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U.S. Must Act Soon to Maintain Telecommunications Leadership.

Today, by the time a high-technology product is before an astonished general market, it is archaic in the research laboratories. By the time it is regulated, it has been amortized by the accountants, and probably put on the scrap heap by the users. "If it works," Dwight Eisenhower used to say gloomily about military hardware, "it's obsolete."

Nowhere is this truer than in telecommunications. The big news for the consumer public over the last three years has been the waltz of disconnection danced by the courts with the AT&T interests--the consummation of a lawsuit begun before the founders of Apple Computer had graduated from college. The majority of the population of the United States was born before the computer came out of the lab, and 90 percent of all computers have been made since Judge Greene started drafting his AT&T opinion. It is difficult to tell whether the public, industry or government is more startled by this revolution.

To the public, high-tech terminology has progressed in just a few years from arcana that draw no response to magic words that arouse enthusiasm, but still no understanding. This is evidenced by a surge of heated new-issue buying on Wall Street, a vague assumption that the "sunrise industries" will beneficially remake our future, and an absence of insight by policymakers and commentators when using technological terms in a way that rivals that invertebrate wonder, "industrial policy." This lack of understanding in our country risks the removal of high-tech manufacturing from an inflexible, high-cost work force. Atari's transfer of its factories from California to Taiwan, where AT&T plans to produce its newest switch, can be attributed to that work force.

Until very recently, Washington's principal approach to the discussion of policy in these matters has been lamentation. Executive commissions and Congressional committees have wrung their hands over the decline of US pre-eminence, deplored the lack of targeting of strategic topics, and mourned the decentralized and adversarial US approach to any important subject. These positions are very sensible...and inconclusive.

In the past, America offered industry the advantages of social mobility, an incomparable resource base, and geographic shielding from the worst disasters of war. These strengths and light-handed government regulatin were more than sufficient to offset specific foreign advantages, such as German higher education or Japanese discipline. In the new generation of advanced applied science, highly mathematical, intensely computerized research is genuinely a greater guide to practice than engineering trial and error was before. Theory is expensive to develop. The capital bases required in this field are so enormous that they suffer by dispersion, and there is much evidence that we cannont assume that crucial scarce goods--above all, human resources--are so abundant that they can be divided.

National powers with resource bases beyond the dreams of private American industry are still compelled to limit their options, recognizing that "renunciation marks the master." Japan, having done extraordinary things in cnsumer electronics, is taking aim at mastering computers and satellites. France is spending a disproportionate amount of its reserves onfiber-optic telephone technology, television, and computer networks. India is setting out to be the Third World's space power; while Brazil, in a textbook case of technological nationalism, has developed initial self-sufficiency in mini and micro-computers and closed out foreign participation in data processing.

This country is an enormous separation-of-powers state, whose institutions have been formed like a coral reef, each created by a wash of perspectives from different regions, generations or groups. Each follows its own imperative. The President and the Congress are the only potential arbiters, and they have too much else before them to harmonize the efforts of various agencies interested in high-tech industry. The dJustice Department is preoccupied with antitrust; the State Department is concerned with the tone that industrial competition imparts to foreign relations; the Special Trade Representative must balance our interests with those of other countries; the Interstate Commerce Commission, the Departments of Defense and Commerce, and...beyond these, many other rivers flow into the sea of any specialist policy. In telecommunications, for example, the National Telecommunications and Information Administration, the Voice of America and the Federal Communications Commission all formulate policy.

Every authority has its own constituency, its own time horizon, its own criteria of the necessary and the unthinkable. Never have all gathered to resolve a national protocol of objectives and priorities. Even if the executive branch of government was to speak with one voice, then the courts, the civil liberties organizations, and the immense and powerful communications industry would have their say. As the effects of policy are felt by the media--from the country newspaper considering a switch to electronic printing to the most advanced satellite-using private news service--or byt the enormous all-class constituency of electronics buffs, each lobbies hard for its interest.

Telecommunications policy in this country has centered on rewrites of the Communications Act of 1934. This was pioneering legislation that has been very ably amended; but it was drafted at a time when the United States was an electronic island, substantially invaded only by a 100-megawatt transmitter in Mexico--a world where television was a laboratory toy. The first article suggesting a communications satellite was a decade away, and computers were just speculation.

Until recently, we distinguished condescendingly between "developed" and "developing" countries. Now the truth is clear--we are all developing countries; there is no plateau of achievement and security on which to rest. The imminent transformation of any field in which technologically organized knowledge predominates threatens to catch us as much off guard as did such historical surprises as the Russian satellite of 1957, the OPEC cartel of 1973, the stunning competitiveness of East-Asian steel in the late '70s, the resolve of the Viet Cong, or the irresponsibility of the Iranian mobs. A country that

is often surprised has to consider how to improve its performance.

President Reagan has given us the first hope of a systematic response to challenges. His appointment of an Industrial Competition Commission may compel public opinion and corporate and political leadership to see just how little insulated the United States is from the competitive tides of the world economy. Innovation is now as likely to be found in Osaka as Omaha and, soon, in Rio and Pusan as in San Diego. It is a dangerous anachronism to maintain antitrust principles which actually enfeeble competition by preventing an adequate pooling of resources.

This attachment to a simpler era when all that was required of government was to enforce competition upon American industries (which were conveniently synonymous with the world) now endangers our ability to marshal resources and to compete worldwide in high technology. Other countries have no historical reflexes against combines or subsidies; and much of the loss of ground in American exports may be ascribed to the obstinacy of successive Administrations in assuming that all the United States had to do was to pursue its course and the world would fall into line. The Bank of Japan, the Common Market Commission and the industrial ministries of Latin America have effectively resisted our lead.

It took the Reagan Administration, elected on a strong free-trade platform, to equalize the pressure by drafting and pressing through Congress the Export Trading Company Act and by acquiescing to the formation of the Microelectronics and Computer Technology Corporation, which allows a dozen medium-sized firms to combine research undertakings otherwise only within the means of the giants, the US of the Japanese. Perhaps the most obvious strengthening of our hand abroad has been the substantial increase in the funding of the Export-Import Bank, a very belated response to the notoriously subsidized terms on which the sales of much foreign technology are financed.

None of these initiatives departs from the general principles of American legal policy or political economy: they represent the minimum recognition of changed circumstances. We need togo beyond this minimum.

The legislation introduced in recent Congresses to centralize and rationalize communications policy is almost certainly nonsensical. Either such a supreme center would have to cater to so many interests as to be totally incoherent or it would have to be unrepresentative. Legislators who seek to imitate other countries' policies overlook the fact that whether Dutch or Japanese, Brazilian or Indian, these economies are much smaller and less complex than that of the United States. We cannot pour our national gallon into the beautifully crafted quart bottles of other countries. We have lacked not some "high command" to straighten us out but the patience and steadiness to look at the new world and to learn from it.

The world is being altered by political action almost as fast as by technology. In both cases, new countries barely found on our maps are being heard from. The United States, as the largest technological market, absorbed so much of world production that only recently has it developed an awareness of exports in the way that the simple economies of scale forced its smaller competitors to recognize from the beginning. The superb Dutch firm Philips, whose home market is smaller than Greater New York, went international for that reason.

The largest market for several key branches of telephone equipment is now to be found in East Asia, where many countries are undergoing telecommunications growth surpassing the scope of the US expansion of 40 years ago in both size and sophistication. These countries are coming on the telecommunications stage not only as purchasers, but also as producers, users of frequencies and (in several not altogether likable senses) as regulators.

The advanced countries as a group have been able to defer many of the final-for-now policy decisions on international communications--and that is all the finality one can have during a scientific revolution--to a series of conferences scheduled for 1984 through 1988. The opening year has a certain grim appropriateness when we reflect on how much more heat than light was generated by the recent conference to plan the direct-broadcast satellite service for the Americas. The existing US market and capital resources had created demand and immediate plans to satisfy it on such a scale that our neighbors became alarmed about their long-term chances of gaining good orbital positions and channel frequencies. If this is a problem in our own hemisphere, what will it be like worldwide?

Not all our fellow developed countries will put much energy into helping us--compact, homogeneous nations like those of Western Europe and Japan can operate more economically. An industry that raises private capital with less effort than do most countries, despite their degree of government subsidizing and contracting, may find its development chilled by uncertainty in the capital market and even "spoiled" by the use of frequencies by countries enforcing their claims on the future. The upcoming international conferences on telecommunications are likely to be dominated by powers with little concern or even dislike for alloting orbit-spectra resources to those who already have great possessions.

No one can blame governments for defending their perceived interests. We should also know how different such interests may be. The poorer countries clearly wish to legislate standards that reward cheapness plus systems operability and maintenance by less-trained people. This is very different from the bias toward highly complex systems that the developed world naturally entertains. The poorer st constitution of the International Telecommunications Union ITU that will give them a much louder voice by the end of the decade in the appointment of the union's standards boards. In all of this, the inefficient East Bloc has interests directly contrary to ours. Hence, the recent increased interest by US companies in helping set ITU standards (in Integrated Services Digital Networks, PABX local area networks and voice and data switches) may be too little and too late.

We would perceive our interests if we could only give more time and urgency to defining them. Yet our strength is in our diversity. Our diversity also ensures that we have institutions and corporations with interests and services sympathetic with the poor as well as the rich. The government's job is to be up to date, not more pervasive. But how much more up to date we all must be still seems to be going unrecognized: new technology means new policy, and the two cannot be separated.
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Author:Tobin, M.
Publication:Communications News
Date:Mar 1, 1984
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