Telecommunications Policy Research Paper

1. Historic Role Of Policy Makers

Over the past 150 years governments throughout the industrialized world, and today in almost all countries, face two sets of issues concerning telecommunications: what to regulate and why, and how to leverage this technology for national advantages. As new forms of telecommunications appeared, governments have had to make judgments about them. In effect, they have had more forms of technology to regulate, create policies around, and exploit. New technologies will emerge that will create the need for additional policy considerations. While technologies have changed over the years (e.g., adding cell phone where wired telephone systems exist, use of pagers), the issues facing policy makers have remained fairly constant over the past century and a half.

There is a specific set of existing technologies which routinely require the attention of policy makers concerned with communications. They are all electronic, often use computer technology, and are widely deployed in many societies. These include: telegraph, telephone, wireless telephones, radio, television broadcasting, cable television, satellites, wireless information appliances (such as a pager), and most recently, the Internet. This research paper will not cover paper-based forms of communications, such as newspapers and magazines, because those topics have different issues from those of electronically based communications. The majority of the deployment of electronically based technologies continues to be in the industrialized world, although usage is expanding all over the planet. Some technologies are more ubiquitous than others. For example, radio is virtually everywhere, even where there is no electricity, thanks to batteries and hand cranks, and their relatively low cost. On the other hand, at the beginning of the twenty-first century, the Internet is most widely deployed in North America and in Western Europe. Much of what we know about telecommunications policy issues is drawn from the experience of Europe and North America, seats of the earliest industrial economies.

Historic patterns suggest future ones. Over the past two centuries new technologies emerged, such as the telegraph in the 1840s, the telephone in the 1870s, and satellites in the 1950s. At first, little policy attention was paid to a new technology because its impact was minor. As it deployed within a nation, policy makers then faced several questions. To what extent should the national government make a specific technology available to the majority of its citizens? Should the government support further research and development to improve a device’s performance, lower its costs, or to get it further deployed? If the technology is related to an existing one already regulated, what should the regulations cover? Pricing? Access? Monopolistic existence? In the special case of broadcasting (radio, TV, cell phones), governments have to allocate bandwidth for the transmission of signals. That effort requires both technical knowledge on the part of regulators, and also a strategy for allocating frequencies among contending technologies. The process of allocation has increasingly become more complex, particularly in the twentieth century, as additional technologies emerged, especially regarding wireless.

Policy makers have also had to deal with issues of national economic development or defense, thinking through how telecommunications can be leveraged in the interests of the nation. The British government, for example, in the nineteenth century saw underwater telegraphic cable communications as vital to national defense and, therefore, supported the establishment of a global network. The United States did the same thing with satellites in the mid-twentieth century. OECD (Organization for Economic Cooperation and Development) nations in Europe collaborated to create an international standard for cell phone communications as an economic stimulant to the new technology in the last quarter of the twentieth century. At the same time, the United States government made its telecommunications network, originally established for defense purposes, accessible to the public; we know it as the Internet. The reason: primarily to stimulate use of a new technology for economic development. In the last decade of the twentieth century, the American government protected the Internet from practices that would have slowed its deployment, such as the imposition of local sales taxes by state and local governments on transactions conducted over the Internet.

2. Common Issues Shared By Policy Makers

Policy makers traditionally face five key issues with each major form of electronic communications. In addition, new issues are emerging. Some issues are related to national policy considerations, such as defense and economic development, others center on activities of government regulators responsible for implementing legal and policy directives. Each of these five vary in importance, depending on issues of the day (war needs, economic considerations, etc.), but each tends to be constantly evident.

2.1 Economic Development

First, there is the issue of how to use a particular technology for economic development. Can investments in the further development of a technology, such as the use of telecommunications with computers, lead to advances that generate new jobs, sales of additional products internally, and for export? Tax incentives and outright financial subsidies in support of local technology firms and for training of new workers are often the tools of choice of policy makers when they support a new technology for economic reasons.

2.2 Infrastructure Development

Second, there is the issue of how an infrastructure can be built, or should be built, to make the technology either usable or accessible. Telephones are useless unless the majority of a nation has access to the same telephone network. In the 1800s telegraph only became useful when it could reach multiple cities. Postal systems and national highways systems raised the same issues for all nations. A communications technology becomes useful when an infrastructure exists to make it available to the entire nation. Tools of choice are often the same as those used to encourage diffusion of a technology to stimulate economic activities.

2.3 Competition

A third issue concerns the extent to which policy makers wish to encourage competition among service providers or different technologies. In the United States, for example, there is a strong tradition of encouraging competition. That is why there are numerous telephone companies, heavily regulated to ensure competition, but essentially operating in the private sector. European governments have chosen a different path in most cases, namely, to run networks out of national government agencies. In part this was to support a technology that initially would have failed in the marketplace, such as telephone and telegraph services in France in the 1800s. Some governments will thus choose to have a national monopoly, operating in an environment in which competition is not permitted. Either approach still raises the question, however, of what to do when an alternative technology emerges, such as wireless telephones as an alternative to wired phone systems. Are both regulated the same way? Should one be encouraged for other reasons (e.g., national defense or economic development) at the expense of the other?

The economics of implementation prove influential. For example in Africa, wireless telephone systems are seen as less expensive than traditional wired systems because there are lower infrastructure costs involved in deploying such networks. So, African governments frequently support the use of cell phone networks over more traditional telephone systems.

2.4 Access

A fourth issue concerns access to a communications technology by citizens of a nation. To what extent should access to communications technologies be facilitated by the state, and why? These are questions that have long confronted policy makers. In the nineteenth century French policy makers decided to run a national telegraphic network to bring high-speed communications to many parts of France. In the early 1900s the American government implemented policies to encourage use of telephones and, by the end of the twentieth century, was investing tax revenues in providing Internet access to all public schools. In each instance, the nation’s interests were considered: Does it help development of the economy? Do we need it for national defense? Is access a fundamental extension of some national basic belief about the open flow of information? Do citizens demand government stimulated access? Is government involvement essential because of the technical infrastructure or complexity involved, as in the case of building satellite networks to transmit information inexpensively even though the initial network is very expensive?

2.5 Affordability And Pricing

A fifth issue concerns affordability and pricing, with primary emphasis on pricing policies. Natural or national monopolies are normally subject to government regulation. One of the central policy issues concerns what prices service providers should charge citizens. If the service provider is a government agency (e.g., a national telephone network), the state can charge whatever it wants, since the concern is not necessarily to turn a profit. The issue in that situation is to what extent does the government want to make access to communications affordable. If communications is provided to a nation through a network of private companies, as increasingly is the case around the world, then the requirement that these companies be allowed to make a profit on their services becomes essential. The issue, then, is how much profit should a firm be allowed to make. Policy makers struggle with understanding the true costs and profits of a firm or communications industry. They also try to understand the needs of citizens and their ability to pay for such services.

As governments have increasingly evolved into democracies or other forms of representative republics over the past two centuries, the role of information in those societies has become an ever more important issue for policy makers. A fundamental premise of these forms of government is that information about political activities, and hence personal and economic issues, should flow relatively uncontrolled. In more autocratic states, the reverse holds. China is still trying to figure out how to block its citizens from using fax machines and the Internet. Yet, in Central Europe more access to information handling tools and communications is on the rise. In North America, all forms of communications are constantly made available to Americans and Canadians. Communications can also extend to press censorship of books, magazines, and newspapers, or their freedom, as a collateral set of policy considerations implemented at the same time that regulators deal with electronic information handling, such as telephones, television, and radio. The nature of government is, therefore, an integral part of the form of policies implemented toward communications.

3. Emerging Issues In Telecommunications

In the last quarter of the twentieth century new issues began to emerge that required the attention of policy makers. Several, in particular, are of growing importance to governments across the world.

3.1 Governments And Global Economics

As communications companies became global enterprises, implementing worldwide business strategies and policies, policy makers began asking what role should an individual country play in the affairs of such a firm? For example, in the late 1900s, telephone executives in Spain quietly moved into the Latin American economies, buying up local phone companies, thereby increasing control over telephonic practices from offices in Madrid. American communications companies in the same period implemented global satellite networks used to transmit long-distance telephone calls. In the late 1800s, British cable companies overwhelmingly owned and controlled the underwater cable business. This is not a standards discussion, this is about how a government regulates or influences a multinational company. To what extent can it? National egos, public policies toward access to communications, and issues related to national defense all weigh in as influences. Government agencies maintain that they have a critical right and need to regulate activities within their borders. Many firms argue that economies of scale and scope require that they not be constrained by some local policy or practice. It remains a never-ending debate, but, nonetheless, an increasingly important issue. More frequently, groups of nations establish uniform policies and practices, as is evident in the Common Market nations of Europe. Yet, overwhelmingly, nations still set policies and regulate independently of each other.

3.2 Control Of International Flow Of Information

The international flow of information through a variety of electronically based communications technologies profoundly increased during the second half of the twentieth century. Simultaneously, it has become increasingly difficult for governments to control the inflow and outflow of information. For example, Western European governments began regulating what data could come in and out of a nation via telephone lines linked to computers in the 1960s. That worked for a while but eventually technology breached the walls and today information moves around the globe as if there were no national borders. The Internet is the most recent example of that process at work. While some governments are attempting to control the type of information transmitted over the Internet (e.g., political data in China, pornographic materiel in the United States and in Western Europe), the fact remains that anyone with access to the Internet can send and receive just about any kind of information. Is that a problem for policy makers? It can be if there is a compelling need to control some aspect of the flow of information. But what has happened is that the technology with which to move information around the globe easily, quickly, and inexpensively on a massive basis is now reality. What governments should do about that, and their role in the process, remains unclear.

4. Special Role Of The Internet

Yet, another emerging reality concerns the specific role of the Internet and computing. Computers and telecommunications are two sets of rapidly converging technologies. They are also becoming ubiquitous, increasingly available to people. At the start of the twenty-first century, nearly half the population of the world had yet to make its first phone call. Half of the others had regular access to Internet-based information appliances, ranging from computers to e-mail machines, to pagers and cell phones, and all relying on the communications backbone of the Internet. Governments now face basic policy questions about the Internet that would have been somewhat familiar to policy makers in the early 1900s puzzling over what to do about radios, telephones, and later television. Local cultural values, issues of national defense, economic development, and historical and legal realities play roles in how policy makers consider the Internet.

What is most different from earlier considerations, however, is the speed with which the Internet became a policy issue. Widespread use of the Internet can be dated to the early 1990s, although access to it in the United States went back to the 1970s, first for the military and their suppliers, and later for the general public. But for all practical purposes, the world began to use the Internet in the mid-1990s and, by the start of the new millenium, approximately a billion users were online across the globe. As of this writing, conservative forecasters called for a doubling of the number of users by about the year 2005. Policy makers tend to react to emerging technologies at a much slower pace than the spread of the Internet. So, uncertainty and tensions exist. In Western Europe, for example, the OECD has run annual conferences and conducted studies and surveys in order to inform policy makers in member nations about what each other is doing concerning the Internet and about its technology. National policies toward the Internet are being created, while public officials are simultaneously coming to realize that this technology is fundamentally changing many economic and societal structures and practices in ways not seen since the arrival of television a half century earlier, or the automobile nearly three-quarters of a century ago.

5. Common Patterns In Communications Policy

Are there some fundamental conclusions, therefore, that one can draw about the basics of communications policies? Are the profound changes in communications technologies which have occurred in the past half-century subject to some conclusive approaches? Historical precedence is a guide in these matters because governments have had to deal with various forms of telecommunications for nearly two centuries, relying on prior cases and practices. Often the issues involved are less about the nature of the technology and more about its use and costs. The one major group of exceptions are the myriad of regulations required in response to the physics and scientific realities of a technology, such as how to distribute radio frequencies across different types of transmission, e.g., AM and FM radio broadcasting. Occasionally, national ‘ champions, ’ in the form of some locally preferred (or developed) technology, influences these technical decisions, such as the debate which occurred in the last two decades of the twentieth century over analogue vs. digital television transmission standards. That issue is also compounded by the continued evolution of technology which today, for example, makes possible DVD transmissions and also use of the Internet and PCs with which to view programming.

Leaving aside these technical regulatory requirements, which can also be highly politicized, there are some common patterns of behavior by policy makers that can serve to inform contemporary interest in the subject.

5.1 Policy Makers And Emergence Of New Technologies

First, public policy makers have normally and regularly felt compelled to rule on the development, deployment, and use of every new communications technology that has appeared in the past two centuries. While a new technology might avoid drawing the attention of policy makers for a period of time (e.g., as was the case with the telegraph in the United States for over a decade), eventually the regulators catch up. Related to the inevitable role of policy makers has been an almost universal discussion among public officials about how best to upgrade communications infrastructures within their nations. By the end of World War I, every industrialized nation had wrestled with this issue and by the end of the twentieth century, almost every government in the world had dealt with the topic.

5.2 Policy Makers And Economic Development

Second, regulatory practices and public policy normally are linked tightly to economic development, national defense, and the realities of existing political infrastructures. Hitler used television to convey his messages; Roosevelt wanted Americans to listen to him on the radio, while the Belgians worried about American television programming corrupting their local culture in the 1980s. As we move increasingly into a new phase in the economies of the world, one characterized by the extensive use of information and its underlying technologies, the debate increases about what role policy makers should play in fostering use of communications within their national borders. While the debate has a long history, what is new is the intensity and critical nature of the process today because of the increased availability of new communications technologies, which are so rapidly spreading through most nations.

5.3 Types Of Policy Makers And Roles

Third, policies have been created and influenced by three groups within governments: regulators working inside administrative departments, national and state political leaders, and state and national legislative bodies. Increasingly in industrialized societies with representative forms of government, major initiatives to codify regulations, government policies, and the national will have led to far-reaching legislation on communications. For example, the Telecommunications Act of 1996, passed by the US Congress, fundamentally defined how competition could occur in America for all forms of communications. The OECD is at work on creating overarching guidelines of a similar nature in Europe that all European governments can consistently embrace. Put another way, national legislatures periodically redefine and codify public policy and practices toward communications, usually about every half century with many, other more narrowly focused, legislation passed in the intervening years. The key pattern, however, is that policy and regulatory matters are always politically charged and invariably involve a nation’s politicians.

5.4 Policy Making At National Level

Finally, regulatory actions have normally been most effective when implemented at a national level, although local pricing practices within a state or province exist with reasonable success. However, the pattern evident today is toward national policies, even on pricing issues. The use of international conventions is on the rise because, as with the experience in implementing national practices, the most effective cover large blocks of people. It becomes difficult, even awkward, to implement one policy in a country and a different one in a neighboring state; that tends to constrain effective use of a technology in ways citizens want. So, the impulse, or ‘ best practice, ’ has been to expand the implementation of consistent policies and practices to ever-larger portions of the world. The trend toward national and even international policies involve:

(a) Spread of universal technical standards (e.g., as the Europeans have done with wireless telephony).

(b) Policies concerning the type of information that can flow in and out of an economy (e.g., with television programming, use of the Internet, and new forms of copyright and patent protection for software and music).

(c) Trade policies that encourage development and acquisition of new technologies (e.g., computer chips, software, and access to satellites).

(d) Increased interconnections with the communications infrastructures of other nations. No sooner had the Americans invented the telegraph in the 1840s, for instance, people around the world wanted telegraphic infrastructures built so that messages could be sent across a nation and to other countries. We are seeing the same with wireless communications and the Internet.

Perhaps the last word on what policy makers face today in the world of communications should come from William E. Kennard, Chairman of the US Federal Communications Commission (FCC). In communicating his agency’s strategy for the future in a written document to the US Congress in August, 1999, he argued that his agency’s strategy was designed so that ‘ it would allow the FCC to enter the next century able to respond fully and quickly to emerging technologies and the inexorable movement from regulation to competition. ’ While he was addressing the US situation, he could just as easily have been commenting about circumstances in many other countries:

In five years US communications markets will be characterized predominantly by vigorous competition that will reduce the need for direct regulation. The FCC as we know it today will be very different both in structure and mission.

With the Internet now the major new source of policy concerns, and possibly so large as to dwarf other forms of communications, it is relevant to end this research paper with Kennard’s observation:

The advent of Internet-based and other new technology driven communications services will erode the traditional regulatory distinctions between different sectors of the communications industry.

While the four trends listed above still hold in that brave new world, his comments suggest that implementation will evolve over time.

6. Research Considerations

There is considerable research done constantly on all aspects of communications and public policy. Research in academic settings is done primarily by economists and political scientists. A great deal of their focus is on the effects of new technologies on a nation’s citizens, and results frequently in policy recommendations. Lewis Branscomb (1993) reflects contemporary examples of this kind of work. The second source of considerable research and debate are the regulatory agencies themselves. In the United States, the FCC conducts much research on all aspects of rates for fees and taxes for each form of electronic communications. Their research is routinely published on its web site. In Western Europe, the OECD does similar research but in addition has taken a special interest in information privacy matters and the role of the Internet. Each year, throughout the 1990s, it sponsored conferences on all aspects of this issue; proceedings of each have been published on OECD’s web site.

The Internet is the subject of much research all over the world. In the United States this is primarily being done by academics, with leading initiatives underway at the University of Texas, University of California at Berkeley, and at the Massachusetts Institute of Technology. As with other forms of technology, the issues being looked at focus on extent of deployment in the economy, possible government regulatory options, and effects on national policies. Both the FCC and OECD publish many white papers on narrow issues, written in a formal academic style with footnotes and ample Bibliography:. In addition to the books in the Bibliography:, each major regulatory agency in the world has an Internet site with public policy announcements, proceedings of conferences, and other studies. The US FCC and the OECD in Europe are the two best sources for material on a wide range of communications issues and technologies.

Bibliography:

1. Branscomb L M (ed.) 1993 Empowering Technology: Implementing a U.S. Strategy. MIT Press, Cambridge, MA
2. Headrick D R 1991 The Invisible Weapon: Telecommunications and International Politics, 1851–1945. Oxford University Press, New York
3. Saunders R J, Warford J J, Wellenius B 1987 Telecommunications and Economic Development. Johns Hopkins University Press, Baltimore, MD
4. Temin P, Galambos L 1987 The Fall of the Bell System. Cambridge University Press, Cambridge, UK