Japan-U.S. Telecommunications Research Institute (JUSTRI)
Sixth Biannual Conference
The Explosion of the Internet and Integrated Digital Services:
Implications for the Future of Regulation and Public Policy
December 9, 1998
Good morning. Ohayo gozaimasu.
As we approach the holiday season, I am reminded of an American end-of-the-year tradition. Habitually, newspapers, magazines, and broadcast outlets create lists of what is in and what is out. For example, Red Herring magazine is in; Wired magazine is out. Folk music is in; country music is out. Double breasted suits are in; suits with vests are out. It's a short-hand way to sum up the cultural, social, and economic trends of the past year.
As we approach the millennium, we also need to address what's in and what's out. I have been laboring in the vineyards of telecommunications a long time now. In that period, I have been privileged to witness amazing change in this industry and in our two great nations because of the emergence of the Information Age. Sixteen years ago, when I entered government service, monopolies were in, terrestrial broadcasting was in, and mainframe computers were in. Today, we are focused on competition, on cable and satellite, on digital broadcasting, on PCs and network computers. And, of course, the Internet and wireless communications are redefining themselves almost hourly and government officials are trying to understand the change.
These changes are transforming telecommunications, and they are transforming economies around the world, including that of the United States and Japan. More manufactured goods are now exported from Santa Clara County -- the home of Silicon Valley -- than from any other area in America , including our traditional industrial and commercial centers such as New York, Detroit, or Chicago. Today, more than 50 million Americans, even those that do not use the Internet, recognize the brand names of seven Internet-related companies: America Online, Yahoo!, Netscape, Amazon.com, Priceline.com, Infoseek, and Excite. According to one account, one-quarter of all people on-line at any given moment are either buying or selling something. Around the world, we are using the Net to do our holiday shopping, purchase insurance, do on-line investing, and pay bills.
How to promote that continued growth is a question we must consider
together, as new technologies transcend national boundaries. We need to
consider public policy models to achieve our shared objectives. And we
must consider how we can chip away at barriers that limit access to information,
to technology, and to progress. These deliberations are essential to achieving
our shared goal of a Global Information Infrastructure (GII) and an Information
Society that benefits all. As members of JUSTRI, you have been creating
collaborative relationships among companies and governments in the Asia-Pacific
region. It's now important that we extend that collaboration and work globally
on these issues
Seasons of Change - Buildout of the Information Infrastructure
This past year, both our nations have experienced significant changes. We've both seen changes in our leadership, with a new Japanese premier and significant changes in the U.S. Congress. Despite these changes, President Clinton's recent trip to Tokyo reaffirmed the strong ties between our two nations in our efforts to improve the Asia Pacific economy and political situation as a whole.
Both the United States and Japan have also witnessed significant growth in our information infrastructure and technologies. The Nagano Olympics in February demonstrated the tremendous potential of new technologies, and how telecom and information technologies (IT) can break down barriers between nations. Not only were we able to see breathtaking views of Japan's winter wonders on television and cable, we were also privy, through the Internet, to a constant flow of up-to-the-minute information on Olympic events. The Nagano Olympic Committee's official web site shattered world records when it recorded 650 million hits in 16 days, 56.9 million on one day alone, peaking at 100,000 hits per minute. The Nagano Olympic News Agency also released news in English, French and Japanese to the world press through 1000 on-site terminals. Talk about net congestion!
Now Sydney is constructing a fiber network to carry all Olympics games traffic--local, long distance and video--through a 1.5 million kilometer fiber link to all venues. After the Olympics end, this Millennium Network will be integrated into the existing telecom system, making Australia a world leader in sophisticated information infrastructure buildout.
And soon, we in the United States must tackle the needs for the 2002 Winter Olympics in Salt Lake City, Utah.
The Olympics illustrate that special events can be demand-drivers for major information infrastructure buildout. But the chief force in the buildout of our infrastructure should be the market. Consumers, end-users, and their demand for certain applications should be the demand drivers that direct the course of our telecommunications systems.
Japan and the United States have both seen the fruits of market forces at work. New laws, new market entrants, and new technologies have made Japan's market conditions lucrative. The U.S. Embassy in Tokyo notes that Japan's current demand for telecom services is estimated at $100 billion while the demand for telecommunications equipment should reach $37 billion in 1999. In Fiscal Year 1997, Japan's Type I major infrastructure carriers invested 3.9 trillion yen (about $ 31.7 billion) in new facilities. I am sure we will hear more today about such projects as MPT's "telecom towns" and "teletopia," the MITI's New Media Community Plan, and other regional "informatization" plans under way in Japan.
In the Asia Pacific region, only Australia, Japan, and New Zealand have met the standard universal service goal of connecting at least 90% of all households. Yet, other Asian economies are making strides in improving infrastructure buildout. The International Telecommunication Union (ITU) reports that 80 new telecom companies formed in the Asia Pacific region since 1990. These new market entrants have contributed, not only to the growth of the telecom infrastructure, but also to employment levels and the countries' general economies.
In the U.S., we are also seeing a greater demand for new data and multimedia services, particularly from small and medium-sized businesses. And companies are investing in new infrastructures to meet this demand. For example, Level 3 Communications will expend $8-$10 billion over the next 20 years to build out a fully-owned 15,000 mile network. Williams Communications is also expected to expend $2.9 billion to complete its 32,000 mile network buildout by end of 2000. This type of buildout is enabling more and more Americans to get the services they want, when they need them.
As this buildout continues and new media develop, we must consider what role governments should play. Many nations differ as to whether governments should stand back or jump in. The Clinton-Gore Administration believes that government has a well defined, although limited, role in the process. Among their 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.
When we are dealing with new media, we should be especially careful that we don't treat new technologies heavy-handedly. The growth of these media depends on an unrestricted environment that promotes investment and innovation. For example, Internet (or IP) telephony now provides a cheaper 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, consumers in the United States are now reaping the fruits of technological innovation.
Of course, government must tackle problems when they arise. In the United States, we believe that the Telecommunications Act of 1996 will promote greater competition and private investment in the delivery of advanced telecom and information services. But we have yet to fully achieve these goals. Competition and open markets do matter. And ensuring competition may be government's most important role.
The Clinton Administration is committed to ensuring that the promises of the Telecommunications Act are realized. For example, we are now reviewing Section 706, a section of the Telecom Act that addresses advanced information infrastructure buildout. NTIA has filed comments with the FCC in its current 706 proceeding, encouraging ways to spur investment in advanced telecommunications technologies. We suggested that the FCC encourage the deployment of broadband networks and services by all communications sectors, including incumbent local telephone companies and their competitors.
Governments must also address the issue of the underserved. The private sector can fill much of these needs through creative financing and new uses of technology. In November, for example, two companies announced they will use satellite and fiber optics to provide two-way Internet data transmissions to rural areas in the United States. Softnet Systems of Mountain View, CA will use satellites and 5-feet diameter dishes to link cable television systems in remote areas. And At Home Corporation will bear a larger portion of costs to link up small cable televisions systems through terrestrial links, for a larger share of the profits.
New technologies will also foster greater access on a global basis. Just last month, Iridium commenced operations to provide satellite-based global mobile services. Many other U.S.-based companies, with overseas investment partners, will commence similar satellite-based PCS services early in the next millennium. Convergence around an IMT-2000, or third-generation wireless standard, will promote seamless communications worldwide. New fiber systems across the Atlantic, Southern and Northern Pacific, and across nations mean higher-speed and greater capacity for burgeoning markets.
The market, however, may not meet all our needs; government must play a role in promoting universal service and access. In the United States, we currently have a 94% telephone penetration level, exceeding the traditional universal service benchmark. Our access to Internet and other new technologies is far lower, however. Approximately one in four households has access to the Internet.
We are now trying to create community access points so that all citizens, no matter what their income or location, can access these technologies as well. The Administration has established an e-rate, or education discount rate, to facilitate such hookups in schools, libraries, and rural health centers. And we are seeing these efforts pay off. Last month, the American Library Association and the National Commission on Libraries and Information Science noted that almost 75% of our nation's libraries offer Internet access to the public. That's an increase of almost 45% in only two years.
Community networking is also a growing phenomenon in the United States.
NTIA's own TIIAP program has facilitated this type of networking. TIIAP
provides matching grants to schools, clinics, and other nonprofit and governmental
entities using new telecommunications and information technologies in underserved
communities. This program had great success with "community access centers,"
which provide the public access and training on use of the Internet and
other new technologies. As we meet here today,
NTIA is hosting a conference here in Washington, D.C. to share the lessons
from our TIIAP projects. I invite you to find out more about our program
on our web site and to attend an upcoming conference we are holding in
the spring to share TIIAP's lessons with the international community.
Finally, it is essential that we focus, not only on barriers within our borders, but also the barriers to telecom buildout in other nations. Whether we are consumers, service providers, manufacturers, or policymakers, our interests are served by competitive environments that foster the growth of telecom and IT worldwide. We must work globally to eliminate bottlenecks to competition, liberalization, and private investment.
Expanding our global information infrastructure is critical, not only because of business imperatives, but also because it will help us meet basic societal needs. A telecenter in a small farming village in Africa enables a family to reach distant relatives in times of emergency. Connection to the Internet can open a worldwide market to a small business or town. Telecommunications can transform the economic health of a community. It is therefore imperative that we commit ourselves to developing a truly inclusive and equitable infrastructure.
The Clinton-Gore Administration recently reaffirmed its commitment to promote access to new technologies for people around the globe. In October, Vice President Gore challenged participants in the International Telecommunication Union's (ITU) Plenipotentiary Conference 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:
Just last May, during the G-8 Birmingham Summit, our two governments signed a joint statement to promote Electronic Commerce, the first between two nations. Korea and Australia have also signed joint statements with the United States in the past three weeks, based in part on the U.S.-Japan statement, particularly on the leadership role that the private sector provides.
Yet there is always greater strength in numbers. We therefore want to work within the regional and international communities to pursue our mutual DDI goals. The United States and Japan are working with ITU members to reform its structure and improve global connections. We look forward to greater cooperation within the ITU community under the leadership of Mr. Utsumi of MPT, as the new Secretary General.
Japan and the U.S. are also working within the APEC forum to create conditions that will spur new applications and technologies, especially across borders. At the same time, we are taking pains not to create regulations where none existed before. The APEC Telecom Ministerial meeting, in which I participated last June, reaffirmed our joint commitment to support a greater Asia Pacific Information Infrastructure, or APII. APEC trade ministers and APEC Leaders in Malaysia last month also reaffirmed their commitment to the APII.
Last month, APEC Leaders approved a blueprint for activities to promote policy environments conducive to electronic commerce. This builds upon the outcome of an OECD ministerial conference in Ottowa in early October on electronic commerce. There, ministers helped generate multinational agreement on the need for telecommunications liberalization to further expand electronic commerce.
Promoting electronic commerce is a chief goal of the Clinton-Gore Administration. Last week, the U.S. Government Working Group on Electronic Commerce provided its report to the President on his 1997 electronic commerce directive. The report enumerates our accomplishments in working with foreign nations to promote telecommunications liberalization and a duty-free Internet zone. It also establishes a new effort to expand Internet availability and the use of e-commerce in developing countries. Only if we include developing countries can we truly turn e-commerce into a seamless global marketplace.
Finally, I'd like to mention another issue
that deserves immediate cooperative attention on a multilateral scale --
the Year 2000 issue. This "millennium bug" means 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
Today the participants at this JUSTRI conference will hear many experts from wide-ranging enterprises reflective of the dynamic nature of the telecom, IT, and new media sectors. As this year ends, it is incumbent on all of us to reflect on policy directions, past and future. As we grapple with issues that shape the new media landscape, we must also remember why we are discussing these topics -- so that more people can benefit from the bounty that our scientists and engineers are creating.
Every day, we read about new developments in electronic commerce and its contribution to the growth of our two nation's economies. But we must also remember that telecommunications and information technology is more than about commerce and finance. It is about enhancing community by allowing new groups to express themselves on-line. It is about broadening our horizons by learning about new cultures. And it is about improving democracy by enabling people to engage in political discussions and polls at the click of a mouse. If we use these new technologies to their full capability, our nations will benefit in numerous ways. We can help prevent a digital divide, improve our economic growth, and preserve our traditional values. These are gifts that we can share, no matter what the season.
Thank you/Arigato gozaimasu.