Remarks by Larry Irving
Assistant Secretary for Communications and Information
National Telecommunications and Information Administration
U.S. Department of Commerce

at the

Asia-Pacific Information Technology Summit
"21st Century Strategies for IT-Driven Growth"

November 19, 1998

Good morning. It's a pleasure to be here with the distinguished delegates gathered here today to discuss strategies for the growth of the information technology (IT) sector in the next century.

As a representative of the Clinton Administration and a former resident of Santa Clara County, I'd like to welcome you here. In the United States, and increasingly across the globe, Santa Clara County - the home of Silicon Valley -- has become synonymous with information technology. More manufactured goods are now exported from this County than from any other area in America - including our traditional industrial and commercial centers such as New York, Detroit, or Chicago. In point of fact, Silicon Valley has become central to the continued growth and strength of the U.S. economy.

For those of us gathered here this morning, the question we must address is how we can promote the continued growth of our IT industries and our information infrastructure so that all countries and all segments of our societies can share the benefits of the Information Age. This is particularly crucial in the Asia Pacific context, where many citizens still are not connected by telephone or computer.

Economic Contribution of IT

The IT sector has already demonstrated tremendous growth, spurred by new technologies such as the Internet and wireless technologies. In the United States, we are rapidly shifting from a heavy industrial to a high-tech economy. The IT sector contributed roughly 30% of the growth in our gross domestic product, adding more than $1.1 trillion to the national output in the last three years. The high-tech industry has also become the largest manufacturing employer in the U.S., employing more than even the automotive, textile, or apparel industries.

The transition to a high-tech economy is occurring, not just domestically, but also globally. Currently, 6% of the global GDP now stems from high-tech industries. Minister Mah Bow Tan and I were just discussing that, five years ago, no-one would have believed that today we would have streaming technologies, IP telephony, a wireless revolution, or electronic books. Who would have imagined that there might be 1 billion wireless users worldwide by year 2000, or that half of all U.S. banks would be offering on-line services today?

These new technologies and applications contribute significantly to our economic growth. Even in the face of recent economic turmoil, the Asia-Pacific region has experienced impressive growth in its IT sector. Korea's IT sector, for example, just posted a trade surplus of $8.6 billion in the last three quarters, due to a significant increase in sales of satellite broadcast receiving equipment, mobile phone handsets, and PCs. Earlier this month, Business Week issued a list of the top 100 IT companies worldwide. A number of Asian companies ranked high, including Taiwan's Austek Computer, Inc., which showed a recent 85% surge in sales. These findings indicate that IT industries are contributing, and will continue to contribute, to the economies of the APEC region.

Equitable Growth of the GII

Roberto Romulo, Chairman of the Pacific Economic Cooperation Council, opened this session this morning by talking about the opportune roles of the State (or government) and the private sector in the development of IT industries. Coincidentally, last week I appeared on a panel discussing precisely that question. There was unanimity of opinion with regard to the role of industry, or the private sector. All of us agreed that the private sector provides the energy, the initiative, the entrpreneurial spirit, the innovation, and the investment that is fueling this economic, technological, cultural, and social revolution.

It would be an understatement to say, however, that we disagreed about the role of government. One of my fellow panelists indicated that all he needed from government were highways and a post office. I was in the distinct minority in asserting that government can contribute positively to the development of IT industries. Over the past several weeks, I have been trying to articulate the role that governments should and must play in "realizing the visions" for the new information economies. Among these key roles, governments should ensure equitable access to new technologies; provide a framework for investment, growth, and competition; open markets to international competition; and create an educated workforce that is able to meet the job demands of a digital economy.

First, it is essential that governments commit themselves to the goal of developing a truly inclusive and equitable national and global infrastructure. Expanding our global information infrastructure is critical, not only because of business imperatives, but also because it will help us meet basic societal needs. New technologies are connecting those who previously had no link to the global economy or to other societies. Remote regions that are not yet wired for telephone service, for example, can now be reached through satellite and wireless technologies. Families in India can sell their homemade goods to consumers in Iowa through the Net.

These technologies are also bringing medical, educational, and economic services within the reach of people who never before had access to such information. A new project in Malaysia, for example, is connecting seven hospitals so they can engage in joint consultation, diagnosis, and treatment. A small hospital in a rural village, which lacks specialized expertise can now contact medical specialists in Kuala Lampur. New technologies are even helping farmers improve their crop yields through new precision farming techniques, combining the Internet, computers, and the Global Positioning System.

We have all heard about the explosive growth of the Net, and we have every reason to believe that its growth will continue. Today, according to NUA Surveys, there are roughly 150 million people using the Internet, 24 million of whom live in the Asia/Pacific region. Those figures are expected to grow exponentially; in fact, some are estimating that 320 million people will be online worldwide by 2002. On-line commercial transactions are also anticipated to reach somwhere between $350 billion and $1 trillion by 2002.

Industry and government must work together to ensure that such growth is equitable. The global infrastructure must reach rural people as well as urban, poor as well as wealthy, and those in developing as well as developed nations. Remember, right now in 1998, 65% of the world's households lack a telephone, and roughly half of the world's population has never made a phone call. In the Asia-Pacific region, those figures are even higher.

The gap between developing and developed countries is even greater when we look at those on-line. In the United States, about one out of four households has access to the Internet; on the African continent, only one out of 5,000 has on-line access. The same gaps are visible in the Asia Pacific region: in Australia, nearly one out of five people are connected, while some estimate that fewer than one in 10,000 are connected in India or the Philippines. Even if our most optimistic projections are realized and we have 400 million using the Net by year 2002, there will still be 6.5 billion people that are not on-line.

The Clinton-Gore Administration has made it a priority to maximize access to the Internet and other new technologies. This past month, the International Telecommunication Union (ITU) held its 15th Plenipotentiary Conference in Minneapolis at which 147 countries discussed the need for international cooperation to build out the global infrastructure. Vice President Gore challenged these countries to fulfill the promises of a new initiative, called the Digital Declaration of Interdependence (or DDI). This declaration posed five challenges to use information technology to forge a stronger global community:

Private Investment and Competition

We believe that the promises of the DDI can be fulfilled if citizens have affordable access to new technologies. And that leads to the second important role for governments: providing a framework suitable for investment, growth, and competition. We believe that affordable access will be possible only through competition and a regulatory environment that supports users and consumers, not national champions. In the telecommunications sector, we have already seen the fruits of this approach. Fourteen years ago, the U.S. Department of Justice broke up the long-distance monopoly held by AT&T. Once the long-distance sector became competitive, prices for long-distance phone calls fell by more than 50 percent. Having just celebrated the "1000th day" of the 1996 Telecommunications Act, we are gradually seeing signs of competition and greater consumer choice in the local telephone and cable markets, as well.

Internet telephony is now also providing an even cheaper, third option for making telephone calls. Had the U.S. government decided to regulate IP telephony, as some telephone representatives have requested, companies might not have been willing to make the millions of dollars of investments to improve voice service over the Net. By permitting companies to experiment in an unfettered, unregulated environment, we are now reaping the fruits of their technological innovation.

This market-oriented approach is also essential to the expansion of the Internet and electronic commerce. In July 1997, President Clinton unveiled A Framework for Global Electronic Commerce, setting forth guidelines to promote the growth of the information infrastructure and electronic commerce worldwide. Again, we believe that private investment and innovation will flourish only in a market-driven, unregulated arena. To the extent government plays a role at all, its role should be focused on establishing a transparent and predictable legal environment to support global e-commerce.

Increasingly, there is a regional consensus on this approach. The OECD Conference in Ottowa was extremely helpful in generating multinational agreement on the need for telecommunications liberalization to further expand electronic commerce. Many Asian-Pacific countries are also working towards improving access. India recently ended the monopoly of its government-run ISP provider, with the expectation that competition among private entrants will lower prices and increase Internet users. India currently has only 500,000 Internet users; it anticipates that this number will quadruple as a result of competition. The Vietnamese government is also reducing access rates to make Internet access more affordable. And a number of other countries, including China, Singapore, and Korea, are building international high-tech complexes to attract foreign investors and promote domestic investment. Competition among these private entities should continue to improve services and lower prices for Asian/Pacific countries.

APEC's Initiatives

I am particularly pleased by the progress made by the APEC member economies in this regard. At the June 1998 APEC Telecommunications Ministerial, the ministers reaffirmed their commitment to develop the Asia Pacific Information Infrastructure (APII) and to promote electronic commerce. Member nations hope to accomplish these objectives by identifying barriers to access and improving market access, among other steps.

Just this past weekend, the APEC Ministerial and Leaders' meetings endorsed an APEC Blueprint for Action on Electronic Commerce, which sets forth principles to promote e-commerce. Among other things, the Blueprint establishes a leading role for the private sector in developing e-commerce technology, applications, practices, and services. It also calls for industry self-regulation wherever possible, and seeks government assistance in developing predictable, transparent, and consistent regulations. This Blueprint is an important development and it is gratifying that the Ministers and Leaders have approved this document.

APEC's efforts will help promote the development of an infrastructure that is truly global - encompassing all nations and all peoples. We hope to continue to work with APEC to promote market-driven policies that will encourage the development of a global infrastructure through which electronic commerce, telemedicine, and distance learning can thrive.

I would also like to commend Secretary Suto for raising another critical issue - the Year 2000 (or Y2K) problem. The Year 2000 problem, otherwise known as the "millennium bug," refers to potential disruptions in our computer systems when the clock strikes January 1, 2000. Failure to address this issue could result in disruptions to our computer systems, which may have grave consequences for commerce, government services, emergency services, and national defense. No matter how extensive our infrastructure may be, it is worthless if it cannot function in the next century. Our nations must work together to address this problem.

If we protect our global infrastructure in the next year, there is no limit to the miracles it will help us achieve in the next century. As Vice President Gore stated at the ITU Plenipot: "Today, on the eve of a new century and a new millennium, we have an unprecedented opportunity to use these powerful new forces of technology to advance our oldest and most cherished values. . . . Today, we are more connected than ever before. Now, let us use our new tools and technology to build on that interdependence - to build a stronger global community, and to make real our common values."

Thank you.