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... French households by France Telecom. Yet Americans had much of the functionality of the Minutes through widely available facilities, including telephone access to audio text services and growing access to personal computers equipped with modems. Today, Canada, the European Union and Japan are all concerned that they will be left behind the United States if they do not implement their own information infrastructures. Notably, the report to the European Union states: The first countries to enter the information era will be in a position to dictate the course of future developments to the late-comers. (The Commission of the European Communities) But is this really so?
It may be that their technology companies will have an advantage if they have a ready market for fast packet technologies, such as Asynchronous Transfer Mode (ATM) servers, set-top boxes, and multiplexers that can also be exported. However, the real payoff for users will be from the application of these technologies to access and share information that can contribute to the development of their own societies and the competitiveness of their economies. Most researchers who use the theories and methods of economics in Information Systems research know that there is much to be learned from constructing analytical models when it is impossible or impractical to collect data on a specific phenomenon. In Should We Wait?
Network Externalities, Compatibility and Electronic Billing Adoption, Yoris A. Au and Robert J. Kauffman of the University of Minnesota examine competitive strategy related to technology solution adoption in electronic bill payment and presentment, at a time when widespread diffusion has yet to occur in the United States. The authors analyze institutional relationships in e-billing and find that the current industry structure precludes adoption decision-making without the consideration given to building in option and contingencies to defray the risks of a rapidly changing marketplace. The authors find that there are multiple intermediaries (i.
e. , banks and bill consolidators) between biller / vendor firms (i. e. , electrical utilities and department stores), and the consumers who buy from them. This multi-partite adoption problem makes electronic bill payment and presentment technology adoption more a matter of rational expectations about market developments and emerging standards, than a precise capital-budgeting calculus. With this industry backdrop in mind, the authors employ a welfare-economics modeling perspective to portray how firm adoption patterns are likely to vary in the presence of non-sponsored and sponsored technology e-billing solutions. Their model characterizes a number of conditions under which exercising an adoption option is a first-best strategy, as originally suggested by Choi and The. The present authors partial equilibrium modeling perspective delineates some of the key issues that the marketplace will need to overcome in the next several years, as e-billing technologies become more widely adopted.
Controversial research from a Butler Group associate has found no correlation between IT spending and profits. Associate Paul Strassmanns research shows only a random correlation between IT spending per employee and return on shareholder equity (ROE). For example, Smithkline Beecham has an 86. 8 per cent ROE while spending only a fraction of what Centrica spent on IT per Employee - yet Centrica reported a negative ROE of 36. 2 per cent. Strassmann comments: Spending money on IT guarantees absolutely nothing. The absence of a demonstrable relationship between profitability and IT spending should be seen as evidence that other influences, such as strategic advantages, competitive positioning and leadership effects are likely to be more decisive than information technologies. Technology has been over-valued by companies involved in an arms race of IT spending, trying to match and outdo each others capabilities.
Strassmans report concludes that up to three-quarters of the potential decisive influences on profitability concern strategic choices that even very large investments in computing cannot address or solve. These include variables like market share, capital intensity and relative customer quality, which all display a clear correspondence with profits. Matt E. Thatcher of the University of Arizona and Jim R. Oliver of INSEAD lead off this special section with The Impact of Technology Investments on a Firms Production Efficiency, Product Quality, and Productivity. Their study probes the reasons for the mixed findings on the business value of information technology associated with the productivity paradox.
The authors propose that there has been insufficient consideration given to the interaction of production efficiency and enhanced product quality in the realization of firm productivity. The authors present a model that allows for the possibility that improved profits and productivity gains may actually trade off, rather than both move in the same direction in the presence of information technology investments. The explanation for this, according to the authors analytical model, can be boiled down to whether the investments reduce the firms fixed overhead costs-unequivocally leading to productivity gains-or the firms variable costs of production. Changes to the latter lead to more competitive design, development, and production costs, and improve price recovery, product quality, and product sales margins.
What they do not always do, however, is prompt parallel gains in productivity. An exciting finding in this work is that the authors are able to illustrate when it is possible to predict that there will be a productivity gain or productivity decline due to information technology investment, and hence, a new interpretation of why there actually ought to be a productivity paradox. New technologies and services are alluring, but they also present challenges and paradoxes for the telecommunications industry, users and policymakers. Consider the following: Technological Trojan Horses New technologies are introducing changes faster than policymakers can respond. Callback services (where calls between countries with high international tariffs are actually re originated from a third country with much lower rates such as the United States) are undermining the traditional strategy of monopoly carriers in many developing countries that use high international rates to cross-subsidize domestic rates and generate income that can be invested in domestic infrastructure. Satellite broadcasting has introduced foreign and commercialized programs in western Europe and in much of Asia, forcing domestic broadcasters to innovate to hold on to their audiences.
The Internet, seen by many policymakers as an important tool for their industries to remain competitive, opens the door to unfiltered information that may be considered inappropriate or illegal in their countries. Competition and Consolidation While telecommunications services are increasingly being liberalized to attract competitive providers, there is also a growing tendency to consolidate. The result may be only a few major players or consortia in the international environment, as well as a few providers in major domestic markets. These new oligopolies will be able to offer a greater range of services than their predecessors and may make it easier for users looking for one-stop shopping to meet their telecommunications needs. The danger, however, is that they will form cartels that will prevent significant competition in price, service, or innovation. Access and Control Some governments that see information technology as critical to their economic development strategy are at the same time concerned about the socio-political implications of access.
One of the most ironic examples of the simultaneously held goals of modernization and control is Singapore, which is staking its economic future on becoming an intelligent island. The Singapore One venture intends to extend optical fiber optics throughout the island, to connect every business, home and school. Yet Singapore has retained tight control over individual access to information. The government applies broadcast content regulations to the Internet, holding Internet service providers accountable for content accessible to their customers. Also, it is illegal for individuals to install satellite antennas, so that Singaporeans cannot watch satellite-transmitted programs from regional satellites, including those uplinked from Singapore's own industrial parks.
Universal Service as a Moving Target New technologies and services are forcing policymakers to rethink their goals of universality. In both industrialized and developing regions, universal service has become a moving target, as policymakers must adjust their goals to make new services more accessible. For example, the U. S. Telecommunications Act of 1996 redefines universal service to include access to schools, libraries and health care facilities, and to include not only basic telephone service but also advanced services, a term whose definition will evolve over time.
The World Bank estimates that investment in telecommunications in the developing world must double to meet the growing demand for telecommunications services. In spite of accelerated investment in many developing regions during the past decade, the vast majority of people living in developing countries still lack access to basic telecommunications. Yet there is cause for optimism. New technologies offer the possibility of technological leapfrogging, e. g. , to reach end users through wireless local loops or small satellite terminals rather than stringing wire and cable. Digital transmission and switching are increasing reliability and lowering cost, as well as making it possible for subscribers in developing countries to use electronic mail and voice messaging, and to access the Internet.
Information gaps show least signs of shrinking in the poorest countries, two-thirds of which have less than one telephone line per 100 inhabitants. Telecommunications is not a panacea for countries with populations near the subsistence level as well as urgent demands on foreign exchange for food, fuel and medicine. Yet, as these countries develop market economies and seek to take maximum advantage of scarce expertise, they will need to invest in telecommunications. Of course, these regions are less attractive to investors than more prosperous economies; in general, they have also been the most reluctant to reduce their governments role as monopoly operator. Their networks are also the least efficient, in terms of reliability and the number of lines per telecommunications employee. Restructuring their telecommunications sectors to improve productivity and encourage investment will be necessary if they are to begin to close the gap.
As investment in telecommunications infrastructure increases, the gap between information haves and have nots may become based on price and choice, rather than technology. Countries that continue to favor telecommunications monopolies, or seek to control access to information, may limit user access even where technology is available. In most of Europe, access to the Internet is much more expensive than in North America. As one commentator states: Digital Europe has many medieval features: road tolls and extortion-like taxes, witch hunts, an oppressed citizenry, and powers-that-be in feudal towers. Access is much less affordable in many developing countries. Even professionals in many African countries cannot afford to use telecommunications services.
New technologies have eliminated distance for the international finance industry, which trades not only around the world, but also around the clock; for employees who collaborate on projects across time zones; for footloose businesses that operate from rural communities; and for students and researchers who can search libraries and databases beyond their borders. Yet in many parts of the world, to paraphrase Mark Twain, the news of its death has been greatly exaggerated. Some people may live hours or days from the nearest telephone. Others have facilities available but cannot afford to use them. Still others may not know how to use these new tools to find the information they need, or how to reorganize their work to take advantage of the information available to them.
These barriers must also be eliminated if distance is truly to disappear. References: Alan, C. (1995). Transforming the Way We Live and Work, International Telecommunications: Financial Times Survey, Financial Times, October 3, pp. 1 - 2. Au, Y. A. and Kauffman, R.
J. , Should We Wait? Network Externalities, Compatibility and Electronic Billing Adoption, University of Minnesota Bhargava, H. , Choudhary, V. , Information Goods and Vertical Differentiation, Carnegie Mellon University and Pennsylvania State University Browning, J. (January 1995) Joys of the Express Lane, Globe and Mail Report on Business Magazine, p. 103. Commission of the European Communities, Growth, Competitiveness, Employment: The Challenges and Ways Forward into the 21 st Century, (White Paper), Brussels Cortese, A. (February 26, 1996) Here Comes the Intranet, Business Week, pp. 76 - 84. Gregston, B. (November, 1995). Power and Privilege, Internet World, p. 96. Gundepudi, P. , Rudi, N. , and Seidman n, A. , Forward Versus Spot Buying of Information Goods, University of Rochester Press Hudson, H.
E. (1997). Global Connections: International Telecommunications Infrastructure and Policy, New York: Wiley, pp. 279 - 80. Hudson, H. E. (Dec, 1997) The Internet Wake-Up Call, Asian Telecommunications, New York: Wiley Parker, E. B. and Hudson, H.
E. (1995), Electronic Byways: State Policies for Rural Development through Telecommunications, second edition. Washington, DC: Aspen Institute Schwankert, S. , Dragons at the Gates, Internet World, November 1995, p. 112. Stokes, B. (1985) Beaming Jobs Overseas, National Journal, July 27, p. 1727. Thatcher, M.
E. , Oliver, J. R. , The Impact of Technology Investments on a Firms Production Efficiency, Product Quality, and Productivity, University of Arizona The Death of Distance, The Economist, September 30, 1995.
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Research essay sample on Telecommunications Infrastructure Developing Countries
