FTAA.ecom/inf/02/ Cor. 1
9 January 1999
Joint Government–Private Sector Committee of Experts on Electronic Commerce
Network Access / Reliability and Electronic Commerce
In a knowledge-based economy and society, the telecommunications infrastructure plays a role similar to that of roads, railways and canals in an industrial society. For businesses and individual citizens alike, affordable access to the telecommunications infrastructure is becoming a necessary condition for effective participation in a knowledge-based economy. Developments in information and communications technologies are offering a new approach to national and regional economic development, by minimizing the importance of geographical location and connecting all regions to the information highway.
Telecommunications policy and regulations have typically addressed the issue of access and universality in terms of public network access and basic telephone service. Universality of affordable access has been achieved in telephony in many countries, and the concept of basic service has evolved over time so that single line, touch tone service is becoming the norm. This level of access allows a user to connect a fax machine or a modem-equipped computer, thus providing the commonest form of individual access to the Internet.
Areas of Concern
The challenge for those FTAA countries which do not currently have universal, affordable access to the telecommunications infrastructure is how to achieve such access in the new environment of competitive markets. Will existing carriers or new entrants be able to find the revenue streams necessary to justify the investments needed for the expansion of the telecommunications infrastructure? What role will governments have to play if market forces are unable to bring about the desired outcome? What lessons can be learnt from the experiences of the more advanced countries, and what help can be given?
The other major need for investments in all countries is due to the network modernization required to provide the advanced telecommunications services which underpin the knowledge based economy. The universal, narrow band public telephone network, which was designed primarily for switched voice traffic, will have to be transformed into a broadband network that can efficiently transport huge volumes of packet switched data traffic. The explosive growth of the Internet will speed up this changeover, and also create a huge new demand for high bandwidth services. To date, the network infrastructure required to accommodate Internet traffic has been provided largely by the facilities based telecommunications carriers. Will this continue to be the case? Where will the revenue streams come from that will justify the large new investments that will be needed?
The Internet is likely to provide the platform for many of the electronic information and transactional services, such as medical, education, government, shopping and travel services which the public at large will want access in the future. Several market research firms have forecast explosive growth of Internet based electronic commerce, both business-to-business and business-to-consumer, with revenues in North America doubling every year for the next five years. Governments in many countries, and at all levels, are joining the private sector in turning to the Internet and other modes of electronic service delivery, to improve service availability and delivery and reduce costs.
The market for electronically delivered services and content is now revolving so rapidly, and the impacts of these services are becoming so pervasive, that new approaches may be needed to address access issues in a way which can evolve to meet critical economic and social needs in a knowledge-based economy and society. Some have argued that the concept of “universal and affordable access” should evolve to include access to the Internet and other computer network based communications and information services. Even in advanced countries, however, it will be a long time before the penetration of modem-equipped computers to the home, and Internet access from the home, reaches telephony levels. Is this necessarily the desired outcome, and if market forces cannot bring it about, should governments be willing to intervene? Does universal access to the information highway necessarily require access from every home, or should the concept of universality be expanded to include community level access from libraries, schools and other neighbourhood access points? Such community access points can play a role analogous to pay phones in the early days of telephone use. For developing countries, they seem to be the most practical mechanism for providing access to the Internet platform and its services, to the citizens at large.
The universal, circuit switched voice telephone network is noted for its robustness and reliability. In North America, down times are measured in minutes per year, and the public has come to take network availability for granted. This is due not only to inherent design features but also to the operational expertise of the telecommunications carriers who operate these networks. Long established interconnection and revenue sharing arrangements between the telecommunications carriers permit end-to-end quality of service and simplified billing of users. However, changes in calling patterns and traffic volumes, brought about by competition in long distance markets and increasing Internet traffic, may begin to adversely affect this reliability and availability unless major upgrading of the network is carried out.
If the Internet becomes the essential platform for electronic commerce and electronic service delivery, its reliability and availability will become major issues. It should be recognized that
the reliability of the underlying telecommunications infrastructure does not necessarily guarantee the reliability of the Internet as a whole. The Internet consists of tens of thousands of autonomous networks, united and made interoperable through the use of the TCP/IP protocol. There is no central governance structure for the Internet, and no one entity is responsible for end-to-end reliability and service quality. The reliability of the Internet is an issue which will need to be discussed increasingly in international fora.