This bill will unleash enormous quantities of investment in every aspect of communications and computing. It’s a bipartisan victory . . . [that will lead to] a technological revolution that will empower American families.
These words of Vice President Al Gore were pronounced on February 1, 1996—the day that the U.S. Congress passed a bill overhauling the nation’s communications laws. The vision of the future NII embodied in Gore’s words is fairly common across the five countries. The vision is that of broadband communications that are interoperable as though a single network, easily accessible and widely distributed to all groups within society bringing business, education, government services directly to households and facilitating peer to peer communication throughout society. In short, vision is a future information society enabled by modern information and communication technologies that will provide vast opportunities for new economic activity and a better way of life for everyone.
At this general level, the social visions appear aimed largely at mobilizing public and political support to create an NII movement that will reform telecommunications and launch new technologies, applications and use. However, the social visions also have unique local content in each country. Korea is concerned that the NII will increase “transparency” in civil society. Singapore seeks a balance between the openness possible through modern communications technology and its “communitarian ideology.” France desires to preserve and promote its “culture” while limiting the invasion of foreign cultures which the new media permits. Japan envisions a multimedia “information society.” And the United States’ information superhighway is aimed at “empowering” American families through providing them with choice from a wide array of information, services and entertainment to be available in the new information society. This unique local content is an important part of the NII movement in each country because it appeals to basic social values in each society, thereby differentiating and giving special meaning to country efforts.
STRATEGY AND POLICY DESIGN
The NII plans in Japan and the United States are national plans aimed at national goals. For the most part, they are not influenced by outside considerations. In contrast, the NII plans of Singapore, France and Korea are all strongly influenced by outside considerations. Singapore’s plan is aimed at maintaining its position as a business hub in the Asia-Pacific region and achieving the status of developed nations. France’s plan is influenced by decisions of the European Union and by its desire to be a first mover within Europe in liberalization of telecommunications so that domestic firms are well positioned for the coming competition. Korea’s plan is influenced by its desire for membership among the advanced nations of the world and for leadership in the Asian sphere.
First mover strategy
Although not directly stated in official documents on NII, it appears understood by most countries that the first movers in building NII will have a comparative advantage with respect to gaining the expected economic opportunities. This is because the first movers who innovate with the new technology have early access to the new markets for the technology. In addition, the first movers sometimes set the de facto standards that others have to follow, which provides them with additional competitive advantage from technical leadership. Japan and the United States are viewed by the other countries in the study as the two key countries that will compete head to head for leadership in the new technologies and new services.
However, as discussed below, it is not clear who will be the first mover in standard-setting. While many standards in the computer industry are de facto, government or industry collaboration in any of the three major markets (Europe, Japan or the United States), or especially between any two of these markets, could set standards for their own NII that would become standards for the others, or at least have to be dealt with by the others in order to sell in these major markets. There is strong incentive among the innovators to postpone standard setting so they can reap the benefits of innovating before others enter the market, whereas there is equally strong incentive among fast followers to get standards set early so they too can make the new technologies and use them.
Fast follower strategy
Countries which feel they cannot be leaders in NII, such as Korea and Singapore, nevertheless, feel that they can be fast followers, following closely behind the first movers and gaining advantage relative to other countries that are slow to recognize or seize the opportunity. Singapore has consistently adopted new telecommunications and transportation technologies as an explicit strategy to gain advantage in attracting multinational firms relative to much larger countries in its region such as Malaysia, Thailand, Indonesia, Vietnam and China. It views NII as a means of reinforcing its ambition to become a business center not only for multinationals operating in the Asian region but also for other countries’ domestic firms who do business with the multinationals.
Competition in telecommunications is another strategy envisaged in NII plans of the five countries, although to differing degrees. Free market competition in information and communications services is viewed as a key strategy for achieving the NII on the grounds that competition will stimulate innovation and speed up deployment. Thus, a key element of NII plans is liberalization of telecommunications, allowing domestic telephone, cable, and TV providers to enter each others markets, cross media ownership and entry of foreign competitors into domestic markets. The liberalization strategy assumes that free competition among a large number of suppliers who differentiate themselves in terms of products and services will emerge.
It appears that Japan and Korea will liberalize very slowly, leaving their existing monopolies more or less intact with the vast majority of the domestic market even though allowing new entrants to appear. It also appears from developments in the United States and France that the public and private monopolies that existed before liberalization might be replaced by oligopolies involving a few telecommunications and media giants that control production and distribution, or content and conduit. In the United States, these giants will emerge from a competitive free for all between companies grouped in various strategic alliances.
In Singapore, the structure of competition has been decided by government allocation of information service provider licenses to three large domestic firms. The first was given to the recently privatized, but still government owned, Singapore Telecoms. The second was given to Singapore Press Holdings by transfer of a government developed scientific network. The third was given to Sembawang as the outcome of an international competition. The only foreign competitor, AT&T, lost out even though it had the lowest bid.
These developments suggest that the recent round of liberalization efforts will require future government action to ensure real competition in domestic markets and to allow foreign competition into domestic markets as required by evolving international agreements on tariffs and trade.
Standard setting strategy
Country plans assume that the big players and big markets will create the initial technologies and set technology standards. Some countries such as Japan, might prefer that technology standards be set by international standards organizations such as the International Standards Organization, but also recognize that standards are more likely to evolve de facto from industry leaders or from negotiation and consensus among industry players. Consequently, Japan’s strategy is to be a key player in the United States and Europe--the two leading markets in the world in addition to Japan itself. The strategy of France is closely linked with that of the European Union (EU). While any single EU country such as France, might not be able to set standards, the EU could be a first mover in standard setting because its markets are large enough to compel others to follow. Moreover, Europe has set its own standards in the past as illustrated PAL for TV sets and video recorders, GSM for analogue cellular and TDMA for digital cellular. The strategy of small countries such as Singapore, and countries that are not major players such as Korea, is to wait until the standards become clear before settling on their technology direction, while also trying to make substantial contributions to international standards development that would be of benefit to their country.
This wait-and-see approach is sound strategy because countries need to be consistent and compatible with the de facto standards set by the larger players and markets in order to ensure connectivity and interoperability at a global level and to be able to export NII products and services they might develop. The Singapore case illustrates that this nation state has been very explicit about monitoring technology standards, waiting to adopt until the standards are clear, and adopting de facto or international standards as they appear (e.g., the TCP/IP standard for the Internet and ATM technology for broadband communications).
Policy design for NII
The foregoing strategies (and others as well) might be embedded in an explicit policy design for the NII or the design might be left to evolve. Thus, a key problem in NII development is how to develop a policy design for the NII. Policy design means the establishment of institutions and/or specific policies and plans that will shape the evolution of the NII. The five country cases detail the institutions, policies and plans being followed in each country and present important differences. Singapore illustrates an explicit case of policy design in the establishment of a new institutional framework as well as specific policies and plans for NII development. In contrast, the United States illustrates a case of “order without design” through a dramatic shift from government leadership to market institutions.
The Singapore case suggests that policy design appears more feasible in small, concentrated states with centralized public institutions and control over the private sector. Singapore’s National Computer Board was the institution traditionally charged with promoting computerization in the city state; after successfully computerizing government agencies and launching government-private systems such as TradeNet, and promoting computerization throughout the country, the NCB developed IT2000 which set out a broad vision for the integration of computers, communications and content and set out to realize the vision. However, other government ministries with roles in communications and information began to recognize the importance of IT and the implications of NCB’s leadership role in IT2000, and pushed to have matters taken out of NCB’s hands. NCB stumbled in implementation of IT2000, which provided the opportunity for other ministries to argue that policy design needed to be done at a higher level. The Committee on National Computerization, which had launched Singapore’s IT plans and the NCB in the 1980’s, was reconstituted as the National Information Technology Council with these major players as participants with the result that the roles of major participants were sorted out and the NCB reengineered to fit into the new role structure. What also emerged was a decision to create domestic communications companies that could compete with big MNCs both domestically and abroad, be strong enough to forge alliances with MNCs, or both, rather than be overrun by foreign competitors. So, the telecoms authority licensed three ISPs which were all domestic enterprises already in the communications sector: Singapore Telecom, Singapore Press Holdings, and Sembawang. For “communitarian” reasons (domestic political reasons), it adopted a two wire to the home policy and for global interoperability reasons, adopted emerging technology standards for internet and broadband communications.
Policy design for Korea’s Information Infrastructure (KII) has been characterized by strong central government leadership as indicated by the KII Plan. Planning for national projects has been a tradition of Korea as was seen in Five-Year Economic Development Plans and NBIS Plans, each of which were implemented under the leadership of the Economic Planning Board and National Computerization Board, respectively. A new steering committee headed by the Prime Minister, and attended by related Ministers was established to spearhead the KII Plan.
In contrast to Singapore and Korea, there is no policy design in the United States, but there is a new order nevertheless--free market competition in telecommunications and the media. France too has rejected government-led grande projets in the tradition of Colbertism and turned instead to deregulation of telecommunications to promote market competition. Japan is engaged in a power struggle between powerful ministries aligned with various private corporations that have competing visions of the institutional framework under which the NII should be developed.