Strategic liberalization: Mapping a course for sustainable infrastructure development

Telecommunications Policy

Volumn 20, Issue 8, 1996, Pages 557-571

  Regli, Brian ^a  

^a TUFTS UNIVERSITY   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

INDUSTRIAL MANAGEMENT; PUBLIC POLICY; STRATEGIC PLANNING;

TELECOMMUNICATION INFRASTRUCTURES;

TELECOMMUNICATION SERVICES;

EID: 0030261991     PISSN: 03085961     EISSN: None     Source Type: Journal    
DOI: 10.1016/0308-5961(96)00041-9     Document Type: Article

References (39)

1. The jungle analogy is borrowed from the conclusion of George Calhoun's Wireless Access and the Local Telephone Network [Artech House, Norwood, MA (1992)], and is informed by many recent efforts to more directly link theories of economic and technological development to models of biological and ecological change. Some of the most notable include Michael Rothschild's Bionomics: Economy as Ecosystem [Holt, New York (1990)] and Joel Mokyr's The Lever of Riches: Technological Creativity and Economic Progress [Oxford University Press, Oxford (1990)].
2. The jungle analogy is borrowed from the conclusion of George Calhoun's Wireless Access and the Local Telephone Network [Artech House, Norwood, MA (1992)], and is informed by many recent efforts to more directly link theories of economic and technological development to models of biological and ecological change. Some of the most notable include Michael Rothschild's Bionomics: Economy as Ecosystem [Holt, New York (1990)] and Joel Mokyr's The Lever of Riches: Technological Creativity and Economic Progress [Oxford University Press, Oxford (1990)].
3. The jungle analogy is borrowed from the conclusion of George Calhoun's Wireless Access and the Local Telephone Network [Artech House, Norwood, MA (1992)], and is informed by many recent efforts to more directly link theories of economic and technological development to models of biological and ecological change. Some of the most notable include Michael Rothschild's Bionomics: Economy as Ecosystem [Holt, New York (1990)] and Joel Mokyr's The Lever of Riches: Technological Creativity and Economic Progress [Oxford University Press, Oxford (1990)].
4. See, in particular, Sussman, G and Lent, JA (eds) Transnational Communications: Wiring the Third World Sage, Newbury Park, CA (1991) and Hills, J Deregulating Telecoms: Competition and Control in the United States, Japan and Britian Quorum, London (1986).
5. See, in particular, Sussman, G and Lent, JA (eds) Transnational Communications: Wiring the Third World Sage, Newbury Park, CA (1991) and Hills, J Deregulating Telecoms: Competition and Control in the United States, Japan and Britian Quorum, London (1986).
6. Eli Noam's extensive corpus of work reflects a central concern with achieving universal service in an increasingly competitive environment. Perhaps his most representative article in this area is The public telecommunications network: a concept in transition' The Journal of Communication 1993 37(1) 30-48; See also Al Gore's comments from Scientific American, March 1991, which are largely consistent with his policy speeches during his tenure as Vice President in the Clinton administration..
7. Eli Noam's extensive corpus of work reflects a central concern with achieving universal service in an increasingly competitive environment. Perhaps his most representative article in this area is The public telecommunications network: a concept in transition' The Journal of Communication 1993 37(1) 30-48; See also Al Gore's comments from Scientific American, March 1991, which are largely consistent with his policy speeches during his tenure as Vice President in the Clinton administration..
8. Tyler, M and Bednarczyk, S 'Regulatory institutions and processes in telecommunications: an international study of alternatives' Telecommunications Policy 1993 17(9) 650-676. The most definitive statement on World Bank telecommunications development policy remains the book by Saunders, R, Warford, J and Wellenius, B Telecommunications & Economic Development Johns Hopkins, Baltimore (1994).
9. Tyler, M and Bednarczyk, S 'Regulatory institutions and processes in telecommunications: an international study of alternatives' Telecommunications Policy 1993 17(9) 650-676. The most definitive statement on World Bank telecommunications development policy remains the book by Saunders, R, Warford, J and Wellenius, B Telecommunications & Economic Development Johns Hopkins, Baltimore (1994).
10. Staple, G and Smith, P 'Telecommunications sector reform in Asia: towards a new pragmatism' World Bank Discussion Paper 232, The World Bank, Washington, DC (1994). See also Solomon, J 'The World Bank's new pragmatism' Telecommunications Policy 1994 18(9) 675-678.
11. Staple, G and Smith, P 'Telecommunications sector reform in Asia: towards a new pragmatism' World Bank Discussion Paper 232, The World Bank, Washington, DC (1994). See also Solomon, J 'The World Bank's new pragmatism' Telecommunications Policy 1994 18(9) 675-678.
12. George Gilder's perspective on the changing telecommunications infrastructure appears every month in Forbes ASAP, in his 'Telecosm' article series, and is strongly reflected in his book, Microcosm [Simon and Schuster, New York (1989)]. Peter Huber's most recent book, The Geodesic Network II [The Geodesic Company, Washington, DC (1994)], reflects many of these same priorities.
13. George Gilder's perspective on the changing telecommunications infrastructure appears every month in Forbes ASAP, in his 'Telecosm' article series, and is strongly reflected in his book, Microcosm [Simon and Schuster, New York (1989)]. Peter Huber's most recent book, The Geodesic Network II [The Geodesic Company, Washington, DC (1994)], reflects many of these same priorities.
14. George Gilder's perspective on the changing telecommunications infrastructure appears every month in Forbes ASAP, in his 'Telecosm' article series, and is strongly reflected in his book, Microcosm [Simon and Schuster, New York (1989)]. Peter Huber's most recent book, The Geodesic Network II [The Geodesic Company, Washington, DC (1994)], reflects many of these same priorities.
15. This paper uses the term 'development' in the broadest sense, in the tradition of theorists in the fields of political science and economics. To paraphrase the words of one of the most famous development thinkers, Amartya Sen, we are interested in what people can or cannot do according to the political and economic entitlements and opportunities at their disposal. The goal of development, according to this tradition, is to widen the scope of resources available to people. This section draws out some of the most significant themes from this rich literature and applies them to the issues surrounding changes in the telecommunications sector.
16. The direct connection between economic and political participation and the introduction of new technology will not be directly addressed in this paper. The literature indicates clear linkages and, even though all of the causal links have yet to be quantified, this paper will assume that increased access to technology is positively correlated with factors such as increased productivity at the micro-economic level, increased access to information, and increased access to economic and political services. See, in particular, Cronin, FJ, Colleran, EK, Herbert, PL and Lewitsky, S 'Telecommunications and growth: the contribution of telecommunications infrastructure investment to aggregate and sectoral productivity' Telecommunications Policy 1993 17(9) 677-690 and Neuman, WR The Future of the Mass Audience Cambridge University Press, Cambridge (1991).
17. The direct connection between economic and political participation and the introduction of new technology will not be directly addressed in this paper. The literature indicates clear linkages and, even though all of the causal links have yet to be quantified, this paper will assume that increased access to technology is positively correlated with factors such as increased productivity at the micro-economic level, increased access to information, and increased access to economic and political services. See, in particular, Cronin, FJ, Colleran, EK, Herbert, PL and Lewitsky, S 'Telecommunications and growth: the contribution of telecommunications infrastructure investment to aggregate and sectoral productivity' Telecommunications Policy 1993 17(9) 677-690 and Neuman, WR The Future of the Mass Audience Cambridge University Press, Cambridge (1991).
18. The classic work on this kind of wireless communications application is Hudson, H When Telephones Reach the Village Ablex, Norwood, MA (1984); see also Communication Satellites: Their Development and Impact Free Press, New York (1990).
19. The classic work on this kind of wireless communications application is Hudson, H When Telephones Reach the Village Ablex, Norwood, MA (1984); see also Communication Satellites: Their Development and Impact Free Press, New York (1990).
20. The exception to this rule appears to be the United States. See Mueller, M 'Universal service in telephone history: a reconstruction' Telecommunications Policy 1993 17(9) 352-369. Some theoretical work has been done on decentralized alternatives for wireline telecommunications infrastructure, such as
21. Davies, A Telecommunications and Politics St Martin's, New York (1994).
22. Schumacher, EF Small is Beautiful Blond and Briggs, London (1973).
23. See Hirshman, AO Exit, Voice and Loyalty: Responses to Decline in Firms, Organizations and States Harvard University Press, Cambridge, MA (1970) and, more particularly, Hirshman, AO The Strategies of Economic Development Cambridge University Press, Cambridge (1980).
24. See Hirshman, AO Exit, Voice and Loyalty: Responses to Decline in Firms, Organizations and States Harvard University Press, Cambridge, MA (1970) and, more particularly, Hirshman, AO The Strategies of Economic Development Cambridge University Press, Cambridge (1980).
25. See, in particular, the proceedings of Docket 91-34 of the Federal Communications Commission on the bundling of customer premises equipment (CPE) and wireless services.
26. 1994 World Telecommunications Development Report (International Telecommunications Union, Geneva, 1994), p 37-38: "Mobile phones are often perceived to be a luxury purchase rather than an element of basic service. Certainly, if one looks at the distribution of subscribers worldwide, they are concentrated in the developed countries. The 24 industrialized nations of the OCED currently account for more than 90% of the installed base for mobile phones, compared with just 70% of the installed base of telephone main lines. Furthermore, even within these countries, the main users of mobile phones are to be found among the business community rather than the residential users. So, at face value, mobile communications have little to offer developing countries and even less to help the rural poor".
27. As Calhoun put it in Local Access and the Local Telephone Network, Artech House, Norwood MA (1992), p 147: "The third view of wireless access services is frankly revolutionary. (If this means that it is also at times rather overblown, so be it.) Radio is welcomed in its full potential as a technology of the next millennium, the communications medium of the future, the realization of science fiction dreams from Dick Tracy to Star Trek. Radio is not to be shackled to antiquated service ideas rooted in the saurian swamp of wireline telephony - on the contrary, the PCN revolutionaries rhapsodize about radio communications as a great technological imperative that will redefine our expectations about what communications services should do for us. Just as the airlines killed the railroads, so will personal, portable communications networks reduce the wireline network to a vestigial remnant, a backup system at best, a pastime for antiquarians".
28. Thomas Hazlett attributes the idea of applying auctions to the allocation of spectrum to Leo Herzel, not Ronald Coase as some have suggested. The association with market socialism comes from Coase, as Hazlett points out in a recent article by drawing on some of Coase's commentary on the subject: "It is sometimes said that I introduced the idea of using prices to allocate the spectrum. But this is untrue. The first time this was proposed, at any rate in print, was by a student author, Leo Herzel, in an article in the University of Chicago Law Review in 1951. When I first read this article I thought, and it was quite natural to think this, that Leo Herzel had been influenced by Aaron Director and Milton Friedman. But this is also untrue. While he was an undergraduate, Herzel had become very interested in the debate over whether a rational, efficient system for allocating resources would be possible under socialism. As a result, he read Abba Lerner's The Economics of Control soon after it was published in 1944. This debate, particularly Lerner's detailed proposal for market socialism in The Economics of Control was the inspiration behind his views." Hazlett points out that auctioning is, in its purest form, rent-seeking behavior by governments that assert access over the resource of the electromagnetic spectrum. See Hazlett, T W 'Assigning property rights to radio spectrum users: why did FCC license auctions take 67 years?' Paper presented at the Telecommunications Policy Research Conference, September 1995. (Soloman's Island, Maryland).
29. Thomas Hazlett attributes the idea of applying auctions to the allocation of spectrum to Leo Herzel, not Ronald Coase as some have suggested. The association with market socialism comes from Coase, as Hazlett points out in a recent article by drawing on some of Coase's commentary on the subject: "It is sometimes said that I introduced the idea of using prices to allocate the spectrum. But this is untrue. The first time this was proposed, at any rate in print, was by a student author, Leo Herzel, in an article in the University of Chicago Law Review in 1951. When I first read this article I thought, and it was quite natural to think this, that Leo Herzel had been influenced by Aaron Director and Milton Friedman. But this is also untrue. While he was an undergraduate, Herzel had become very interested in the debate over whether a rational, efficient system for allocating resources would be possible under socialism. As a result, he read Abba Lerner's The Economics of Control soon after it was published in 1944. This debate, particularly Lerner's detailed proposal for market socialism in The Economics of Control was the inspiration behind his views." Hazlett points out that auctioning is, in its purest form, rent-seeking behavior by governments that assert access over the resource of the electromagnetic spectrum. See Hazlett, T W 'Assigning property rights to radio spectrum users: why did FCC license auctions take 67 years?' Paper presented at the Telecommunications Policy Research Conference, September 1995. (Soloman's Island, Maryland).
30. This kind of approach is under consideration at the FCC at present; the goal is to 'jump start' competition by allowing wireless providers to deliver their own calls through the wireline network. As the head of the FCC's Wireless Telecommunications Bureau, Michele Farquhar, explained at a recent conference sponsored by the Personal Communications Industry Association (15 May 1996): "One of the necessary factors for the development of competition within CMRS [Commercial Mobile Radio Services], as well as between wireless and wireline carriers, is to establish reasonable and fair interconnection. The Commission's Notice of Proposed Rulemaking on LEC [Local Exchange Carrier]-CMRS interconnection tentatively concluded that bill-and-keep is an appropriate interim model . . . [and] the correct theoretical structure for LEC-CMRS interconnection would be based on a long run incremental cost model.".
31. The Pioneer's Preference program was established by the FCC as part of the auction proceedings for PCS in an attempt to identify companies and service providers that had contributed to the development of advanced wireless technologies. Three companies were eventually rewarded and offered the right to purchase 'A Band' licenses during the auction proceedings at reduced costs.
32. Wireless Technologies and the National Information Infrastructure Office of Technology Assessment, US Government Press, Washington, DC (1995). The report points out that two possible resolutions exist: the FCC determines the grounds for preemption through its continuing consideration of such petitions, or that Congress makes clear its intentions regarding the legislative language "and offers a specific interpretation regarding local zoning and antenna siting - either by supporting it explicitly or by requiring states and local governments to resolve antenna siting issues through negotiations with wireless companies." The FCC Docket 93-62 has been assigned to this issue, and Speaker of the House Newt Gingrich publicly supported preemption in his speech to the Wireless '95 conference in New Orleans, 1 February 1995. See also Teske (ed) American Regulatory Federalism and Telecommunications Infrastructure Erlbaum, Hillside, NJ (1995).
33. Wireless Technologies and the National Information Infrastructure Office of Technology Assessment, US Government Press, Washington, DC (1995). The report points out that two possible resolutions exist: the FCC determines the grounds for preemption through its continuing consideration of such petitions, or that Congress makes clear its intentions regarding the legislative language "and offers a specific interpretation regarding local zoning and antenna siting - either by supporting it explicitly or by requiring states and local governments to resolve antenna siting issues through negotiations with wireless companies." The FCC Docket 93-62 has been assigned to this issue, and Speaker of the House Newt Gingrich publicly supported preemption in his speech to the Wireless '95 conference in New Orleans, 1 February 1995. See also Teske (ed) American Regulatory Federalism and Telecommunications Infrastructure Erlbaum, Hillside, NJ (1995).
34. Telecommunications Act of 1996 Section 704(a). The Act used this language to amend the National Wireless Telecommunications Siting Policy Section 332(c) (47 U.S.C. 332(c)).
35. Telecommunications Act of 1996 Section 704(a). The Act used this language to amend the National Wireless Telecommunications Siting Policy Section 332(c) (47 U.S.C. 332(c)).
36. The only real exception to this is Telepoint, pioneered in the UK during the early 1990s. Telepoint was targeted to pedestrian and home use, and was based on advanced cordless telephone systems. Four Telepoint providers were initially licensed in the UK, but by the end of 1995 all four had either withdrawn their services or collapsed in the early planning stages because of difficulties with equipment and pricing strategies. However, the UK market is now witnessing the emergence of fixed wireless local loop services, courtesy of lonica. See 'Built on thin air' The Economist 18 May 1996, 70. The regulatory document that is the foundation of Telepoint and PCS services in the UK is Phones on the Move British Department of Trade and Industry, OFTEL, London (1989). See also Gardiner, J and West, B (eds) Personal Communication Systems and Technologies Artech House, Norwood, MA (1995) 15-22 for a discussion of the relationship between PCS and Telepoint service models.
37. The only real exception to this is Telepoint, pioneered in the UK during the early 1990s. Telepoint was targeted to pedestrian and home use, and was based on advanced cordless telephone systems. Four Telepoint providers were initially licensed in the UK, but by the end of 1995 all four had either withdrawn their services or collapsed in the early planning stages because of difficulties with equipment and pricing strategies. However, the UK market is now witnessing the emergence of fixed wireless local loop services, courtesy of lonica. See 'Built on thin air' The Economist 18 May 1996, 70. The regulatory document that is the foundation of Telepoint and PCS services in the UK is Phones on the Move British Department of Trade and Industry, OFTEL, London (1989). See also Gardiner, J and West, B (eds) Personal Communication Systems and Technologies Artech House, Norwood, MA (1995) 15-22 for a discussion of the relationship between PCS and Telepoint service models.
38. The only real exception to this is Telepoint, pioneered in the UK during the early 1990s. Telepoint was targeted to pedestrian and home use, and was based on advanced cordless telephone systems. Four Telepoint providers were initially licensed in the UK, but by the end of 1995 all four had either withdrawn their services or collapsed in the early planning stages because of difficulties with equipment and pricing strategies. However, the UK market is now witnessing the emergence of fixed wireless local loop services, courtesy of lonica. See 'Built on thin air' The Economist 18 May 1996, 70. The regulatory document that is the foundation of Telepoint and PCS services in the UK is Phones on the Move British Department of Trade and Industry, OFTEL, London (1989). See also Gardiner, J and West, B (eds) Personal Communication Systems and Technologies Artech House, Norwood, MA (1995) 15-22 for a discussion of the relationship between PCS and Telepoint service models.
39. Efforts are being made in some developing countries to put these theories into action and move beyond the trial stage by providing local telephone services with a wireless local loop infrastructure. These efforts have inevitably run into regulatory and political difficulties. In Mexico, for example, a number of companies, including Grupo lusacell (part owned by US-based Bell Atlantic) and local investment consortia Pulsar, have been lobbying for concessions to compete directly with Telmex, the formerly state-run telecommunications provier, for local services. The result has been a series of political conflicts that have lasted for the past three years. See 'Dice Bell Atlantic que mantiene plan' La Reforma 5 May 1996.