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Transforming Global Information and Communication Markets

Transforming Global Information and Communication Markets: The Political Economy of Innovation

Peter F. Cowhey
Jonathan D. Aronson
with Donald Abelson
Copyright Date: 2009
Published by: MIT Press
Pages: 352
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  • Book Info
    Transforming Global Information and Communication Markets
    Book Description:

    Innovation in information and communication technology (ICT) fuels the growth of the global economy. How ICT markets evolve depends on politics and policy, and since the 1950s periodic overhauls of ICT policy have transformed competition and innovation. For example, in the 1980s and the 1990s a revolution in communication policy (the introduction of sweeping competition) also transformed the information market. Today, the diffusion of Internet, wireless, and broadband technology, growing modularity in the design of technologies, distributed computing infrastructures, and rapidly changing business models signal another shift. This pathbreaking examination of ICT from a political economy perspective argues that continued rapid innovation and economic growth require new approaches in global governance that will reconcile diverse interests and enable competition to flourish. The authors (two of whom were architects of international ICT policy reforms in the 1990s) discuss this crucial turning point in both theoretical and practical terms.

    eISBN: 978-0-262-25506-6
    Subjects: Business, Technology

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Acknowledgments
    (pp. vii-x)
  4. Introduction
    (pp. 1-4)

    As 2009 nears, the world is in a time of gloom and panic. Will global governance and the global economic order survive? In retrospect, some saw the collapse of the dot com bubble as a portent of the financial meltdown and the collapse of confidence in the future. In the United States there is a dour bipartisan consensus that escalating special interest politics, budget deficits, economic insecurity in the midst of more consumption, environmental and energy policy gridlock, and deep uncertainties about national-security strategy point to intractable problems in the design and conduct of public policy. In other countries the...

  5. I The Inflection Point

    • 1 The Next Revolution in Global Information and Communication Markets
      (pp. 7-18)

      This book focuses on the ICT infrastructure, the intersection of communications networks with the infrastructure and applications of information technology. The networked information infrastructure that blends computing and communications is the largest construction project in human history. The money and the effort required to build this infrastructure dwarf what was needed to erect the pyramids of Egypt or the Great Wall of China. The initial investment created a huge global market for information and communications technology, estimated to grow to almost $4 trillion by 2009. (Figure 1.1 tracks the growth of the hardware, software, services, and communications market segments from...

    • 2 The First Two ICT Eras
      (pp. 19-42)

      The organization of the global ICT infrastructure shifted dramatically from the mid 1950s through the end of 2000. Technology and policy changes drove the shift.

      In the early years, ICT was essentially two markets: a monopoly telecom marketplace and a distinct, concentrated computer and software industry centered on mainframes and mini-computers. During the 1960s and the 1970s, the growth of data networking and nascent competition in equipment and value-added services led to increased value-added competition in both services and equipment as a limited exception to monopoly. As networking matured, it gradually brought these two markets together into an integrated ICT...

    • 3 Modularity at the Inflection Point
      (pp. 43-64)

      A new era of networked ICT is upon us. As in earlier times of imminent change in information networking, its precise form and its efficiency remain malleable. This chapter discusses how these changes will challenge the interests of numerous stakeholders.

      As in the last two eras, the market position of a leading firm (in this case Google) is important to understanding the technological and political economic choices confronting policy makers. Grasping the strength and limits of Google’s potential for dominance provides a vantage point for examining what is ahead. Although no single company’s fate is a true measure of an...

    • 4 Modularity and Innovation
      (pp. 65-94)

      The implications of modularity undercut the utility metaphor in important ways. Modularity and interoperability of capabilities signal the demise of the utility model that depends on quasi-monopoly or duopoly in major software and service platforms. Various competitive strategies and architectures are emerging. The inflection point puts large parts of the industry’s value added in play.

      The exploration of the implications of modularity begins with a closer look at how different competitors interpret the strategic import of the utility metaphor. These observations are then extended into a broader reflection on important competitive advantages by offering a “systems integration” model of ICT...

    • 5 The Political Economy of the Inflection Point
      (pp. 95-126)

      If the networked ICT industry is at an inflection point that challenges all major segments of this market, then it should be reflected in the political economy of market governance. Here we examine the evidence.

      In this chapter we probe two dimensions of the political economy at the inflection point. We begin by arguing that the United States is and likely will remain for some time the pivot of this inflection point. (Although its agenda cannot determine global change, the US is likely to be the single largest influence on the global policy agenda.) Then we turn to the political...

  6. II A Theoretical Interlude

    • 6 Theory before Policy
      (pp. 129-146)

      We theorize because a good theory can look across markets and countries to find common causal dynamics about how politics and policy shaping global and national markets. Our story is one of political economy. The preferences of the powerful across the globe, informed by their domestic political economies, the dynamics of negotiation, and the need to build support for proposed global actions ensure deeply political alternatives dominate governance.

      Global market governance—whether by informal or formal agreements and institutions—is important because choices about the design of market governance influence the winners and losers and the innovation and efficiency in...

  7. III Three Dimensions of Global Market Governance

    • 7 Trade and the Global Network Revolution
      (pp. 149-174)

      Markets undergoing significant technological transformation face questions about global market governance. Technological changes were catalysts that led to the transformation of domestic market policies in the first two ICT eras. Eventually these changes in domestic markets created challenges that existing international market governance could not resolve. One response by governments was to grant more of a role to trade agreements in the global governance of ICT markets.

      Initially, trade rules had no jurisdiction over communications and information services. Over time, trade rules emerged and evolved in response to the rise of value-added competition. Governance reflecting managed market-entry arrangements finally were...

    • 8 Wireless Infrastructure
      (pp. 175-206)

      The ascendance of the wireless infrastructure was a major ICT innovation. This chapter examines the political economy of the changing governance of the wireless infrastructure by analyzing the introduction of wireless broadband (third-generation, abbreviated 3G) services.

      Governments strongly influenced the wireless innovation processes because they controlled the radio spectrum, the essential wireless real estate, set general competition policy for wireless services, and often set the technical standards for the market. The traditional justification for government’s central role was that radio spectrum constituted a scarce public resource that could be degraded by radio interference among competing uses. Government policies almost always...

    • 9 Internet Governance
      (pp. 207-232)

      The Internet is credited with incubating new forms of networked governance.² As the first ICT network infrastructure designed for the digital age, the Internet is an indicator of how governance of ICT could evolve.

      There are three interrelated layers of Internet governance.³ First, development, specification, and adoption of the technical standards are voluntary, and the benefits of compatibility are widely distributed, so there are incentives to cooperate. Still, agreement can be elusive. Second, the allocation and assignment of exclusive resources, such as addresses and domain names, resembles the allocation of resources in other domains, except that it requires technical knowledge...

  8. Summary and Conclusions
    (pp. 233-268)
    Donald Abelson

    Here we offer a preliminary blueprint for future ICT governance policies. Specific suggestions show how to begin the process of reformulating domestic and international governance to meet the challenges presented at the inflection point. Most of our proposals begin with a test of political economic feasibility in the United States, because for the foreseeable future America will continue to have the most influence on global arrangements. We also employ our theory of how global governance changes to connect shifts in US policy to global policy decisions.

    We address several important questions, including these:

    Which policy choices should shape ICT’s governance...

  9. Notes
    (pp. 269-336)
  10. Index
    (pp. 337-342)