The Challenges Facing the ITU A presentation to Telecom Tokyo Forum '94 by Dr. Pekka Tarjanne Secretary-General, International Telecommunication Union Tokyo, February 1, 1994 It is a great pleasure to have been invited, once again, to take part in the Telecom Tokyo Forum sponsored by the New ITU Association of Japan. Last year my Deputy, Jean Jipguep, gave the keynote address at Telecom Tokyo Forum '93 on the subject of "ITU Activities -- Addressing a Changing Environment". In his address, Jean reported on the changes that were made to the structure and functioning of the ITU at the Additional Plenipotentiary Conference which took place in Geneva in December, 1992, changes which resulted in the birth of a "new ITU". We are now less than eight months away from the opening day of the next regular ITU Plenipotentiary Conference in Kyoto on September 19, 1994. In my remarks today, I would like to discuss the main challenges which will face the "new ITU" in the years ahead, and to focus on two of the most important strategic issues which will -- or should be -- discussed at Kyoto: the role of the ITU as we move from international to global telecommunications systems and the role of the private sector in the ITU. 1. Telecommunications in the Global Information Society At one level, the movement from international to global telecommunications is simply a move from a world in which telecommunication services between countries were jointly provided through connecting agreements between national monopolies, to a world in which these services are being offered by individual companies or by groups of companies in a number of countries, usually in competition with domestic suppliers. Many of the major telecommunication service providers are in the process of extending their operations outside their national markets into other countries, either by establishing operations in other countries, through acquisitions and mergers, or by creating strategic alliances. In the process, they are becoming multi-national, trans-national and even global operators. At a deeper level, the emergence of global telecommunications operators simply reflects a number of profound changes that are taking place in our economy and society. These forces underlie the trend we see today to globalization in telecommunications, and in many other areas. Telecommunications is at the heart of a far-reaching revolution which is taking place, and driving the world toward the global information society of the twenty-first century. 2. Key Trends What are these trends? And what are their implications for the "new ITU"? Trend #1 - Technological Convergence The concept of "technological convergence" has gained wide acceptance as the central paradigm underlying a number of key trends in telecommunications and information technology. Computer and telecommunications technology have converged. This is reflected in a number of developments - in the digitalization of switching and transmission, in the development of computerized signalling and network management techniques, in the decentralization of network intelligence, and in the rapid growth of computer-based, value-added telecommunication and information services. Wired and wireless telecommunication systems are also converging. As a result of the "radio revolution", wireless systems are interconnecting - and in some cases beginning to compete - with networks at every level, ranging from LANs through terrestrial cellular telephone systems to satellite-based mobile communications. Telecommunication, computer, broadcasting and information technology are beginning to converge into broadband-based multimedia and advanced personal communication systems. We have even started to see a beginning of a new trend - the entertainment and publishing industries are approaching us, leading to new convergence complexities. As well as posing new challenges for the ITU's standardization and radiocommunication functions, these patterns of technological convergence indicate the need to involve new participants in the work of the ITU. Trend # 2 - The Changing Structure of Telecommunications Market forces unleashed over the past two decades by the combined effect of technological developments, policy decisions by the governments of the most highly industrialized countries, and the requirements of major business users have substantially altered the structure of the telecommunications industry. Telecommunication operators have been separated from government administrations in most 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 value-added to basic. Corporate communication systems have become an important segment of the telecommunications industry, a segment in which many significant developments have taken place outside the boundaries of the traditional public network providers. Some big business users of telecommunications have become operators of their own international private networks, out of a desire for strategic control of their information resources or out of dissatisfaction with the offerings of established carriers. Today's ITU does not fully reflect the dramatic changes that have taken place in telecommunications. The Union remains largely the preserve of dominant carriers, with little active participation by new players in the telecommunications industry or by major users. Again, this trend strongly suggests the need for greater private sector participation by the new players in the telecommunications industry. Trend # 3 - The Evolving Role of Government 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 traffic, as well as in many of the most dynamic economies in the developing world, particularly in South-East Asia and in Latin America. In the future, in these countries government will no longer be an operator. It will be a policy-maker and a regulator, providing public interest oversight to an industry which is increasingly private and competitive. It does not follow from this trend that the same approach to developing telecommunications can be applied in every country. Indeed, as demonstrated by a report recently published by the ITU , even among countries which have liberalized their telecommunications, there is considerable variation in regulatory arrangements. In spite of these qualifications, the trend among the world's strongest economies is clear. Although countries with liberalized telecommunications constitute a minority of ITU Members, they make a preponderant contribution to the work of the ITU, both financially and through the provision of technical expertise. As well as supporting the need to involve non-governmental participants in the work of the ITU, the changing role of government in global telecommunications raises several strategic questions of vital importance for the future of the Union. What new products and services will government members require to assist them in discharging their policy and regulatory responsibilities? How can non-governmental players be given a greater voice in ITU decision-making processes without infringing on the sovereign rights of nations? How does the changing role of government affect development strategies, particularly in the Least Developed Countries (LDCs)? Trend # 4 - Globalization Questions of national sovereignty are complicated by the emergence of new telecommunication systems and services which are no longer "inter - national", but truly global. The proposed Low Earth Orbit (LEO) mobile satellite systems are one example of this new phenomenon. So are the strategic alliances and mergers and acquisitions I have already referred to that are being put in place by major national operators with the aim of offering "one stop shopping" to customers in different countries. Increasingly, these issues cannot be dealt with in isolation, as questions purely of telecommunications policy. 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. These developments raise the critical question of how domestic and international institutions, such as the ITU and its members -- which are based on the premise of national sovereignty -- can effectively regulate today's global, "borderless" telecommunication systems, which are largely developing in the private sector and outside the scope of government control. Trend # 5 - Human Development in the Information Society The gap in telecommunication benefits between developed and developing countries has been a long-standing concern to the ITU. While significant progress has been made in closing this gap in some countries and regions of the world in the years since the Arusha Declaration and the report of the Maitland Commission, in other areas, the gap has remained. This must remain an issue of primary strategic importance to the ITU. Even in the developed world, the benefits of advances in telecommunications are not being equally shared. From the perspective of the human need to communicate, so as to be able to participate in the economic, social, cultural and political life of the global information society, development issues should be seen as a general problem of the human condition, common to people everywhere. In addition, there is growing interest in the relationship between the development of telecommunications and the preservation of the natural environment, as well as growing concern about the impact of some new communications technologies on human health. 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 emergence of these issues at the global level indicates that the ITU should expand its policy capabilities and become involved in dialogue with a wider range of organizations and institutions at the international level, if it seriously wants to promote a more comprehensive approach to issues of the global information economy and society. 3. Challenges Facing Members and "members" in the Restructured ITU Throughout the Union's history, the private sector has played a very important role in the activities of the ITU. Today, more than 250 companies and organizations, other than Administrations, take part in the work of the ITU. Together, they contribute about 10% of our budget. Beyond this, they make an enormous contribution in kind, particularly to the work of the Standardization and Radiocommunication Sectors. I am also pleased to say that many private sector organizations have already joined the ITU's new Development Sector. However, if the new, restructured ITU is to attain the goals set for us by its Members, and continue to play a leading role in international telecommunications, the participation of non-administration players will have to be enhanced. Indeed, our Additional Plenipotentiary Conference in December 1992 passed a resolution specifically asking us to review this question. The trends I have outlined clearly have important implications for all ITU members. To deal with them effectively, new patterns of partnership will have to be developed to unite the interests of government and the private sector in the development of global telecommunications. The public sector can no longer do it alone. Nor, may I venture to suggest, can the private sector. Let us look at the reasons why this is so. Member Administrations have lost some of the independence they traditionally enjoyed in establishing telecommunications policy. In most cases, decisions can no longer be made on the basis of purely national considerations. International and regional developments must be taken into consideration, as must the actions of trading partners. In 1993, steps taken in North America (NAFTA) and Europe (EU, Maastricht) emphasize these trends. At both the national and international levels, there is also a growing interdependence between telecommunications and other areas of policy and regulation, particularly in the field of economics. Again, in 1993, the GATT breakthrough is a case in point. These trends are increasing the complexity of telecommunications policy- making. At the same time they are - or should be - moving telecommunication policy considerations toward the centre of national policy agendas, in both developed and developing countries. But to respond effectively, policy-makers will have to gain a greater understanding of how the private sector works, and come to appreciate both the possibilities and limits of government regulation. For their part, telecommunication network operators, service providers and product suppliers face equally complex challenges. Business opportunities are expanding in both domestic and international telecommunication markets at growth rates well above the economy as a whole. But so is competition, between established players and from new entrants. The explosive growth potential of the telecommunications industry has proportionally increased the economic value of frequency allocations, standardization recommendations, and development initiatives - and potentially increased the value of ITU products and services to non-governmental participants. To capture the public and private benefits of the telecommunications revolution, all the members of the ITU -- both big-"M" and small-"m" must work together to ensure that the products and services provided by the ITU not only anticipate and respond to the direct needs of the Union's public and private participants, but that they serve the best interests of mankind as a whole. The central strategic challenge facing the ITU is to adapt an intergovernmental organization based on national sovereignty to the emerging requirements of the global information society, in which telecommunication is becoming an increasingly important business activity, as well as remaining a key socio-economic infrastructure and an essential public service. 4. Towards a "Really New" ITU From the foregoing analysis, it should be clear that the trends which are transforming telecommunications from an international government service into a competitive, global business opportunity will have a profound effect on the ITU. To respond to these challenges, I have recommended to the ITU Council that the following strategic policies should be considered by the Kyoto Plenipotentiary Conference as a guide for the Union's activities in the 1994-98 period: * The ITU should continue to be guided by the goals and principles that are set out in the Constitution. They are the "moral compass" of the ITU. They help to define our role and distinguish it from those of other members of the telecommunications community. * First and foremost among these is the goal of fostering and facilitating the global development of telecommunications for the universal benefit of mankind. This is a practical challenge of immense importance to the international community. In the twenty-first century economic, social and cultural development, as well as global peace and security, will depend on good communications. * The symbolic functions of the ITU are also very important. Symbolically, the ITU represents the rights and obligations of all members of the global community. It seeks to advance the common interests of mankind in telecommunications through the rule of law, mutual consent and cooperative action. Its actions are based on fundamental respect for the human need to communicate and recognition of the role that telecommunications increasingly plays in sustainable economic, social, cultural and political development. * Against this background, the mission of the ITU should be "to provide the products and services required by the global telecommunications community that are best provided by an international organization". * Carrying out this mission in the changing telecommunications environment will require the ITU to become an open organization, responsive to the needs of all members of the telecommunications community, client-oriented, entrepreneurial and risk-taking in its behaviour. * As part of the process of becoming a more open organization, and to reflect the changing telecommunications environment, participation by non-governmental entities in Union activities must be enhanced. * The scope of ITU activities should be enlarged. Information technology is breaking down the barriers that existed between the telecommunications, broadcasting, computing, entertainment and publishing industries. Major users in resources, manufacturing and services are developing their own networks. Advanced communications technology is linking all these systems into the multimedia networks of the future. All of these elements - as well as others not yet imagined - will be part of the global telecommunications community of the future. * To respond to the needs of its increasingly diversified clientele, the ITU should segment its markets much more clearly than it does today, target the needs of its clients, and offer a much more diversified portfolio of products and services. Some of these (e.g. in the domain of radio and telecommunications regulations) may continue to be of primary interest to governments. Others (e.g. in the domain of standardization) will be of primary interest to operators, industry and users. It follows that different approaches will have to be developed in different parts of the organization to respond to these divergent needs. * As part of this process, the ITU must become a much more effective communicator, both with its members/clients, with other intergovernmental and non governmental organizations involved with telecommunications at world and regional levels, and with its own staff. Implementing this vision of a new ITU will require an interrelated set of strategies. In the main, these strategies can be developed and implemented within the structure decided by the APP. However, there are two critical areas in which further structural reform will have to be considered -- the role of the ITU in regulating global telecommunication systems, and the rights and obligations of private sector organizations that participate in the work of the ITU. Given the dramatic changes that are taking place in the telecommunications industry, the Members of the ITU should begin to deal with these questions at the Kyoto Plenipotentiary Conference. There will be a lot of good material to assist them with this task. The ITU Council has established a special working group to prepare an overall strategic plan for the ITU for the next plentipotentiary period. In addition, the secretariat is preparing reports for Council in response to APP resolutions 4 and 15, which dealt respectively with the need to enhance participation by "members" in ITU activities, and the need to establish a forum where ITU members could discuss telecommunications strategies and policies. I am very pleased to say that Japan is playing an active role in all these preparations. With the excellent cooperation and support provided by the Japanese administration, I am looking forward to the Kyoto Plenipotentiary Conference. I am confident that it will be not only a great success, but another landmark event in the long history of the ITU. See The Changing Role of Government in an Era of Telecom Deregulation, Report of a Colloquium Held at ITU Headquarters (ITU, Geneva, 1993)