Diving into policy issues

Conference

report

Diving into policy issues The Third Annual Communications 22-24 June 1988

Policy Research Conference,

The annual Communications Policy Research conference met again this year at the Cumberland Lodge in Windsor Great Park, UK. This was the third annual conference on European Telecommunications Policy Research, bringing together a small group of selected academics and policymakers from the UK, Europe and the USA for indepth discussions on current policy issues. The main themes discussed included price caps, and in particular their limits and flaws, and the range of issues raised by ISDN in its many forms. The first session was concerned with regulatory policy. Although he was unable to attend, Harry Trebing, of Michigan, one of the foremost American experts on regulatory theory and policy, produced a paper on the US experience of deregulation, which included a trenchant critique of price caps, and a set of suggestions as to how they could be made more effective. He proposed that detailed cost and price controls should be linked to incentives and penalties to enhance simultaneously allowing efficiency, telcos the flexibility to take risks and ensuring that shareholders bear the full weight of risk. Kevin Morgan (SPRU) and Douglas Pitt (University of Strathclyde) giving a paper entitled ‘Coping with turbulence’, argued that the decentralized nature of the US government has resulted in endemic interagency turf wars and coalition struggles over such issues as ONA, liberalization of the regional Bell operating companies or the New York Teleport, and has become a factor in fostering political turbulence and commercial uncertainty. Far from liber-

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Windsor, UK,

alization and the MFJ reducing the importance of regulation, regulatory strategies are as important a component as ever in corporate strategy. Jill Hills’ (City University) argument challenged the Morgan-Pitt thesis, suggesting that there is a surprising coherence in US policy perspectives, orientated above all to the global needs of key US firms. Negotiations in GATT and WATTC are treated almost as bilateral negotiations between the USA and the rest of the world when this suits its purpose, and, she argued, there is little evidence of the decline of US hegemony in its success in imposing its view of the world of WATTC.

ISDN In the second session, on ISDN, Dr Barbara Mettler Meibom of Hamburg University spoke of a major German study being conducted into the wider implications of ISDN, in particular highlighting fears of state abuse of the potential of the ISDN to provide information about individuals’ communications and transactions. Dr Meibom argued for separate networks for telephony, data and broadcasting and ‘anonymous’ switches that limit the scope for recording information about network usage. The German group is currently investigating technical solutions which would override the capacity of switches to record the nature and direction of conversations, transactions etc. Paul Slaa of Vrige University described a study being undertaken by the Dutch Office of Technology Assessment (analogous to the US Congress OTA) on ISDN, which is analysing the ISDN as a design problem and seeking to gener-

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ate a wide debate about its benefits and costs. Herbert Dordick of Temple University described the Pennsylvanian experience of ISDN where the role of the Bell operating company has become one of joining specialized user groups (universities, distance learning corporations etc) which are rapidly developing their own closed ISDNtype networks. Apparent fragmentation appears to coincide with much greater use of the public network. Moreover, ISDN trials with closed user communities can provide the BOC with experience of advanced information services. Jens Arnbak of Delft University described the problems of information ownership in an ISDN environment, the conflicts between privacy and the free flow of information, and the different models of public broadcasting and private telecommunications. Arnbak asked if it is possible to draw up a framework for ownership and protection that is not specific to a particular set of technologies. Drawing on work conducted for the Dutch Committee on Computer Crime, Arnbak called for a new model of control dependent on the sources of information and the locus of control and flows. Rather than using a concept of ownership of data or information, the boundaries of protection are set by whether networks users explicitly seek to make their communications exclusive or to direct and address them.

Universal Service In the session on universal service, Jeremy Mitchell of the National Consumer Council outlined a series of reports undertaken by consumer groups in all the EC countries together with the recent Consumers Association (CA) report on BT’s performance. The reports call for much more consistent and detailed reporting on service qualities, while the CA report calls into question the efficacy of existing price caps, suggesting that these need to be broader and to be much more tightly related to service targets. Nicholas Garnham of the Centre for Communications and Information Studies (CCIS) gave a pap-

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er on universal service in West European countries, and’explained his conclusion that liberalization and competition are unlikely to have a significant effect on penetration rates. He noted a striking absence of any clear definitions of what universal or public service should mean. Ironically, definitions only become necessary when deregulation is being considered. Manley Irwin of New Hampshire gave a brief account of how private networks are evolving as elements in corporate strategies, redefining corporations relationships with suppliers, distributors and financial institutions; while Howard Williams and Andrew Gillespie of CURDS in Newcastle described the perspectives of smali and medium-sized firms. Reference was made to the apparent convergence of large firms taking on the characteristics of networks of small units and small firms forming cooperative networks.

New regulatory

approach

In a final session, Dr Elixmann of WIK (West Germany) delivered an analysis of the production conditions in West Germany’s telecommunications network, and described the problems involved in determining the origins of productivity gains and falls. Geoffrey Mulgan of CCIS, in a paper on costs and tariffs in new networks, argued that the indeterminacy of costs and prices in the ISDN and broadband networks will demand new regulatory approaches that go beyond current debates on the relative merits of rate of return and price capping. One possibility suggested, echoing Harry Trebing’s paper at the beginning of the conference, is the imposition of targets and revenue penalties tied to such things as service quality. Suggestions that the conference should become more broadly European, ideally being based in a different country each year, are now under active discussion. Geoffrey Mulgan Centre for Communications and Information Studies Polytechnic of Central London London, UK

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Book reviews Switching on to policy needs THE LAW AND ECONOMICS TRANSBORDER TELECOMMUNICATIONS

OF

A Symposium edited by Ernst-Joachim

Mestmgcker

Nomos Verlagsgesellschaft, Baden Baden, Germany, (Law of International Telecommunications, Vol I), 1987, 45OPP

This is an important book of use to a wide readership, including policymakers, regulators and operators in telecommunications and broadcasting, negotiators on trade in services, practising lawyers, and those with a general interest in the unfolding national and international debates on telecommunications issues. It consists of a series of papers and comments from a symposium in West Germany in March 1986. The papers range from detailed analysis of specific legal questions, through philosophical assessments of the issues under debate, to prognostications of where the debates might lead. Since that symposium two-and-ahalf years ago, a number of important events have taken place, including the launching of the Uruquay Round of negotiations on trade in services, the release of the European Community Green Paper on Telecommunications, agreement on Canada/US Free Trade, and disagreement on the approaches to be taken in WATTC ‘88. Nevertheless, the papers for the most part give useful insights and are worthy of note in current work and debate. I commend them in particular to policymakers. As I now comment in more detail on the contents, let me confess the obvious - I am not an expert in the range of issues covered in this interest-

ing and very readable volume; my own interests and biases will soon become clear! The book is divided into four parts: Introduction; National and international regulation of content in telecommunications; New developments in national telecommunication’s policies; and International rule making for transborder telecommunications. The first paper in Part I, written by Mestmacker (the editor) gives an excellent introduction to the book, and melds together broadcasting and telecommunications issues in a logical and almost convincing manner. Part of the thesis of the book is clearly that ‘the distinction between communications and broadcasting (. . .] is losing its relevance’ (p 12). and this theme is picked up in a number of the following contributions (eg pp 87, 195, 229). I am not, however. entirely convinced that it is desirable to make such a merger at this stage, because of the already complex and sensitive nature of the issues in telecommunications (the area with which I am familiar). Another assertion in this paper is that, ‘Governments recognize without exception that telecommunications is of

vital importance for the economic growth and the international competitiveness of their national industries’ (p 21 emphasis added). Again, I am not convinced that this is so; if it were, it would have been demonstrated in more widespread changes in telecommunications policies to reflect the new economic realities. The paper by Grewlich in Part I provides a useful overview of European actuality and potential in the international information technology infrastructure. It also recognizes the ‘significant political importance’ of the OECD Declaration on Transborder Data Flows (p SO), and is one of the few papers acknowledging concerns of developing countries. The value of the

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