In China, however, the government seems to believe it can have it both ways. Post and Telecommunications Minster Wu Jichuan told reporters at a news briefing, “By linking with the Internet we don’t mean absolute freedom of information. I think there is general understanding about this. If you go through customs, you have to show your passport. It’s the same with management of information.” Wu said Beijing will adopt unspecified “management measures” to control inflows of data on all telecommunications services as they evolve in China. “There is no contradiction at all between the development of telecoms infrastructure and the exercise of state sovereignty. The International Telecommunications Union states that any country has sovereignty over its own telecoms.” He may not understand that to implement full Internet access and maintain censorship, you would almost have to have someone looking over the shoulder of every user.
In France, the pioneering on-line service, Minitel, has fostered a community of information publishers and stimulated broad familiarity with on-line systems generally. Even though both terminals and bandwidth are limited, Minitel’s success has fostered innovations and provided lessons. France Telecom is investing in a packet switch data network.
In Germany, Deutsche Telekom lowered the price of ISDN service dramatically in 1995. This has led to a significant increase in the number of users connecting personal computers. Bringing down ISDN prices was clever, because lower prices will foster the development of applications that will help hasten the arrival of a broadband system.
The level of PC penetration in business is even higher in the Nordic countries than in the United States. These countries understand that their highly educated workforces will benefit from having high-speed connections to the rest of the world.
Although the interest in high-tech communications systems is probably greater in Japan than in any other country, it is very difficult to predict the fate of the information highway there. The use of personal computers in businesses, schools, and homes is significantly less widespread in Japan than in other developed countries. This is partly because of the difficulty of entering kanji characters on a keyboard, but also because of Japan’s large and entrenched market for dedicated word-processing machines.
Japan is second only to the United States in the number of companies investing in developing both highway building blocks and the highway’s content. Many large Japanese companies have excellent technology and a record of taking long-term approaches to their investments. Sony owns Sony Music and Sony Pictures, which includes Columbia Records and Columbia Studios. Toshiba has a large investment in Time Warner. NEC’s corporate slogan, “Computers & Communication,” coined in 1984, anticipating the highway, is an indication of its commitment.
The cable industry in Japan was overregulated until quite recently, but the rate of change is impressive. The Japanese phone company, NTT, has the largest valuation of any public company in the world and will play a leadership role in every aspect of the highway system.
In South Korea, although significantly fewer PCs per capita are being sold there than in the United States, more than 25 percent of the machines are going into homes. This statistic demonstrates how countries with a strong family structure that put great emphasis on getting ahead by educating children will be fertile ground for products that provide educational advantages. One appropriate use of governmental authority will be the creation of incentives to encourage low-cost connections for schools and to ensure that the highway reaches rural areas and low-income areas too.
Australia and New Zealand are also interested in the highway, partly because of the great geographic distance between them and other developed countries. The phone companies in Australia are being privatized and the market opened to competitors, encouraging forward-looking plans. New Zealand has the most open telecommunications market in the world, and its newly privatized phone company has set an example of how effective privatization can be.
I doubt that any of the developed countries, including all of Western Europe, North America, Australia, New Zealand, and Japan, will end up more than a year or two ahead of or behind the others unless poor political decisions are made. Within each country some communities will get service earlier than others because of their economic demographics. Networks will go into richer neighborhoods first because that’s where residents are likely to spend more. Local regulators may even find themselves competing to create favorable environments for the early deployment of the highway. No taxpayer money will be needed to build the highway in industrialized countries with pro-competition regulations. The speed with which the highway is brought directly into homes will correlate in large part with the per capita gross domestic product (GDP) of a country. Despite this, even in developing countries the connections into businesses and schools will have a huge impact and reduce the income gap between these countries and developed ones. Areas such as Bangalore in India, or Shanghai and Guangzhou in China, will install highway connections to businesses that they will use to offer the services of their highly educated workers to the global market.
In many countries nowadays, the top political leaders are making plans to encourage highway investment. The competition among nations trying either to take the lead in development or to make sure they don’t fall behind is creating a very positive dynamic. As different countries try different approaches, everyone will watch to see what works best. Some national governments may rationalize that if they decide they must have a network right away and private enterprise is not willing to build it, they will have to help build or fund pieces of their information highway. A government bootstrap could, in principle, cause an information highway to be built sooner than might happen otherwise, but the very real possibility of an unattractive outcome has to be considered carefully. Such a country might end up with a boondoggle, white-elephant information highway built by engineers out of touch with the rapid pace of technological development.
Something like this happened in Japan with the Hi-Vision high-definition television project. MITI, the powerful Ministry of International Trade and Industry, and broadcasting company, and NHK, the government-run TV broadcasting company, coordinated an effort among Japanese consumer-electronics companies to build a new analog HDTV system. NHK committed to broadcasting shows a few hours a day in the new format. Unfortunately, the system was rendered obsolete before it was ever deployed, when it became clear that digital technology was superior. Many Japanese companies found themselves in a difficult position. Privately, they knew the system was not a good investment, but they had to maintain their public commitments to the government-sponsored format. As I write this, the “plan of record” in Japan remains to move to this analog system, although nobody actually expects it to happen. Japan will, however, benefit from the investment in developing high-definition cameras and displays that the Hi-Vision project encouraged.
Building the information highway will not be as simple as saying “Run fiber everywhere.” Any government or company getting involved will need to track new developments and be prepared to shift directions. Such flexibility requires technological expertise that, with the attendant risks, is better covered by industry.
Competition in the private sector will be fierce on many fronts. Cable, phone, and other companies will compete to provide the fiber, wireless, and satellite infrastructure. Hardware companies will fight to sell servers, ATM switches, and set-top boxes to network companies, and PCs, digital TVs, telephones, and other information appliances to consumers. At the same time companies in the software business, including Apple, AT&T, IBM, Microsoft, Oracle, and Sun Microsystems, will be offering software components to network providers. Eventually, millions of companies and individuals will be selling software applications and information, including entertainment, across the network that springs up.