Winning the Silicon Sweepstakes

Winning the Silicon Sweepstakes: Can the United States Compete in Global Telecommunications?

Copyright Date: 2010
Published by: Yale University Press
Pages: 416
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  • Book Info
    Winning the Silicon Sweepstakes
    Book Description:

    In this timely book, Rob Frieden points out the many ways the United States has fallen behind other countries in telecommunications and broadband development. Despite the appearance of robust competition and entrepreneurism in U.S. markets, there is very little of either. Because of an inattentive Congress and a misguided FCC unwilling to confront real problems, industry incumbents can earn healthy profits while keeping the United States in the backwaters of Internet-based information, communication, and entertainment markets. At every turn, regulators have tipped the scales in favor of large established companies, creating an environment that stifles innovation. As a consequence, Americans are stuck with relatively slow connectivity and with equipment that lacks features that have been staples in other countries for years. In telecommunications, the United States is a little like a third world country that is developing under crushing bureaucracies without recognizing that the rest of the world has passed it by. Professor Frieden not only shows how failure can intrude on the ability of the United States to compete but suggests how to restore its competitiveness.

    eISBN: 978-0-300-16312-4
    Subjects: Business, Political Science

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
    (pp. vii-xiv)
    (pp. xv-xvi)
  5. CHAPTER ONE The Law of Unintended Results
    (pp. 1-21)

    THE UNITED STATES has long led the world in telecommunications, specifically in information, communication, and entertainment (ICE) markets, as exemplified by its incubation and privatization of the Internet. Ironically, it does not lead in securing access to broadband wireline and wireless networks or in providing the government stewardship possibly needed to stimulate widespread installation of the infrastructure for these essential networks. It has lost much of its competitive and comparative advantage in ICE markets because limited efforts have been made to promote digital literacy and because ICE equipment and service providers have effectively thwarted necessary government oversight.

    Other nations have...

  6. CHAPTER TWO Feast and Famine in the Information Age
    (pp. 22-43)

    TECHNOLOGICAL INNOVATIONS offer unprecedented opportunities for consumers to achieve faster, better, smarter, cheaper, and more convenient access to information, communications, and entertainment services. In light of the extraordinary U.S. success in commercializing the Internet, as well as its best-practices leadership, spanning many years, in computers, data processing, software, and other ICE industries, we would expect the United States to have achieved equally stellar achievements in building the infrastructure to provide and access ICE services. Remarkably, the United States has failed in that respect, despite being the location for much of the investment made during the heady dotcom boom of 1998...

  7. CHAPTER THREE How the United States Lost Its Digital Advantage
    (pp. 44-67)

    BASED ON REALISTIC measures of ICE infrastructure installation and market penetration, the United States lags behind many industrialized and even industrializing nations in market penetration, costs, correlation with per capita gross domestic product, annual growth, deployment of fiber-optic links, and average speed.¹ Why these shortcomings? Government ICE policymaking has become politicized, distracted, and ineffectual, and ICE ventures have effectively deflected complaints about performance, price, and business practices. While the United States falters, other nations recognize how a robust ICE infrastructure can prime the pump in many aspects of commerce and social interaction.²

    The United States has a long and successful...

  8. CHAPTER FOUR Case Studies in Wrongheaded Policymaking
    (pp. 68-108)

    POLITICS, ECONOMIC DOCTRINE, and expediency appear to have overtaken reason in ICE policymaking in the United States. Though obligated to uphold the public interest, fairly interpret statutes, and generate a complete factual record before making decisions, FCC commissioners, with increasing frequency, consider policy issues from a political perspective. Partisanship can create incentives for individual commissioners to seek predetermined policy outcomes regardless of the factual record that the Commission staff generates—or could generate if the FCC would conscientiously seek public participation. No matter what the commissioners read and hear in testimony or what actual empirical evidence and statistics the Commission...

  9. CHAPTER FIVE Best and Worst Practices
    (pp. 109-131)

    DESPITE CONFIDENT assertions about a robustly competitive ICE marketplace, state and federal telecommunications regulators in the United States still maintain a complex, expensive, and woefully flawed mechanism to subsidize access to basic, “lifeline” telephone service and, in limited instances, broadband access to the Internet. Residents in remote areas and Indian reservations, poor people, schools, libraries, and rural medical facilities qualify for subsidized access on the grounds that market failure has occurred in terms of both geographical penetration and affordability.

    As articulated in section 254 of the Telecommunications Act of 1996, the FCC and a Federal-State Joint Board on Universal Service,...

  10. CHAPTER SIX Understanding the Dotcom Implosion
    (pp. 132-146)

    DESPITE AMPLE BENEFITS accruing from ICE technologies, the Internet will not change everything, nor can it escape the impact of business cycles and other economic forces. With breathtaking speed, attitudes about the ICE marketplace have careened from irrational exuberance to extraordinary pessimism. Share prices, investors’ enthusiasm, and prospects for an information revolution have waned since the gold rush mentality of the late 1990s. With growing demand for full-motion video services accessed by both computers and wireless handsets, the cycle has begun to swing upward. Increasing demand for fiber-optic-cable and satellite capacity has begun to reduce the overhang of excess capacity...

  11. CHAPTER SEVEN The Fundamentals of Digital Literacy
    (pp. 147-164)

    EVEN IF EVERY nation had a conscientious and effective government that safeguarded consumers and promoted the public interest, individuals still would need to acquire and maintain digital literacy. They would need to have a general understanding of how ICE equipment and services work and what services enhance their personal well-being.¹ Technological mastery requires more than hand-eye coordination, the flexibility to type on wireless handsets with small keyboards, the ability to use such graphical user interfaces as the computer mouse, and the skill to maneuver in the World Wide Web. Mastery involves knowing how to exploit ICE technologies for individually beneficial...

  12. CHAPTER EIGHT Challenges and Choices
    (pp. 165-183)

    THE ICE ENVIRONMENT combines, and will combine in the future, many of the characteristics of the past with newly developed characteristics. The Internet does not change everything, as we have seen, but we should not ignore how analog technologies and markets have evolved into digital ones. Change seems to have picked up in velocity, and the stakes have increased, particularly as ICE technologies and markets converge and it looks as though a single Internet medium will provide access to nearly all ICE services. The failure to understand the opportunities and threats presented by a changing ICE environment has the potential...

  13. CHAPTER NINE The Impact of Technological and Market Convergence
    (pp. 184-237)

    THE CONVERGENCE OF ICE technologies and markets substantially raises the stakes for haves and have-nots: for individuals and nations that have access to digital technologies and services, along with the skills needed for their effective use, and individuals and nations that do not. Those lacking access—whether because of financial limitations or reluctance to invest in digital literacy—risk falling further behind in the ability to exploit ICE technologies for personal, societal, and national gain. The stakes constantly rise. The issue is not just how best to access entertainment and communication links. More important is the question of whether and...

  14. CHAPTER TEN Capturing the Benefits of Convergence
    (pp. 238-253)

    DESPITE THE IRRATIONAL exuberance and pessimism displayed in the ICE marketplace over the past decade, few would disagree that on balance, technological innovations have generated ample dividends. As we have seen throughout this book, whether the benefits flow to the public requires limited but effective government oversight and digitally literate consumers. ICE technologies and markets have begun to converge in ways that potentially increase both the rewards and the risks for the public and for ICE ventures. Most people stand to benefit from the cost savings and efficiency gains resulting from digitization, packet switching, and the proliferation of broadband access....

  15. CHAPTER ELEVEN What Government Should Do
    (pp. 254-289)

    IN THE UNITED STATES, extraordinary politicization, wishful thinking, and research sponsored by stakeholders have all but guaranteed that ICE policies will fail to promote best practices, competition, and enhanced consumer welfare. Policymakers operate from the assumption that competition exists, or soon will exist, if only the legislators and the regulators would remove disincentives to investment. The United States used to provide a model for what nations should do to stimulate the ICE economy: remove barriers to market entry, promote competition between private ventures, and have an independent regulator with the resources to ensure a level playing field and sustainable competition....

  16. CHAPTER TWELVE Unresolved Issues
    (pp. 290-298)

    THROUGHOUT THIS BOOK, we have examined instances in which action or inaction by governments, companies, and individuals prevent the full exploitation of ICE technological innovations. Many governments have become so enamored of the concept of competition that they ignore the need for regulations to curb market power, respond to anticompetitive conduct, and remedy market failures that occur when industry segments do not become as competitive as expected. Companies have come to understand that they can accrue valuable competitive advantages by exploiting governments’ predilection to favor marketplace competition, hence companies’ skillful participation in the political, regulatory, and lawmaking process. Compounding regulatory...

  17. CHAPTER THIRTEEN The Way Forward
    (pp. 299-312)

    ICE TECHNOLOGICAL and marketplace convergence has become a reality. Yet many ICE ventures, consumers, and governments appear remarkably ill equipped to respond to information-age changes. Given such poor preparation, some of the anticipated positive benefits may not arise, and some of the avoidable problems will. Consumers lacking digital literacy will find themselves increasingly on the have-not side of the digital divide, even though many can afford new ICE products and services. Governments that have bought into the “robust competition exists” argument may lack the inclination, resources, and perhaps even legislative authority to provide necessary and effective regulation. Since ICE technologies...

  18. NOTES
    (pp. 313-380)
    (pp. 381-396)
  20. INDEX
    (pp. 397-409)