Bad medicine: the Internet was going to change the world but in many ways it hasn’t. Annie Turner bemoans the market forces that have kept the global status quo

Bad medicine: the Internet was going to change the world but in many ways it hasn’t. Annie Turner bemoans the market forces that have kept the global status quo – Spoofing protocol

Annie Turner

The 1990s were one long globalisation party, driven by a booming stock market, hyped up by telecoms and to a lesser extent IT. When the music stopped, it was shocking to find how many people were left without seats. 2003 is underway and the hangover shows little sign of abating, despite some severe medicine being dished out.

The Internet was going to change the world. In very many ways it hasn’t. While Oplayo (www.oplayo.com) launches a groovy new video service for mobiles, the vast majority of people in sub-Saharan Africa don’t have access to a phone, much less own one. Oh yeah, and three million people are starving to death there too. Interesting that where there are phones, there are stronger economies.

The USA, with Britain bleating the same mantra, argues for free market forces, which only applies when it suits us in the West. For example, I have argued before in this column that the rest of the world subsidises the USA enjoying free local calls, which of course includes Internet access. Those who run the local loop and regional telecoms services simply thump the long distance carriers with interconnect rates to pay for it and in turn, they recoup that from international settlement rates. The Americans, through the World Trade Organisation treaties, have also managed to skew the international settlement mechanism to benefit itself, squeezing the poorest nations.

The world is plunging into a recession due in large part to the collapse of the stock market, which has been brought to its knees by corruption, fraud, unchecked greed and stupidity. In December Cable & Wireless `forgot’ to mention 1.5bn [pounds sterling] in liabilities on its balance sheet. It’s a sign of the times that Alcatel allegedly pulled the plug on Interoute in December and it didn’t even get a mention in the FT.

Look at the plight of France Telecom and Deutsche Telekom. They are crippled by gargantuan debts that were mainly run up by these cash-cow incumbents trying to span the globe in a series of hotchpotch alliances. British Telecom is doing better at extracting itself from the same mire because it took drastic measures to reduce its debt mountain. And there was no altruism in these so-called global alliances–how quaint the likes of Global One and Unisource sound now–they were all gunning for big profits from being a one-stop-shop for multinationals.

We are just so smart that we, either within the industry or the regulatory frameworks, didn’t see that we went about deregulation from the wrong end. The predicted boom in long distance traffic couldn’t happen until broadband access was widespread and that’s only beginning to happen now. And we are forcing the same pattern of deregulation on any country that is in no position to tell us to get lost.

In the meantime, many of those arrogant harbingers of a new age in communication–equipment makers and governments–have taken a serious drubbing, the former far more than the latter.

It is hard working, well meaning employees who have taken the hiding for this stupidity, with hundreds of thousands of people losing their jobs, and at service providers too. You can’t go into a pub without hearing someone cursing their endowment policies or pension plans.

It never ceases to amaze me how many employees appear to buy into their employer’s ethos. I can never decide whether they are a bunch of airheads or simply good actors–they keep their mouth shut, do what they’re told and in public at least, endorse the company and what it’s doing with a smile on their face.

Part of the explanation might be that they work so hard and spend so much time chasing their tails that they never have the chance to analyse what they are doing or why. Frantic activity is always a good way of displacing thought. As though that’s not bad enough, they want to inflict that way of life on the rest of us. Long may the Spanish stick to their siestas and the British drink at lunchtime.

I know we are all desperate for good news, so we latch on to anything that looks like the light at the end of the tunnel. So far that light has mostly proved to be a train coming towards us, but TeleGeography, that monitor of global telecoms activity, reckons that there are grounds for cautious optimism.

In its recent report, TeleGeography’s Bandwidth Pricing Database, it stated, “After years of rapid declines, long-haul bandwidth prices on many major routes have stabilised–and even risen–in recent months.”

It has come to this–after all that was said, we are rejoicing at such thin fare as, “On the world’s busiest international communications route, New York to London, monthly lease prices for 155Mbit/s circuits have increased slightly each month since April 2002. Over the same period, bandwidth prices for most major US domestic routes have experienced only small declines of two to four per cent, with price increases in a few cases.”

Don’t get too carried away though. The same organisation also found that, “After two years of unprecedented growth in global cross-border calling, international telephone traffic increased just 10 per cent in 2001, the slowest growth rate in 20 years. Furthermore, international call revenue plunged by $10 billion in 2001, the largest single-year decline on record.”

Still, taken together, that might mean we are through the worst of the boom and bust phase. We just need to try and hold on to reality as the bubble is inflated again. A happy, transitional New Year to you all.

COPYRIGHT 2002 DMG World Media Ltd.

COPYRIGHT 2003 Gale Group