Tipson, Frederick

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Global Telecommunications and Local Politics - The Institutional and Jurisdictional Architecture

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Chicago-Kent Law ReviewVolume 72Issue 2 Symposium on Global Competition and PublicPolicy in an Era of Technological IntegrationArticle 16December 1996Global Telecommunications and Local Politics -The Institutional and Jurisdictional ArchitectureFrederick TipsonFollow this and additional works at: https://scholarship.kentlaw.iit.edu/cklawreviewPart of the Law CommonsThis Article is brought to you for free and open access by Scholarly Commons @ IIT Chicago-Kent College of Law. It has been accepted for inclusionin Chicago-Kent Law Review by an authorized editor of Scholarly Commons @ IIT Chicago-Kent College of Law. For more information, pleasecontact dginsberg@kentlaw.iit.edu.Recommended CitationFrederick Tipson, Global Telecommunications and Local Politics - The Institutional and Jurisdictional Architecture, 72 Chi.-Kent L. Rev.583 (1996).Available at: https://scholarship.kentlaw.iit.edu/cklawreview/vol72/iss2/16GLOBAL TELECOMMUNICATIONS AND LOCAL POLITICSFREDERICK TIPSON*In view of the short time which remains, I will depart from myplanned remarks and emphasize just a few of the points which I hadintended to cover. Perhaps that is just as well, in view of my inabilityto be present yesterday for the first part of this excellent symposium.I would, however, refer you to the outstanding survey of the telecom-munications industry which appeared in The Economist of September30th-the best short summary I have seen of what is taking place inthe broader industry of which AT&T is a part. Based on the discus-sion today, I would emphasize three points: the pace and depth ofchange, the importance of key individuals, and the clarification of val-ues underlying public policy.I may be accused of exaggeration, but I would suggest that theinformation and communications technologies we see all around usare changing our world so quickly, and in ways which are so profound,that even three years from now we will hardly recognize the world aswe now know it today-particularly in the way our economic lives areconducted, both individually and in business. Three years may not bequite right, but it is a very short-term transformation that I have inmind. The impact of technological change often drags a bit from theinitial availability of a new application, but at some point there tendsto be an acceleration and combination of impacts which we are nowwitnessing in the computer and telecommunications area, and whichwill soon assume even more breathless dimensions. Already we haveseen huge changes in the way that industries are being restructuredand in how companies operate-changes which are largely the conse-quence of these technologies.These impacts are so fundamental because they affect some verybasic elements of social life: our identities as individuals, the way eco-nomic value is determined, our sense of security, and our attitudes to-ward political authority. John Jackson referred to the problematicconcept of state sovereignty. Sovereignty, like nationalism, is a muta-ble and variable abstraction which nevertheless retains great politicalresilience and importance. At the same time, it is often asserted in the* International Public Affairs Vice President, AT&T.CHICAGO-KENT LAW REVIEWface of circumstances which illustrate its obsolescence. In fact, formany purposes, it has become almost quaint to talk about "national"components of any given industry. This is not to suggest that nationaldecision-makers do not have a critical impact on global industries-they remain in many industries, including telecommunications, key in-fluencers in the shaping of competitive conditions. But unless the na-tional regulators evaluate industry on a global basis, they are likely tomake wrong decisions, or at best irrelevant ones. This reality is in-creasingly clear in the telecommunications industry, where the paceand depth of change often leaves national regulators in the dust.At the global level, our regulatory approaches are not keepingpace with the industries we seek to oversee. When I worked on thestaff of the Senate Foreign Relations Committee, it was my job,among others, to see that treaties were handled effectively by theCommittee and then shepherded through the process of Senate adviceand consent. This process often required years to complete, and in thecase of some treaties resulted in more than a decade's delay from thetime of Presidential submission while the agreements waited on theCommittee's calendar for sufficient support to get them moving.Based on this experience, I am especially aware of how clumsy thetreaty-making process can be-not only the negotiation phase ofcourse, but also the process of ratification, implementation, andamendment. Making policy by the treaty mechanism requires enor-mous commitments of time, resources, and domestic political capi-tal-not to mention the danger of a lowest-common-denominatoroutcome rather than an optimal solution.1 The Uruguay Round ofGeneral Agreement on Tariffs and Trade ("GATIT"), the Law of theSea Convention, the Non-Proliferation regime-each have beenlandmark achievements but have required enormous expenditures oftime, talent and political opportunity costs. And their ultimate effec-tiveness is still dependent on our eventual success at implementationand amendment.The telecommunications industry in particular has outpaced theplodding, state-centered processes of its multilateral overseer, the In-ternational Telecommunication Union ("ITU"). Several fundamentalprinciples of the ITU framework are now disregarded with virtual im-1. The point is less valid, of course, in the case of international agreements requiring Con-gressional approval by majority vote rather than Senate advice and consent-particularly wherefast track approval processes are legislated in advance, as in the case of multilateral trade agree-ments. Nevertheless, the clumsiness and delay of the Uruguay Round process illustrates similarproblems surrounding the construction and maintenance of international "regimes."[Vol. 72:583GLOBAL TELECOMMUNICATIONSpunity, and the process of agreeing on new principles remains slowand incomplete at best. In fact, these days the more important pro-cess seems to be what we might call that of "parallel politics,"whereby officials in one country take their cues and ideas from thosein other countries-take each other's "regulatory seminars," so tospeak-in deciding how best to frame their own policies. In otherwords, the traditional multilateral framework is often less useful andinfluential than that of other countries' examples-or, in the case ofthe European Commission, the policies embodied at the regionallevel. Having said this, I should note that in fact the GATT/WorldTrade Organization ("WTO") have been trying, in effect, to stealsome of the ITU's turf and thunder by reaching a market accessagreement for telecommunications services which effectively bypassesthe state-control mentality which still hangs up the ITU: "dualing mul-tilateral regimes," we might call this. But meanwhile, as I have said,the industry outpaces both of them.On this point of "parallel regulation," let me turn to my secondpoint of emphasis-the critical importance of individual talent in de-vising positive policies. In my current role at AT&T, I work to assuresome consistency in the positions we take on regulatory issues aroundthe world, and what quickly becomes obvious is how much differenceit makes for foreign governments and multilateral institutions to havededicated experts-as distinct from opportunistic politicians or con-servative bureaucrats-in key positions of regulation and policy-mak-ing. Because the telecom industry is changing at such a pace-andwith such enormous economic implications for each economy-itmakes a critical difference whether or not a country has the people inplace who can make sensible and often controversial decisions in theinterest of the broad public of that country, and can do so within theshort time frames necessary to allow competition and technology tounleash the capabilities of the industry so that the country is not dis-advantaged or left behind. Information and telecommunication tech-nology has, in fact, unleashed capabilities which create a race amongindustries and economies, which regulation can either facilitate or im-pede. Where it delays or distorts the application of these capabilities,entire sectors can be hobbled in the arena of global competitiveness-sometimes irreparably.Therefore, the quality, empowerment, and continuity of individ-ual decision-makers becomes a key factor in the quality of a country'sresponses to changes in the global industry. We learn to appreciatethose governments which give appropriate authority to capable peo-19961CHICAGO-KENT LAW REVIEWpie and then keep them in place long enough to execute some consis-tent approaches. I would not want to seem to be "buttering up"Professor Ehlermann by placing him in that category, but he is an ex-ample from DGIV of the European Commission of just such con-tinuity of talent, and he was able to engineer some further continuityafter his retirement by seeing to the appointment to DGIV of HerbertUngerer from DGXIII to oversee the further development and imple-mentation of telecommunications competition policy. Dr. Ungererhas been able, largely through the strength of his intellect and con-tinuity, to exercise enormous impact on the quality of the Commis-sion's approach to telecommunications regulation in Europe. Butthere are other individuals around the world of comparable impact,such as Alex Arena in Australia and then Hong Kong, Stuart McPher-son in Canada, Neil MacMillan in the United Kingdom, and Rafaeldel Villar in Mexico, to cite just a few.I hope you will forgive me if I avoid jumping into the Lion's Denby trying to name my favorite telecommunications regulators in theUnited States. But I would note in the area of antitrust regulationthat the United States has not always maintained the kind of consis-tency and continuity on international telecom matters which wouldhave been helpful in positioning the United States industry within theglobal political game. Indeed, the Justice Department is an exampleof how the differences from one U.S. administration to another canresult in significant swings in approaches to regulatory policy.And this observation leads to my last point, about underlying val-ues. Most regulation in the telecom industry, and indeed that of anti-trust regulation in particular, derives theoretically from argumentsabout economic efficiency and consumer welfare which place the as-surance of efficient competition as the hallmark objective of policy.At AT&T, that is the emphasis we are consistently trying to place inour arguments about public policy and regulation. Yet we also recog-nize that in the political processes surrounding such industry regula-tion, there are other values which enter into the calculation-particularly outside of the United States, but within our country aswell. These have to do, among others, with distributive and welfareobjectives, such as those surrounding universal service, or short-term"protective" objectives involving the delay of negative impacts on par-ticular constituencies or companies, such as protecting jobs in certainfactories or localities-objectives which may not be justified in com-parison with some larger or longer-term objective for the industry inquestion, but which have powerful political salience nonetheless. The[Vol. 72:5831996] GLOBAL TELECOMMUNICATIONS 587pace of privatization and liberalization has been slowed significantlyin countries like Germany, France, and Spain-as well as Brazil, Mex-ico, and India-by concerns about the immediate impact upon jobs inthe traditional telecom monopolies. Certainly it can be argued thatthese delays have come at the expense of national competitiveness-not just in telecommunications, but in consequent drag on other in-dustries-but they do illustrate the complex mix of values which un-derlie policy resolution in a given political system. In effect, what weoften see is that the longer-term objective of greater economic effi-ciency ultimately prevails over the shorter-term objective of "cushion-ing" or stringing out the impacts of this transition. Those systemswhich delay this balance too long, however, risk undercutting theirentire industry-with the long-run result of an even greater net loss ofjobs. Some countries may already have misjudged this equation.

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