February 17, 1997 in Nation/World

A Brave New World For Phones

James Gerstenzang Los Angeles Times
 

If communications technology seems complex and confusing, Saturday’s global agreement to liberalize trade in telecommunications demonstrates with bell-ringing clarity its potential to reach out beyond national borders.

The giants of the U.S. telecommunications industry - AT&T;, MCI and Sprint were gushing in their predictions: The pact will allow them to spread American technological prowess and profits around the globe. A talkaholic anywhere in the United States will be able to telephone Tanzania at sharply reduced rates.

But dangers lurk. Gary Hufbauer, a senior fellow at the Institute for International Economics, suggests that U.S. tax consultants could suddenly face competition from, say, Pakistan, where accountants could take advantage of high-quality data-transmission lines to prepare tax returns for small businesses halfway round the globe.

On the positive side, educational opportunities could open up, giving schoolchildren in developing nations Internet access to documents in U.S. libraries’ computers. Retail customers in the United States could circumvent local stores and wholesalers and order directly from warehouses or factories in low-wage, less-developed nations.

And on a much broader plane, the success achieved by the 70 participating nations demonstrates for the first time on such a grand scale the trade-expanding possibilities of the World Trade Organization, as nations whose economies have been built around state-run monopolies commit themselves to free-market competition.

Even as the telecommunications industry has grown from the telegraph to the Internet, from copper wires to direct satellite transmissions, it has remained one of the world’s most nationalistic industries.

“To turn it, over a decade, into an industry which is competitive, with free entry by outside forces, will be a dramatic change,” Hufbauer said.

That is exactly what the pact will do when it begins taking effect next Jan. 1. It will allow foreign companies to compete in providing international telephone services, cellular phone service and access to satellites.

Where Belgacom has had a monopoly in providing Belgium’s telephone service, for example, communications companies based in the United States and elsewhere would be allowed to compete for business or invest in the local company.

And where local regulations may have kept those companies out of Indonesia, Thailand or other countries where geography or topography made installation of telephone lines difficult, there are predictions that phone companies will leapfrog the land-line stage and move directly to establishing cellular phone systems built around ground stations that relay signals to satellites.


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