INTERNATIONAL TELECOMMUNICATION UNION		

TELECOMMUNICATIONS IN THE ERA OF GLOBAL ELECTRONIC COMMERCE:
THE SEARCH FOR NEW FOUNDATIONS

Dr Pekka Tarjanne, Secretary-General
International Telecommunication Union

20 March 1996
Beijing International Convention Centre,
People’s Republic of China

Distinguished Guests,
Ladies and Gentlemen,	
It is a pleasure to be able to be here with you this evening. During the course of today’s programme, you have already heard a great deal about the new technologies, applications, products and services that are making it possible to do business of all kinds electronically, by using computers and telecommunication networks.  Tonight, I would like to take the opportunity to look at some of the broader issues brought about by the rapid changes taking place all around us -- not only as they affect commerce, but as they affect social and economic life, and relations between nations.
Let us start with technology.
Last year, the ITU celebrated its 130th birthday. Founded in 1865 to manage the interconnection of telegraph traffic, the Union has witnessed enormous changes in the field of telecommunications. Another period of evolution, as fundamental as the development and popularization of the telephone, is upon us now. The way people define and use communications is being altered forever by the convergence of telecommunication, broadcasting and computing technology. Today’s telecommunication system has become a complex web of increasingly intelligent networks made up of fibre optic cables, traditional copper wires, satellite systems, mobile radiocommunications-based systems, and high-speed global computer systems.  State-of-the-art networks are capable of transmitting voice, text, data, images and full motion video, anywhere in the world.  They support advanced network-based communication services, such as call forwarding, caller-identification and teleconferencing, and provide world-wide access to electronic information databases.
These technological changes have led some people to conclude that we are entering a completely new era, often described as “the global information economy”, or the “global information society”, or simply as “the information age”.  In this new age, everything is supposedly different from the way it was in the past.  But technology cannot change the world all by itself.  It all depends on how it is used, and on the choices we make.  The future is not as simple, clear or certain as it is often portrayed.
It is certainly true that technology has made it possible to do some things very differently -- and even to do them “globally”.  Let us take the example of the financial services industry, which has felt the effects of technological change more than most.
The financial services industry is now one of the largest customers for telecommunication and information technology services worldwide. The world’s large banking institutions now spend billions of dollars each year on information technology.  Developments in telecommunications and information technology have been one of the main factors enabling the growth of the financial services industry in recent years. And the changing requirements of the financial services industry have in turn been one of the main demand drivers behind the impressive growth of telecommunications over the past decade.
Modern telecommunications and information technology has made truly global 24-hour financial services possible through an international clearing mechanism, known as SWIFT, which permits 24-hour international banking transactions and settlements. Today, the SWIFT network carries over US$ 2.3 trillion dollars each day in financial transactions, an amount more than the annual GDP of all but the richest countries
Let’s look at another example of how computer and communications technology are changing the way people are doing business -- even at the ITU!
All of us here tonight are aware of the soaring popularity of the Internet and other on-line services as a way to transfer information. But these networks are  also rapidly expanding as a medium for electronic commerce - for exchanging goods, services and money.  If you consult the ITU home page on the World Wide Web, you can read my speeches and even subscribe electronically to ITU publications!  Since we launched this service, last summer, we have recorded sales of over three quarters of a million Swiss Francs -- for the publications, not my speeches I am sorry to say!
With the Internet currently doubling in size every year, and improved versions now being developed by many telecommunications carriers, the potential for commercial activity is enormous. New electronic cash systems currently under development may soon replace the credit card as a means of payment, and allow the network to be used for truly secure financial trading. These new systems have the potential to one day by-pass hard currency altogether by developing smart cards and electronic wallets which people carry with them instead of notes and coins.  This is an area in which China has shown global leadership through the “Golden Card” project.
A further manifestation of the development of electronic commerce is the use of freephone numbers. In the United States, an estimated US$ 100 billion worth of business is conducted each year over freephone services. In 1996, the ITU’s Telecommunication Standardization Sector adopted a new global standard (ITU-T Recommendation E.169) which defined a system of “Universal International Freephone Numbers” (UIFNs) which will create a truly global marketplace for electronic commerce conducted over telephone lines. A supplier can register a freephone number which will be unique throughout the world. This will enable customers wherever they may be located to contact and deal with the supplier at no cost to themselves
Although the vision of an emerging global electronic marketplace for goods, services, money has some appealing features, there are other aspects that are clearly more problematic.  Some of these problems are essentially technical.  There are important issues to resolve in areas such as network security, for example. But the new global networks raise many more fundamental concerns about  the regulation of international commerce -- whether it involves trade in goods, services, currencies, information or ideas, -- and the impact of these changes on national sovereignty, political institutions, and way of life.
Today, issues surrounding international trade are of great interest to all nations. The world’s trading patterns are in a period of transition, not least because of the new ‘electronic trade routes’ being set up over globally-linked computer networks. Ancient trading caravans packed with exotic goods have been replaced today by streams of bits and bytes, as people place orders, arrange transportation, and provide payment globally via telephones and computers. The trade routes of tomorrow will be built with fibre optic cable and sophisticated constellations of satellites. They will provide almost instantaneous transmission of data, information, ideas, and entertainment across the globe.
Those of us involved in telecommunications must recognize that the world no longer regards telecommunications only as a public service provided by national administrations and managed internationally via agreements between governments.  In the Information Age, telecommunication is increasingly being seen as a commercial service which can be provided on a competitive basis by domestic or international suppliers, both public and private.
The one hundred or so members of the World Trade Organization now regard  telecommunications as a traded service.  This reflects the reality that telecommunications is the backbone of world trade in goods and services.  And that is why the ITU is working closely with the WTO to examine the implications of free trade agreements for the regulation of national and international telecommunications.
The question of how best to regulate global networks and the services they carry is complex and difficult.  We are today in a period of transition, in which policy-makers and regulators, often under conflicting pressures, are looking for global solutions which can also be applied to help resolve national problems.  One thing is becoming clear:  in the global information age the scope for individual countries to act alone is narrowing. The free-form nature of large, global networks means that governments are finding it increasingly difficult to control the kinds of material, or services offered.  More than ever, international cooperation is needed.
The need for better international cooperation is particularly evident if we look at problems associated with the regulation of some of the kinds of content carried on global information networks.  In the culturally and socially diverse global community, there will always be some information that certain countries find unacceptable, either because it is illegal, or because it is felt to be harmful to a certain part of the population, or because it conflicts with traditional values or established political practices.
The issue of how to regulate electronic content is made more difficult by the fact there is no way to distinguish between bitstreams of data carrying useful, beneficial data, and those carrying undesirable material.  And then there is the sheer technical difficulty of restricting user access to such systems to be considered, as well as the plainly impossible task of monitoring the activities of millions of users. Finally, and most importantly, there is an ethical problem.  What is the right balance between, on the one hand, regulating the content of telecommunications services to prevent social harm, and on the other hand giving people the fullest possible freedom to exercise fundamental human rights -- such as freedom of expression and access to information?
Like all the problems of the global information age, these problems cannot be solved by any one country acting alone.  They must be solved by the members of the international community working together to ensure that fundamental human rights are protected, while respecting the differences that make the world not only interesting, but worth living in.
The old rules that guided the development of international telecommunications are clearly changing.  What lies ahead? 
In my view, the task of defining new rules for the new game of the global information society should involve all players -- governments, the private sector, major telecommunication users, and ordinary citizens.  And in undertaking this task, members of the international community should be guided by certain fundamental principles.
What are these principles?  Unfortunately, I cannot claim to know the answer to this question.  But I do have some suggestions.
The first is the principle of internationalism. While we all acknowledge that the world is shrinking, and inter-dependence between nations is growing, we must strive to ensure national initiatives are harmonized and coordinated at the regional and international levels.
The second is the principle of universalism. In the past, the development of the telephone network has been guided by the desire to achieve universal service.  Should this not continue to be our goal in the future?  In the global information society of the twenty-first century, universal access to basic communication and information services should be seen as a fundamental human right.  Otherwise, the gap between the information “haves and have nots” will continue to grow, and we will never find the famous “missing link” to close the gap between developed and developing countries.
This brings me to my third principle, human values.  In the information age, telecommunications will be the most important industry in the world.  But we must not lose sight of the fact that telecommunications does not exist for itself; its purpose is to serve people, to improve communications between them, and to help them better their lives.  The values that are important to us as individuals and as members of society should also guide us as members of the international telecommunications family.  These values differ between individuals and between countries.  They may centre on the search for knowledge, on the development of human potential, on service to the family, community or country, or on other equally worthy goals.  But though our values and goals may differ, we must always seek to understanding of our fellow human beings, and to respect the things that make us different.  If people everywhere were all the same, communication would not be necessary.  Happily, this is not the case.  As long as there are human beings, there will be a need for communications, and the basic values that makes it possible.
As global electronic markets continue to open up, I believe that these and other principles will provide the cornerstone   of a new governance structure for global telecommunications. The ITU, as a body which has a membership which comprises a healthy mix of public and private enterprises, and which has a 130-year history of leading the development of ground-breaking technologies such as the telegraph, the telephone, the fax machine, and the mobile phone, is well-placed to again lead the way into a new era of global communications.  As industry leaders, you will be determining your needs, the needs of your users, and the future of your industry, as we head into the next millennium. Let us take seriously our responsibility, and work together to create not just a new world, but a better one.
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