Telecommunication refers to point-to-point or networked electronic transmissions of information—telegraph, telephone, wireless, and data (i.e., the Inter net). Telecommunication networks can use both cable and wireless transmissions, although in the wireless realm telecommunications are still characterized as networked or person-to-person links rather than one-to-many broadcast media. Modern societies depend on reliable and efficient electronic communications to conduct critical economic and social transactions every day. In most countries, however, the genesis of telecommunication networks from early telegraph systems placed their function and regulation within state organizations or state companies associated with postal services. As digital telecommunications, especially telephone and data networks, began to grow and diversify, these systems first became independent of postal administrations and then mostly privatized as new, competitive services, such as mobile telephones, came into use.
Traditional means of distant, point-to-point communications were affected by the movement of written information overland or by sea. From the mid-nineteenth to the mid-twentieth centuries, telecommunication networks were nearly all analog systems: Transmissions by either wire or wireless radio were in the form of analog waves. When digital computers were developed and their performance increased so dramatically, the move to convert from analog to digital systems was justified initially by cost savings and versatility. In embedding such computer systems in telecommunication networks, it also became apparent that new, diverse services could be deployed rather quickly and easily. Related technologies, such as digital mobile telephone systems and packet-switched networks, could be easily connected to or overlaid onto existing network infrastructures. The open, generative nature of such digital transmission systems and their associated standards paved the way for competition, as market entry by new firms became much easier, and deregulation in one country created pressures for deregulation in others.
Developing societies traditionally viewed access and use of telecommunications technologies as a way to generate foreign exchange or manage centralized political economic functions. Now many emerging market countries realize that telecommunications liberalization can be a major factor in accelerating growth, promoting innovation, and ensuring economic diversification. Governments worldwide now view reliable, technologically advanced telecommunications as a national resource for competitiveness and economic security. Due to the ubiquity of integrated digital multimedia resources and recognition that these resources offer a decisive competitive advantage, the stakes of decisions in telecommunications policies have increased. As organizations of all types discover new ways of employing telecommunications to further their objectives and strategies, some scholars observe that advances in telecommunications have transformed power relationships in favor of private organizations over traditional governmental functions.
Traditional Policy Frameworks
Governmental policies—in constitutional, regulatory, and economic contexts—largely shape the design, operation, and diffusion of telecommunication products and services. Telecommunication policy primarily involves issues concerning the transmission facilities of electronic communication. Content issues and related policy concerns, such as freedom of speech, rights to communicate, censorship, and privacy, have not been within the primary jurisdiction of telecommunication regulatory agencies.
Ownership, access, standards, and spectrum management have been the primary areas of telecommunications policy regulation under government monopoly regimes and contemporary regulatory structures. As an outgrowth of government-provided postal services, most governments established agencies or parastatal corporations known as PTTs (Post, Telegraph, and Telephone) to provide national telecommunications services and associated telecommunications equipment to their users. PTTs that were organized as state-owned enterprises obtained their capital investment from general government revenues and were typically prohibited from raising capital from commercial sources. In the United States, the 1934 Communications Act established exclusive commercial telecommunications carriers for voice and nonvoice services—AT&T (the Bell System) and Western Union, respectively. The Federal Communications Commission (FCC) performed regulatory oversight, including approvals for establishing prices, for interstate rates, and state public utility commissions performed oversight for local services. Under the PTT model, rates were typically established to cover investment and operating costs.
As public utilities, telecommunications operators have had to contend with policy requirements for universal access, or universal service, and its consequent economic burdens. Dense transmission trunks between major urban areas or within densely populated areas are more economical to operate due to high demand and less costly supply. Providing public telecommunications access to rural or thin-route areas is more expensive than acceptable prices would allow. Users in such areas either have inferior coverage or pay higher prices unless regulatory policies enforce rate averaging and subsidies to offer comparable services.
Standards also heavily influence the types of products and services available to users. Requirements imposed by telecommunications policy makers have included prior approvals—known as type acceptance—or restrictions on the types of customer-premise equipment that can be connected to public networks, allowable technical interfaces, and service quality (e.g., average network availability).
Radio spectrum management has also been the domain of government regulators. The bands of the electromagnetic spectrum useful for electronic applications include wireless telecommunications, over-the-air broadcasting, satellite communications, and radars. Demands often compete for alternative services, such as frequency bands reserved for television broadcasting versus wireless data networks. Designation and registration of the radio spectrum has been an important policy function of governments and has developed into sophisticated international rules in the International Telecommunication Union for avoiding interference and in allocating frequency bands to their most efficient use.
The Digital Revolution
With the widespread availability, growing performance, and decreasing costs of computers, telecommunication networks became more heavily automated, digital, and combined with information technologies. Digital networks allowed new providers to demonstrate how easily telecommunications services markets could be entered, diversified, and expanded. These types of technological opportunities subsequently caused a number of governments to reconsider monopoly service models. Customer-premise equipment was first opened to competition, followed by new services such as mobile telephony and most public services. State-owned telecommunication operators were also increasingly privatized, allowing them to compete in domestic and international markets and to raise investment capital in traditional commercial markets. Most countries have privatized their telecommunications services and have opened markets to alternative operators and suppliers.
The introduction of multiple suppliers and operators led quickly to a bifurcation of regulators and operators. To maintain impartiality, policy and regulatory agencies could not be associated with any single operator. These policy agencies also have had to adapt to new challenges created by competitive markets. These include equipment performance standards, interconnection rules among telecommunications operators, allocating spectrum bands among competing operators, achieving universal service, and accelerating the deployment of new services, such as broadband wireless access.
Emerging Policy Issues
The strenuous efforts in the late 1990s to liberalize telecommunications services, in the context of a global trade regime under the World Trade Organization (WTO), highlight the importance of global telecommunications. Under resulting agreements, about 90 percent of telecommunications services in over seventy countries were opened to competition. Some estimates by the WTO indicate that such liberalization has added the equivalent of one trillion U.S. dollars to the world’s gross domestic product.
Such a generation of wealth and its consequent dependence on the global telecommunications infrastructure lead to new and potentially contentious policy issues—national and global. Developing countries continue to worry about being caught in a digital divide, less able to compete in a communications rich global economy. Other countries are concerned that the rules of global telecommunications governance are not fully institutionalized. Private organizations and individuals have concerns about how the benefits of widespread, affordable, unencumbered communications can continue. Issues affecting the content of communications are also surfacing, including the balancing of countervailing policies, such as privacy and electronic surveillance.
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