn their attention to telecommunications? First and foremost, the development of global telecommunication systems raises the question of how institutions which are based on the premise of national sovereignty can effectively regulate global, "borderless" telecommunication systems. Beyond this, the gaps between developed and developing and least developed countries- which seems to be widening - continues to be a prime concern to the members of the international community. Even in the developed world, the benefits of advances in telecommunications and not being equally shared. They are going primarily to big business users, with relatively little benefit to small business and residential customers. In addition, even in the most highly developed countries, differences persist between telecommunications "greenlands" and "deserts" - that is to say, between very well-served metropolitan areas, and less well-served rural and remote locations. Concerns are also emerging about the relationship between the "right to communicate" and other basic human rights, such as the right to privacy. The controversy surrounding "caller i.d." and cellular eavesdropping shows how sensitive these issues are for some consumers and governments. On a more general plane, there is growing interest in the relationship between telecommunications and the environment - both the natural environment and the human environment. There are many possibilities for saving energy and resources through the use of telecommunications, and there is growing concern about the effect of some new communications technologies on human health. The impact on share prices of the recent "cellular cancer" scare demonstrated very clearly that the telecommunications industry cannot afford to ignore concerns of this kind. There is clearly no shortage of public interest issues for governments to worry about as they turn their attention to telecommunications policy and regulation. How this agenda is shaped and developed, at both the national and international level, will clearly effect the development of global markets for communication goods and services. The future of the telecommunications industry will also be shaped by more general geopolitical forces. The globalization of telecommunications is inseparable from the globalization of economic activity. Telecommunications have unified world financial, currency and commodity markets in "real-time" trading systems. They have supported the development of global corporations. They are changing the distribution of work between developed and developing countries in both the manufacturing and service sectors. They are a key to improving trade efficiency through techniques such as electronic document interchange (EDI). And they have an important influence on consumer demands, expectations, and tastes through the dissemination of advertising and cultural products. The future of the telecommunications industry is closely tied to the global acceptance of liberal democracy and market economics. Although it is now in worldwide ascendancy, this ideology is being challenged by protectionist forces. These forces arise from several sources - the effects of the prolonged world-wide recession, the collapse of the political economy of Eastern Europe and the former Soviet Union, and the re-emergence of political forces based on national, ethnic, cultural and religious factors in many parts of the world. In general, these forces run counter to the development of open global markets - particularly in telecommunications. Whether the industry likes it or not, the future of world telecommunications cannot be separated from global development in all its dimensions - economic, social, cultural and political. Given the central role that telecommunications will play in global development in the twenty-first century, there is a clear need for the industry to recognize the responsibility it bears for the future welfare of mankind, and to consider the ethical dimension of telecommunications in conjunction with its business dimensions. The social responsibility that has always been part of the telecommunications business, I would argue, will not go away and should not go away - even in the era of global markets. The old alliance between government and industry should be developed in new and creative ways, for the information society of the twenty-first century. This is my primary mission at the ITU, and one in which I invite your very active participation.