Anthony J. Pennings, PhD

WRITINGS ON DIGITAL STRATEGIES, ICT ECONOMICS, AND GLOBAL COMMUNICATIONS

The Transformation of Telecom to Global IP – GII to WTO

Posted on | October 19, 2014 | No Comments

In the mid-1990s, the international telecommunications world experienced a fundamental transformation. With the introduction of the “Global Information Infrastructure” (GII) in 1994, Vice-President Gore fired a warning shot that was followed up with a series of ITUreforms designed with the globalization of communications services and e-commerce in mind. By 1995, a powerful redefinition was settling over the industry. “In successfully shifting the locus of international regulation away from the International Telecommunications Union (ITU), a European and developing-country power base, to the World Trade Organization (WTO), where its power reflects its huge, high-income market, the United States has also fundamentally shifted the conceptualization of telecommunications away from the postwar public utility, security related, monopoly model, to that of a customer driven, trade-related, service industry.”[1] This post examines what and how international institutions had a bearing on the development and diffusion of the global Internet Protocols (IP) that have transformed communications and social media around the world.

The WTO met quickly in Singapore in 1996 and quickly resolved to reduce tariffs on the flow of information technologies. The next year it met in Geneva and established rules for the continued privatization of national telecommunications operations. The telco environment moved from highly regulated bureaucratic telecoms united under the umbrella of the ITU to less regulated privatized telcos operating, however, within an international trade regime. They have shed their government PTT (Post, Telegraph, and Telephone) bureaucracies only to find themselves embroiled in a larger net cast by the international treaties of dominant countries. However, these multilateral arrangements could break down another set of bureaucratic organizations, the broadcasters, and with it usher in a new age of television, characterized by a multiplicity of interactive services and new business models based more on e-commerce rather than mass advertising.

Vice-President Gore had introduced the concept of the GII at the annual ITU meeting in Buenos Aires during March of 1994. The target was the national PTT monopolies, the ITU’s main clientele. “He described a new communications revolution driven by the export of three American ideas: competition instead of monopoly, the rule of law, and the connection of networks to existing networks at a fair price.”[2] Gore’s approach was to use the government to ensure Al Gorecompetition and economic development. “He outlined the basic principles of a policy revolution: the Administration would repudiate the embrace of monopoly by government and instead use the power of law to open all markets to innovation, competition, new investment, new entrepreneurs.”[3] The GII was not a practical, technical solution but at the time the Internet had not emerged as the obvious telecommunications medium. Wireless, cable television, direct to home satellite systems, were all in competition to emerge as the dominant “information superhighway”. The GII was a conceptual framework to further challenge the PTTs and pave the way for data communications and all the related services that had been promised by ISDN (Integrated Services Digital Network).

Gore followed up the next month in Marrakesh, Morocco, at the closing meeting of the Uruguay Round of the GATT (General Agreement on Tariffs and Trade) negotiations which called for the creation of the World Trade Organization. It would be the WTO that would help facilitate the modernization of telecom networks around the world and break down the barriers to global IP. During that summer President Clinton, following Democratic tradition reaching back to the 1934 Reciprocal Trade Agreements Act that authorized the President to negotiate trade agreements with other countries, urged the development of an international information infrastructure at the G-7 G-7meeting in Naples, Italy. The G-7 had emerged since the breakdown of Bretton Woods in the 1970s as a powerful vehicle for coordinating international policy and pressuring multilateral organizations. The next year, after the WTO was formed, the G-7 nations (sometimes G-8) met in Brussels, Belgium for a Ministerial Conference on the Information Society. Britain, Canada, France, Germany, Italy, Japan, and the United States agreed in principle to develop the Global Information Infrastructure (GII) and funded a number of projects to test international broadband networking as well as special projects on emergency management and telemedicine. Despite rising opposition, Congressional Republicans supported the Clinton-Gore initiative and helped to ratify the international trade agreement.

The World Trade Organization was formed on January 1st 1995. The WTO was conceived as an organization designed to negotiate reductions on international tariffs and other trade barriers. Formerly the General Agreement on Tariffs and Trade (GATT), the WTO was created for the liberalization of international trade and economic cooperation across national boundaries. WTODue to the complexity of international economic interdependence, the contracting parties of GATT launched the eighth major trade negotiation round at a ministerial meeting in Punta del Este, Uruguay, in September 1986. More than one hundred nations participated in negotiations regarding international economics. Over the next three years, the World Trade Organization (WTO) tackled crucial issues that paved the way for the Internet and global e-commerce. Clinton’s re-election and the signing of the Telecommunications Act of 1996 in February 1997 gave the administration a powerful negotiating position and they stressed and pushed Gore’s telecommunications plan.

In late 1996, the WTO met in Singapore and agreed to reduce tariffs on information technology trade, including personal computers. The Information Technology Agreement (ITA) was concluded at the December 1996 Ministerial Meeting in Singapore and took effect July 1, 1997. The ITA was a benchmark agreement that significantly reduced tariffs on a wide range of information technology products. It reduced customs duties on computers and telecommunications and planned to eliminate them by 2000. This affected a whole range of products from computers, keyboards, printers, modems, switching equipment, semiconductors, software and scientific equipment. It specifically allowed American companies to sell their IT wares more competitively. Cisco was particularly aggressive in advocating further liberalization of trade in information technology products through its membership in the American Electronics Association and other industry coalitions. Cisco’s CEO John Chambers was one of several high-tech leaders that served on President Clinton’s Advisory Committee on Trade Policy Negotiations (ACTPN) and helped in developing a plan for addressing Internet commerce issues at the WTO.[4] The ITA significantly reduced tariffs on over 90% of information technology products traded globally. The agreement meant savings for U.S. exporters of some $5 billion each year.

The WTO met early the next year in Geneva, Switzerland and addressed a new round of trade negotiations on information technologies and telecommunications services.[5] The February meeting sought a new Information Technology Agreement (ITA II) that was intended to further liberalize markets and benefit information technology manufacturers and consumers. In the end, trade negotiators failed to reach an agreement on the ITA II because of continuing disputes regarding questions about what products would be covered. However, an agreement was reached that signaled good news for cheap telecommunications and the internationalization of Internet technologies and the World Wide Web.

Notes

[1] Quote on the WTO from Jill Hills, “U.S. Rules. OK?”, in Robert W. McChesney and John Bellamy Foster (1998) Capitalism and the Information Age: The Political Economy of Global Communication Revolution. p. 101.
[2] Hundt, Reed. (2000) You Say You Want a Revolution? A Story of Information Age Politics. p. 45.
[3] ibid, p. 25.
[4] Cisco would become the world’s largest company by market capitalization in 2000.
[5] Early debate on services inclusion from Jonathan D. Aronson, “Trade Negotiations, Telecom Services, and Interdependence,” in Jussawalla, M. et al. (eds.) Information Technology and Global Interdependence. New York: Greenwood Press. 1989. This book consisted largely of contributions to three conferences entitled TIDE 2000 (Telecommunications, Information and Interdependent Economies) organized by the Japanese Foreign Affairs Ministry and the East-West Center in Honolulu, Hawaii.

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AnthonybwAnthony J. Pennings, PhD is a professor of global media at Hannam University in South Korea. Previously, he taught at St. Edwards University in Austin, Texas and was on the faculty of New York University from 2002-2012. His first faculty position was at Victoria University in Wellington, New Zealand.

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    Professor and Associate Chair at State University of New York (SUNY) Korea. Recently taught at Hannam University in Daejeon, South Korea. Moved to Austin, Texas in August 2012 to join the Digital Media Management program at St. Edwards University. Spent the previous decade on the faculty at New York University teaching and researching information systems, media economics, and strategic communications.

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