6
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Internationalization and Competition
After the Fall
On February 9, 1996, President Bill Clinton signed the most important United States telecommunications statute enacted since the Communications Act of 1934. Congress had worked for more than five years to enact a statute that would accommodate the various interests involved in telecommunications and would take into account the new realities of 1996. Much had changed since the AT&T breakup in 1984; indeed, many of the important companies in modern telecommunications had either not been born or were not involved in 1984. Netscape and America Online, for example, were unknown in 1984, while Microsoft at that time was concerned only with software development, not telecommunications. In 1984 most of the telephone systems in Western Europe and Asia were publicly owned monopolies. So strongly entrenched was the public-monopoly idea in telecommunications that it was contained in West Germany’s fundamental law. In 1984, however, British Telecommunications (known as BT) was transformed into a public company and listed on the various stock exchanges. Since that seminal event, public telephone systems throughout the world are gradually being privatized. At the same time competition is being introduced in many nations. These remarkable changes were as unthinkable as late as 1976, just as the fall of the Berlin Wall and the end of European communism were then. But the world had changed dramatically in many respects since then.
There is little question that one of the most important changes that has occurred, especially since the AT&T breakup, is the creation of a global telecommunications infrastructure as both response to and cause of the creation of a global economy. One week after President Clinton signed the new telecommunications law, Merrill Lynch and Salomon Brothers, two of the largest Wall Street brokerage houses, stated that they expected approximately 20 percent of their future investment banking revenues to come from global telecommunications.1 The contrast with earlier periods is dramatic. In 1980, while a number of telephone stocks (principally American firms) were traded on the world’s stock exchanges, AT&T was overwhelmingly the dominant factor. Between 1986 and 1995 the value of the telecommunications sector had quadrupled, with more and more firms in that industry listing on one of the major exchanges each year. Every major telecommunications firm has been investing heavily in an international presence, either separately or through an alliance with other firms. AT&T, for example, which derived little of its revenue from international sources before the 1984 breakup, expects to earn half of its revenue outside the United States before the year 2000.2 If one looks at cross-border telecommunications acquisitions, the number and value of such transactions has been accelerating rapidly since the crucial year of 1984. For example, from 1985 to 1990 alone, the number of deals increased from five to sixty-seven, while their value jumped from $399 million to $16.5 billion.3
Three interrelated trends must be considered to appreciate the international importance of the U.S. telecommunications sector: foreign trade, foreign investment, and globalization. Modern telecommunications is a contributing cause of these trends. At the same time, the increasing internationalization of telecommunications is also an effect of the trends. Let us begin with the exports of goods and services (measured in constant 1987 dollars). In 1994 the value of exported goods and services constituted about 12 percent of gross domestic product (GDP)—more than 2.5 times the 1960 percentage. At the same time, imports constituted more than 14 percent of GDP in 1994, more than three times the 1960 figure. If we look at just the goods-producing sectors of the U.S. economy, the changes that have occurred are even more dramatic. In 1994 exports of U.S. goods were 24 percent of the domestic output of goods. The comparable figures for 1960 and 1980 were 8 percent and 16 percent. Imported goods illustrated comparable trends. In 1960 approximately 9 percent of the goods consumed in the United States were imported. By 1994 that figure had grown to about 28 percent. Thus, the United States has become more dependent on exports and imports than at any time in the era following World War II.4 And the upward import and export trends give every evidence of continuing as the successfully enacted North American Free Trade Agreement (NAFTA) and the signing of the Uruguay Round world trade agreements attest. At the most obvious level, the increased volume of international trade transactions inexorably leads to increased demand for telecommunications services. All other things being equal, business customers engaged in telecommunications activities in many countries would clearly prefer to purchase services from a single provider rather than from many because transaction costs will be lower. The fact that all other things are often not equal provides an incentive, in turn, for telecommunications providers to place themselves in the position of being a one-stop provider.
Trends in investment have followed the same path as foreign trade. The market value of direct U.S. investments abroad (in current dollars) escalated from $379.1 billion in 1985 to $993.2 billion in 1993. In that same short period, foreign direct investment in the United States jumped in market value from $220 billion to $745.6 billion. These figures do not include, we should note, indirect investment. We may reasonably conclude that the telecommunications needs of foreign firms with American investment and American firms investing abroad will be even greater than in the export and import situations. The reason is the daily need that home offices have to constantly stay in touch with branch plants and offices in other nations. In contrast, sales and negotiations are apt to be more intermittent. In addition, international firms will often demand secure private networks. For example, in the 1960s IBM began building an internal global network; by 1988 it extended to 145 countries and could serve to link employees throughout the company’s far-flung empire. By 1987 IBM was moving three trillion characters of internal information annually.5
While increased cross-border trade and investment together account for much of the expanded scope of telecommunications, there is a subtler concept at work, the impact of which will be even more dramatic. This is the concept of the global economy, which, while incorporating increased levels of trade and investment, includes far more. The idea of the global economy has both a consumer side and a producer side. The speed with which information can electronically move around the world is the most important facet of the global economy. Obviously, in every country there is much nationalism that resists cooperation, openness, and interdependence. Nevertheless, consumers have voted with their pocketbooks for a global economy. Consumers in the developed regions of the world gradually achieved what management expert Kenichi Ohmae has termed the “Californiaization of need,” and telecommunications has played a major role in this process. The products of McDonald’s, Adidas, and Coca-Cola, among many other firms, are sold almost everywhere. “Whatever their nationality, consumers … increasingly receive the same information, seek the same kinds of life styles, and desire the same kinds of products. They all want the best products available, at the lowest prices possible. Everyone, in a sense, wants to live—and shop—in California.”6 At the cash register, very few of us care whether the Sanyo boom box we are buying was assembled by a Japanese company in a Thai factory and contains components made in many countries.
Consumer wants are not, however, permanent. Indeed, new trends and fads replace older ones more rapidly than ever before in some industries and services, such as apparel. Trends discerned in one market can readily be imitated in another one. At the same time, there are still national or regional trends that are not imitated elsewhere—which may provide an opportunity for introduction in another market. Regardless of how consumers may respond and the differences between various groups or nationalities, making sound marketing decisions for the future requires, in the first place, the collection of a considerable amount of information and, in the second place, the dissemination of that information throughout a global network. A product variation that is successful in Indonesia may, for example, be unpromising in the United States. Nevertheless, it is better that American firms receive such information than remain in blissful ignorance of it. We spoke in Chapter 1 about the importance of feedback, accuracy, and dialectic, and the power of modern telecommunications to solve the problems raised by these conceptions. Nowhere is the capability of resolving such issues greater than in the global arena. When one factors in the capabilities to store, manipulate, and retransmit marketing and other information that was unavailable only a few years ago, one can readily appreciate the extraordinary importance that modern telecommunications provides to companies assessing and seeking to fulfill consumer demand.
When one moves from the demand side of the ledger to the supply side, the enhanced benefits of modern telecommunications come even more to the fore. These advantages can be divided into two categories: those that reduce costs within a firm, and those that reduce costs between the subject firm and those with which it undertakes or may undertake transactions. Although Wal-Mart is largely a domestic company, it concretely typifies what may be done globally. Wal-Mart, a leader in the application of modern information technology, has created a massive communications system that transmits data from the cash registers of more than two thousand stores into an enormous database containing its vendors’ weekly point-of-sale data. Collecting and analyzing such data, Wal-Mart can rapidly determine how well particular product lines are selling and adopt new strategies very quickly. Out-of-stock information can focus on the responses of suppliers and encourage them to boost or lower production and adjust inventory carrying costs. Wal-Mart’s quick response time, thanks to modern telecommunications, has provided the company with an enormous advantage over less information-intensive competitors.7
This case only begins to illustrate the many ways in which modern telecommunications shapes Wal-Mart’s business activities and strategies. And, it is difficult to consider the thousands of ways in which most other large enterprises are being transformed by the same forces. The Wal-Mart case illustrates the enlargement of the network idea in which information can flow from point to point at the speed of light and is processed and analyzed more quickly than ever before. It requires no leap of the imagination to appreciate that information can flow across oceans in the same blink of an eyelash that it can flow from Key West, Florida, to Bellingham, Washington. “New network services will make it possible for companies to be effectively managed and to compete anywhere, anytime. A top executive can hold a meeting with senior executives who remain in Tokyo, London, New York, and Des Moines in virtual reality…. Already it is possible to schedule, monitor, and coordinate the production of multiple factories in a number of countries from a single location.”8
Based on a large number of case studies, Michael Porter and Victor E. Millar, two of the leading scholars of business strategy, have provided a set of generalizations about the dramatic changes that are being wrought by the telecommunications revolution, especially in the international area.9 They have concluded that information technology allows firms to collect and process more information up and down the value chain than ever before. Markets are thereby enlarged and competitiveness is intensified because of the more systematic and comprehensive ways in which pricing and other business information can be obtained and evaluated. Similarly, production can be made more efficient than ever before because of the information revolution. For example, fishermen now employ weather satellite data on ocean temperatures to more accurately identify promising fishing areas. Again, engineering and supply data about components in a finished product can be more readily evaluated (and sometimes corrected) through advanced telecommunications than ever before, thereby greatly lessening the “snafu” problems that have so often plagued producers.
Porter and Millar conclude that the most important implication of the information revolution is its contribution to the globalization of the world economy. By dramatically reducing information and transaction costs, globalization allows firms to efficiently coordinate activities around the globe. This does not necessarily mean that large companies extend their own operations around the globe, for the very same kinds of telecommunications networks also explain the expansion of outsourcing, in which manufacturers link closely with independent suppliers with whom they are in constant contact and over whom they can exercise vigilant quality controls.10
We can concisely sum up this section by noting Vice President Albert Gore’s observation that “time zones, not cost, will be the biggest barrier to keeping in touch.”11 And, as the cost of telecommunications drops, the power of telecommunications increases. Globalization can only be stopped by foolish government nationalism.
Response of Telecommunications Companies
The globalization of the world economy and the central role that modern telecommunications plays in it is, of course, no surprise to either the telecommunications industry or government leaders. The telecommunications industry has an obvious incentive to meet the enormous consumer and producer demand latent in globalization. As we will see, they have done so through a variety of strategies, such as joint ventures and alliances with foreign firms, that are intended to create a single information supplier that can serve a customer throughout the world. The strategy, in short, is to serve as a one-step supplier of telecommunications services so that firms do not have to enter into separate agreements in different countries or regions. At the same time, the service provider can offer both a seamless telecommunications system with uniform standards throughout the customer’s marketing areas and a wide range of services including basic and advanced telecommunications services. One-stop telecommunications services from a single provider can, thus, lower transaction costs materially below what they would be if a customer had to arrange separate contracts with telecommunications firms in each nation or region. From the perspective of the telecommunications industry, the stakes in the global market are huge. In the first half of the 1990s corporate voice, data, and teleconferencing traffic volume between countries in messages per minute was increasing at an annual rate of 15 to 20 percent—about double the U.S. corporate domestic rate. Estimates of the total world communications market by the year 2000 range as high as $750 billion.12
While the enormous capital requirements to satisfy this demand alone indicate a principal reason for international alliances and might imply that only large firms can be significant players in international telecommunications, small companies, indeed, play roles in satisfying niche markets. Consider for example Verifone, Inc., which gathers and transmits election data in Mexico. In the United States and other nations, Verifone makes and sells terminals that verify credit card and check transactions. Or consider Synoptics Communications, a leading provider in many countries of intelligent hubs that allow computers to talk to each other. Or consider IDB Communications Group, Inc., which specializes in transmitting sporting events in the United States, Europe, and Asia. One could go on and on, but the point is eminently clear. The enormous international telecommunications market has spurred the creation of numerous specialty firms, some of which will become major players, some of which will fail, and some of which will remain niche players. In addition, the burgeoning telecommunications market has stimulated established firms in other fields to supply services and equipment. Thus, for example, by 1997 in Germany, savings banks, railways, utilities, industrial companies, and insurance companies were pushing hard to establish networks for specialized services.13
The evidence presently indicates that international telecommunications is becoming increasingly competitive and, at the same time, increasingly heterogeneous, with a large number of services available in addition to POTS—plain old telephone service. Increasingly crucial to a modern business system are such newer services as electronic data exchange (including processing) for orders, offers, invoices, confirmations, delivery, restocking; videoconferencing; videotex (interactive screen-assisted data communications services); on-line database services; electronic mail; high-speed facsimile and other visual information; and electronic banking services.
At the same time other new technologies allow the existing wireline network to be bypassed, including cellular telephone, cable television, satellite, personal communications services, new fiber-optic lines along railway or utility lines, and so on. This consideration has extremely important consequences for intensifying global telecommunications competition.
Consider the history of Sprint Corporation, the United States’s third largest long-distance company, to see the implications for global competition. Sprint’s long-distance business was born in January 1970 when the Southern Pacific Company, the holding company controlling important railroad properties, established it to provide private-line communications services to businesses, government agencies, and educational institutions. Southern Pacific Communications Corporation (SPCC) was the outgrowth of Southern Pacific’s large internal communication system along the company’s rights-of-way, which in 1969 covered almost 8,000 track miles.14 In 1983 GTE, then the United States’s second largest telephone company, purchased SPCC, becoming a long-distance provider. GTE Sprint, the reorganized firm, was gradually purchased by United Telecommunications, a large operator of local telephone systems, and in 1990 officially adopted Sprint as its name. Sprint expanded internationally and into a variety of other services. For example, in 1993 Sprint instituted KINKO’S, a public videoconferencing network and in 1994 began long-distance service in the United Kingdom.
The morals of the Sprint story are two. First, rights-of-way are an enormously valuable resource in entering the telecommunications business. Rights-of-way that can be deployed to transmit electricity, gas, or railroad traffic may also be used to transmit telecommunications traffic. Second, experience in private telecommunications systems can suggest entering into the public network business, and then into advanced services. The United States led the way in permitting new entry into long distance and other telecommunications services, but other nations have been following a similar path. For example, in May 1994 RWE, the German utility, and the Deutsche Bank won a contract to operate a data-transmission network in Germany to compete against Deutsche Telekom, then a government-owned carrier. Similarly, only one day before that announcement, two large German industrial corporations, BellSouth, the American regional Bell operating company, and Vodafone, a British group, began operating E-PLUS, a mobile telephone network.15 The inevitable next steps are internationalization and adding more services to the original ones deployed by the entrant, for the same distribution pipes—whether wireless, optical fiber, satellite, or some combination—can frequently accommodate any kind of transmittable information. In other words, information is the relevant product market, not voice, video, and so on. Thus, older firms, start-up enterprises, and companies entering telecommunications from other industries all may portend intense and widespread telecommunications competition in the global economy and its major markets.
Two potential roadblocks lie in the way of this vision: capital requirements and governmental policy, including not only the traditional entry and regulatory barriers, but also the more difficult ones involving establishing international standards. Let us first look at the capital issues. According to one widely respected 1995 engineering economics study: “There’s a worldwide capital crisis right now, and there isn’t enough money in the world’s capital markets to build the flashy new networks we keep hearing so much about…. The harsh reality is that there simply is not enough money in the world to meet all the demands of the telecommunications industry, let alone those of anyone else.”16 For this reason Nippon Telephone and Telegraph (NTT), the world’s largest company, had to delay its plan to upgrade its local access network beyond 2015, the initial target year. One method of increasing cash as well as attracting financial backing is to sharply cut costs, especially labor costs. Many important telecommunications carriers, especially current and formerly publicly owned ones, are under intense cost-cutting pressures in order to effectively compete in the global arena. For example, Deutsche Telekom in 1995 had twice as many employees per customer as the average American telephone carrier and four times as many as a typical American cable company. According to the foregoing study, Deutsche Telekom would have to discharge many employees in order to compete effectively against American carriers.
Two other consequences follow from the capital-shortage problem. First, there is an incentive to reduce embedded costs. Thus, major global projects will be largely wireless. Second, since any single firm would be hard pressed to meet very ambitious global plans, there is a very strong incentive to form cross-border alliances and joint ventures. There are a number of incentives that have led to the spate of cross-border alliances, but certainly increasing capital as well as reducing risk in a large-scale capital commitment are among them. Iridium World Communications, one of the most ambitious projects ever conceived in telecommunications, illustrates these consequences. In June 1990, Motorola announced the Iridium project, the purpose of which was to allow small portable telephones to communicate with other telephones from any location in the world to any other place. The twenty-five-ounce handset could conveniently fit in an overcoat pocket. The system was originally intended to deploy seventy-seven low-earth-orbit satellites. While Motorola was confident of the technology, it viewed financing as the major obstacle in implementing the plan, anticipating that the cost of putting the service into operation within six years would be $2.3 billion. Accordingly, it sought partners in the operation. By January 1993 Motorola announced that it had received only tentative commitments from potential investors, but no binding commitments. The number of satellites had been scaled back to sixty-six. Notwithstanding these difficulties, Motorola was able to announce in September 1994 that it had obtained $733.5 million in new equity capital in Japan to supplement the $840 million it had raised in 1993. Motorola, however, had to put in more of its own money than it had originally planned. But its partners included DDI (Japan’s second largest telephone company), a Brazilian construction company, VEBA (the German utility), Sony, Mitsubishi, Sprint, and other investors throughout the world.17
Motorola’s difficulties, however, were far from over. In September 1995 it had to cancel plans to sell $300 million in junk bonds because of lack of investor interest. In part, investor resistance stemmed from the fact that by late 1995 Iridium faced other large consortia, most importantly Globalstar, seeking to be the first to deploy a global satellite phone network. Financial experts doubted whether all could raise sufficient capital, notwithstanding that the participants included some of the world’s largest corporations, such as Microsoft. Nevertheless, a market that could be worth $15 billion and have thirty-five million customers in developing countries alone in the first decade of the twenty-first century was a powerful magnet. In mid-1996, however, Iridium continued to face financial difficulties, selecting two of the world’s largest banks to arrange short-term and permanent financing amounting to approximately $3.15 billion. In spring 1977 an initial public offering of stock was announced. Network launch was scheduled for late 1998.18 The Iridium project is one of the most ambitious ever conceived. Nonetheless, it typifies two of the strongest themes in global telecommunications stemming from capital issues: the search for partners and the search for ways of lowering embedded costs.
The Government Response
We have seen in this chapter the growth of international connections and telecommunication’s role in globalization. We have observed the increasing importance of information technology in the future prospects of large and small firms and the economies of nations and regions. Business, culture, education, entertainment, and virtually every other facet of life are nourished by modern telecommunications. In the last section we looked briefly at telecommunications firms’ responses and intentions to the new opportunities. In this section we will look at government responses to the new situation. François Bar, a leading expert in the area, succinctly summarized a widely held view on government’s roles in the process: “If technology diffusion is to be the overarching policy goal, governments have an important role to play in facilitating access to the technology, in preparing the grounds for its diffusion, in stimulating its implementation.”19 Governments can play a variety of roles, including removing regulatory and other impediments to telecommunications development, encouraging competition and diversity, providing and assisting the provision of rights-of-way, encouraging the adoption of uniform standards, and facilitating the interconnection of the various subnetworks into larger ones. On the other hand, it is possible for government bureaucrats to go too far and start dictating business policy and technological choices. National governments throughout the world as well as regional authorities and international organizations are groping their ways to the adoption of appropriate policies.
The inexorable direction that most governments in the world have taken is toward privatization of government monopolies and the introduction of competition in the provision of services and equipment. Several case studies in this section will illustrate these processes. Privatization ends the dependence of telecommunications firms on governments, which in almost all cases are hard pressed to solve budget deficit problems. Indeed, the sales of those huge properties to investors help to reduce deficits. At the same time, privatized firms have easier access to capital markets and more flexibility in attracting additional capital through joint ventures, the sale of stock, borrowing on more flexible terms, and so on. The introduction of competition (often called liberalization) permits the introduction of still more capital in telecommunications. At the same time, the force of competition provides strong incentives for efficient operation and the introduction of novel and diverse technologies. United States firms, the clear leaders in technology and efficiency, have of course taken advantage of the new situation to invest heavily throughout the world. And this, in turn, further assists the process of globalization. Thus, we might say that government’s most important new role is getting out of the way!
Prior to 1982 the world’s information infrastructure and government’s role in it is simply described. The United States, as we have seen, was dominated by AT&T, the vertically integrated network manager that controlled the local loop, long distance, switching and transmission gear, and customer premises equipment. Legal controversies that ultimately upset the system had erupted in long-distance and customer premises equipment. As we will see in Chapter 8, the computer-communications interface provided a particularly vexing set of issues. Associated with AT&T were a large number of local-loop carriers ranging in size from GTE, a giant in its own right with major operations in such rapidly expanding areas as southern California and the west coast of Florida, to very small carriers such as the Ragland Telephone Company of Ragland, Alabama, and the Valley Telephone Company of Baggs, Wyoming. Texas alone had more than sixty such companies not affiliated with AT&T, GTE, or any other large holding company.20 Regulating this cooperating structure were the F.C.C. and the various state regulatory commissions.
The systems that prevailed in most of the rest of the world in 1982 were quite different, but similarly straightforward. Canada was a hybrid system consisting of privately owned carriers in the most populous parts of the country and government ownership in the prairie provinces. A national administrative commission regulated the private monopolies. But the model that prevailed in most of the rest of the world was different again. A government monopoly typically owned and operated the post office and telephone and telegraph systems (hence the acronym PTT). Typifying the extent to which the system was deeply ingrained and universally accepted, the West German constitution (Grundgesetz) of 1949 proclaimed that the new federal government would be regulator, operator, and provider of the telecommunications infrastructure. Thus, a constitutional amendment was required to change the structure.21 In each case the telephone monopoly’s equipment was supplied by one or a few privately owned companies. In the case of the larger nations, such as West Germany or France, the equipment suppliers were frequently national firms. For example, Siemens and AEG were the largest equipment suppliers in Germany, while Thomson-CSF (nationalized by the Socialist government in 1981) was the dominant such firm in France.22 While, of course, less developed countries did not have telecommunications equipment manufacturing industries, the pattern remained the same: a publicly owned operating monopoly and a few favored suppliers.
Another way of appreciating how deeply ingrained this system was is to consider it historically. Germany provides a good example. The German public monopoly system can be traced back to 1505 when the Hapsburg emperor Maximilian granted exclusive mail-carrying privileges to the Italian Taxis family in exchange for a large share of the profits. The system’s profitability was greater than expected and led to a corollary policy that stemmed from the monopoly grant—vigorous protection from others who sought to operate rival systems. In 1614 Prussia made the next important policy development by establishing a state-run monopoly. Those persons who instituted the Prussian system made no bones about their fundamental intention of using the system to generate revenues for the state’s activities. When the telegraph came into use in the nineteenth century, it was integrated into the overall publicly owned communications system, a decision reinforced by the new device’s military importance. When the telephone was invented in 1876, it, too, was incorporated in the public communications systems. In 1892 the Telegraph Act was amended, guaranteeing that the Telegraph Administration would exclusively provide telephone service. As we noted, these systems became known as PTTs in view of their three major activities.23 Before examining the pressures and incentives for the changes to privatization and competition in Germany and elsewhere, it should be observed that residential consumer dissatisfaction was clearly not a factor. In fact, the trade unions, social-democratic parties, and consumer organizations resisted the transformation. Further, we should not underestimate the sheer force of inertia and tradition that would make it difficult to radically reform centuries-old institutional arrangements.
Again, Germany is the most instructive case to illustrate the forces arrayed against the dramatic transformation. As late as 1985 the Economist reported, “The Bundespost has no plans, secret or not, to deregulate anything. Its near absolute control over German telecommunications is secured by constitutional protection, by its position as West Germany’s biggest employer (with 500,000 employees, about 200,000 of them in telecoms) and government cash cow … and by its administrative independence.”24Supervision was extremely light and telecommunications revenues were deployed to subsidize, in part, the postal operation’s enormous losses. While it was true that telephone rental charges were twice those of Britain’s, Gerd Tanzer, Bundepost’s telecommunications chief, nonetheless confidently asserted that there was a social consensus in favor of retaining the publicly owned monopoly system. And yet later it was transformed.
Although each nation has its distinctive history, Japan—with the world’s second largest economy and telecommunications system—provides a good illustration of the forces leading to change as well as those whose objections had to be overcome. The Japanese telecommunications system can be traced back to 1869, when the Ministry of Technology established telegraph service between Tokyo and Yokohama.25 The progress that had been achieved until World War II was reversed by the devastation visited on Japan in that conflict; Osaka, for example, had only 51 percent of the telephones installed in March 1951 that it had in 1940. The postwar government’s response was the Telecommunications Law of 1953 and the Nippon Telegraph and Telephone Law of 1952. The effect of these laws was to create a government corporation with a monopoly over domestic telecommunications. The new corporation (NTT), although government owned, was modeled on AT&T. Early on, NTT established major research facilities patterned on Bell Labs, which laid much of the groundwork for Japan’s widespread transistor technology as well as making important advances in memory chips, electronic switching, and data processing.26 Like AT&T, NTT could argue that tampering with its structure might destroy an invaluable research resource. Additionally, the new public-monopoly corporation was assumed to be more efficient than competitive or smaller-scale enterprises, and its monopoly status would prevent wasteful duplicative capital investment that could be deployed more effectively elsewhere. The Diet desired the creation of a nationwide system that would reach the remotest parts of the nation at uniformly low local rates. A government monopoly was conceived as the best mechanism to attain these results.
On April 1, 1985, Japan began the process of transforming its telecommunications system. NTT began transforming itself into a private company and liberalization, previously restricted to peripheral markets, began. United States trade pressures intended to open the equipment market played a role. But it must be remembered that Japan, an export-led economy, was in the forefront of establishing the global economy. Thus, Japan’s fear of United States trade retaliation was a recognition of the new global economy as was the American pressure on Japan. But more important was the role of the Ministry of International Trade and Industry (MITI), the powerful government agency that plays a caretaker role for Japan’s export industries. MITI’s planners strongly urged further deregulation of data communications so that private carriers could offer innovative new services to Japanese firms that would assure their competitiveness in the global economy. MITI officials held that the NTT monopoly was delaying the necessary integration of computers and telecommunications without which Japanese firms, especially in the leading electronics sector, would fall behind in foreign markets. NTT, it was also noted, was becoming grossly inefficient, generating far less revenue per employee than the Bell operating companies. Additionally, since NTT purchased more than one-half of its equipment from only four domestic firms, both potential foreign and domestic suppliers joined in the push for NTT privatization and liberalization. Further, large and small Japanese firms, including electronics manufacturers, computer firms, trading companies, and transport companies sought the opportunity to compete in the potentially lucrative telecommunications network market. Even some NTT executives saw the benefits of competition to their company, especially in the provision of newer, more lucrative services.27
The change in Japan did not, of course, instantly create a competitive market. Much resistance remained (and remains). Opponents can still place roadblocks in the path. The important message, however, is that the general direction of telecommunications policy did an about-face, just as it had in the United States and the United Kingdom. The basic theme of the increasing importance of modern telecommunications to the competitiveness of local business interests in the global marketplace was, once again, a central one. Without the full complement of telecommunications services that a competitive environment could provide, national competitiveness in virtually every industrial and service sector would be severely handicapped. Accordingly, governmental actors got behind the movement to privatize and liberalize. Precisely the same considerations applied in the nations of Western Europe, although (with the exception of the United Kingdom) their wake-up call came much later than in the United States and Japan.
The principal agency of change in Western Europe has been the institutions of the European Union, which bind together economic and social policies of France, Germany, Italy, the United Kingdom, and smaller Western European nations. The documents produced under the auspices of the European Union’s associated institutions are particularly explicit in asserting the themes mentioned in this section. A 1993 European Commission white paper (published in 1994), prepared at the request of the European Council to design a medium-term strategy for growth, competitiveness, and employment, gloomily acknowledged that in the prior twenty years Europe’s rate of growth sharply declined, unemployment steadily rose from cycle to cycle, the investment rate had decreased, and, most importantly, the EU’s competitive position in relation to North America and Japan had worsened in regard to research and development, innovation, and the introduction of new products.28 At the heart of the white paper’s conclusions was the observation that the information revolution that the world is undergoing is as radical a transformation as the industrial revolution. Acknowledging that the United States has taken a strong lead in the transformation, the white paper concluded, “This issue is a crucial aspect in the survival or decline of Europe…. It can provide an answer to the new needs of European societies: communications networks within companies; widespread teleworking; widespread access to scientific and leisure databases; development of preventative health care and home medicine for the elderly.”29
The European Council at its December 1993 meeting fully endorsed the white paper, commissioning a report on the information society to be prepared by a group of prominent persons. The report, popularly called the Bangemann Report after Martin Bangemann, its chairperson, provided concrete recommendations for action. Its most important recommendation was that the EU should place primary faith in market mechanisms to carry the member states into the information age. Accordingly, it strenuously urged the EU and its member states to strike down the monopoly or deeply entrenched positions of the PTTs and their respective cozy relationships with favored national equipment suppliers. Finally, the Bangemann Report called for the adoption of common member nation technical standards and government regulations. Notably missing from the report was an explicit call for privatization of the country networks, but the implication was unmistakable in view of the other proposals.30
The Bangemann Report was submitted to the European Council for its meeting in Corfu in June 1994. The Council essentially endorsed the report’s conclusion, emphasizing that primary responsibility for modernization and expansion of the networks lies with the private sector. The roles of the EU and the member states were conceived as providing encouragement and a stable, predictable regulatory framework. Referred back to the Commission pursuant to European Union law, the Commission released its crucial Communication to the Council and the European Parliament on July 19, 1994. Once again, the general conclusions contained in the prior documents were endorsed.31 Indeed, the Commission called for accelerating the rate of ongoing liberalization. The document noted that the Commission had already taken an active role in liberalizing telecommunications competition under articles 85, 86, and 90 of the 1957 Treaty Establishing the European Communities (popularly called the Treaty of Rome) and amendments. Finally, the document generally reached the same conclusions as the previously cited documents had, noting that “The information society promises to create new jobs, enhanced social solidarity … and cultural diversity,” but warning that “Its advent is likely to generate some fears, which should not be underestimated.”32
The next step in the European process was the production of a green paper on telecommunications infrastructure, which the Commission’s July 19, 1994, report requested. (A green paper is a formal Commission document with recommendations submitted to the Council and the European Parliament.) In the strongest statement made to that time, the Commission, in remarks worth quoting extensively, warned:
Everyone is busy preparing for and adapting to the challenges of the new information age. It also includes the USA, Canada and Japan—Europe’s principal economic competitors. The nature of that economic competition itself is also changing. To compete effectively today, one must have the means to access, to process, manipulate, stock and produce information quickly and effectively. One must also have good access to markets and to customers all around the globe. It is therefore vital that Europe places itself at the forefront of this inevitable drive towards a global information society.
Telecommunications infrastructures will form the fundamental platform upon which Europe’s society and economy will depend in the decades to come.33
And what is true of Europe is true of the rest of the world. The inevitable outcome is to strengthen globalization, in which transnational organizations will play an increasingly important role.
International Telecommunications Organizations
Soon after Samuel Morse successfully sent the first telegraph message between Washington, D.C., and Baltimore in 1844, the device was adopted in other nations. Because the telegraph was frequently used for military and political purposes, each user nation employed a different system and a distinctive code intended to safeguard the security of its messages. Accordingly, messages had to be transcribed, translated, and passed over to national authorities at borders. As the commercial use of the telegraph expanded, it was obvious that this system was unsatisfactory and wasteful. On May 17, 1865, the first breakthrough to international standards occurred when the International Telegraph Convention was signed by twenty countries and the International Telegraph Union was created to deal with subsequent issues and later technologies. Thus, in 1885 the International Telegraph Union began the task of drafting legislation concerning the telephone. In 1906 the first International Radiotelegraph Convention was signed. The original regulations have been revised and amended many times.34
As the power of telecommunications to easily travel the globe became a reality with the advent of commercial radio in the 1920s, the establishment of standards became a more technical one, requiring the creation of a separate international organization to deal with these increasingly complex issues. Accordingly, in 1927 the International Radio Consultative Committee (CCIR) was created. Together with parallel telegraph and telephone standards committees, the CCIR became responsible for coordinating technical studies, for testing and measurement, and for drawing up international standards. In 1927, the first fruits of CCIR’s efforts were borne when frequency bands were allocated to the various radio services in use, such as maritime, broadcasting, and amateur. The rationale of CCIR’s allocations scheme was to assign frequencies based on the technical characteristics of each service. Nevertheless, standard setting, although couched in the highly technical language of electrical engineering, sometimes conceals bitter political or intercorporate disputes.
Before continuing with the discussion of the development of international telecommunications institutions, one of the most important tasks of which is the development of standards, it will be useful to digress and look more closely at the conception of standards. Paul A. David has devised what many scholars view as the best classification system for telecommunications. He proposes three categories of standards, each of which raises different sets of issues: reference, minimum attribute, and compatibility.35 Reference standards are those dealing with weights and measures. If one thinks that issues concerning reference standards are only technical, consider, for a moment, the political and economic ramifications if Congress proposed that the United States should adopt the metric system. David’s second category is minimum attribute standards, by which he means minimum requirements before a product or service can be deemed acceptable, such as minimum tensile strength of a wire. Compatibility standards are those that allow a part to function within a system. For example, modems must be compatible with both the telephone networks and the computers that send and receive data. There are, of course, a variety of such standards that must be compatible with other parts of a network. Again, it is sometimes important for a new device to be compatible with older products. For example, color television signals, when introduced, had to be compatible with black and white television sets. In each situation the stakes can be high, and as telecommunications has become increasingly international, disputes are resolved at international levels.
With the paramount issue of standards in mind, we can proceed with the discussion of international telecommunications institutions, picking up with the important 1932 Madrid Conference, at which the various conventions were consolidated and the decision made to establish the International Telecommunications Union (ITU), effective January 1,1934. The ITU assumed international jurisdiction over all forms of communication, recognizing their increasing interconnectability. The 1930s were a time of world disintegration, however, so the ITU did little until after the conclusion of World War II. In 1947 the ITU became a specialized agency of the United Nations. Among its initial measures was the establishment of the International Frequency Registration Board (IFRB), the task of which was to allocate the increasingly complex frequency spectrum among the various services. In 1956 advances in telecommunications spectrum use led to the establishment of the International Telephone and Telegraph Consultative Committee (CCITT) to deal with standards issues. The CCIR continued in existence, and its efforts were expected to be coordinated with CCITT.
The next year saw a dramatic event that set in motion a series of developments, eventually leading to the creation of the International Telecommunications Satellite Organization (Intelsat), the next important international organization. In that year the Soviet Union launched Sputnik I, the first artificial satellite. While the Soviet Union led the way into space, the United States soon overtook it in commercial applications. AT&T’s Telestar satellite was launched in July 1962, and in April 1965 Early Bird, the first communications satellite in geosynchronous orbit (appearing relatively motionless from the earth) was launched. Based on the theories of British physicist Arthur Clarke, the central discovery was that three satellites, placed in a geosynchronous orbit 120 degrees apart, could deliver communications to the entire world.36 While some satellites must orbit over the poles to provide communications to higher latitudes, the geostationary satellites do not move relative to the earth, thereby permitting antennae on the ground to remain stationary.
Responding to the momentous potential of communications satellites, Intelsat was created in 1964, largely through United States initiative. The preliminary step was the United States’ creation of Communications Satellite Corporation (Comsat), pursuant to the Communications Satellite Act of 1962. After a bitter legislative battle over the issue of public or private ownership, Congress and President John Kennedy devised a compromise. Comsat was established as a corporation half-owned by carriers such as AT&T and half-owned by shareholders. Subsequently, the private carriers sold their shares and relinquished their right to select three of the corporation’s nine directors. Three other directors were selected by the government and three by the shareholders. Comsat’s initial mission was to help organize Intelsat, which occurred in August 1964 when eleven developed nations signed an interim agreement. Intelsat’s membership was subsequently greatly expanded to about 130 members, and the United States’s influence was diminished. Intelsat membership is open to any ITU member, but costs and revenues are based on each nation’s investment, which in turn is based on percentage of use during the preceding six months. The organization began operating in 1965 when the United States launched Early Bird, the first commercial communications satellite, the development costs of which were borne by Comsat. In 1969, as Intelsat added satellites, it had established global coverage for international telecommunications.37
While Intelsat’s major market was intended to be and still is overseas telephone calls, it has enlarged its market to offer other services to its members as well as other countries. These include the transmission of live international broadcasts; transcontinental airline booking; secure international banking transactions; international simultaneous remote printing of newspapers, such as the Financial Times’, digital services that can offer integrated voice, data, telex, fax, and videoconferencing; and back-up service in cases of other service outages. Typically, a carrier, such as AT&T, orders Intelsat services through Comsat, while in other nations a carrier was required to go through the national PTT. Thus, at its formation and for years afterward, Intelsat was a monopolist in the provision of international telecommunications transmitted through satellite. Such an arrangement was, of course, to be expected in an organization set up when national telecommunications was either provided by a state-owned or private monopoly.
A combination of technology and the movement toward privatization and liberalization began to undermine Intelsat’s monopoly status. The basic Intelsat agreement contained a provision that opened the door to international satellite service outside the Intelsat framework. In 1983 two American companies, Orion Satellite Corporation and International Satellite, Inc., applied to the F.C.C. requesting the opportunity to launch and operate independent commercial satellite systems linking North America and Europe. The issue of competition was now clearly on the agenda since the two firms intended to attract customers that had been doing such business with Intelsat. Because of the Intelsat agreement’s implications, the Departments of State and Commerce requested the F.C.C. to delay proceedings pending the results of an interagency review. Nevertheless, the lucrative potential of international satellite communications attracted still other applicants seeking F.C.C. authorization to provide similar services. Comsat uniformly opposed the F.C.C. granting such authority on the ground that it would violate the Communications Satellite Act of 1962 and the Intelsat agreements. Intelsat took the unusual step of intervening in a domestic United States proceeding, essentially arguing that granting any such application would be inconsistent with Article XIV of the Intelsat agreements by substantially impairing the economic viability of the organization.38
But as we have seen in other contexts, 1984 was not a propitious year in the United States for restricting competition. The tides were clearly turning. Accordingly, President Ronald Reagan signed in November 1984 a Presidential Determination that alternative satellite systems are “required in the national interest” within the meaning of the Communications Satellite Act. At the same time the Departments of State and Commerce informed the F.C.C. of the criteria by which satellite competition could be furthered without impairing the United States’s obligations to Intelsat. Essentially, new competitors would be required to provide long-lease service and could not connect into the public switched message network. Further, foreign authorities would consult with the United States to assure technical compatibility and avoid economic harm. The scenario that would inevitably follow was similar to the one by which MCI originally sought a niche market and gradually became a full-scale competitor of AT&T. And just as AT&T resisted what it perceived to be continuing encroachment, Comsat played much the same role in connection with international satellite communications. Thus, Comsat fought Pan Am Sat’s application on the ground that its proposed international service in North, Central, and South America, the Caribbean, and Spain would cause substantial economic harm.39
The second prong of the attack on Intelsat’s monopoly is fiber optics, over which it enjoys no jurisdiction. Fiber optics began to compete with satellites, converging into one market. Consider the advances in optical fiber technology and their implications for the future. TAT-1, the first transatlantic telephone cable, was built in 1956 and had a thirty-six-circuit capacity. (Previously high-frequency radio had been used for transatlantic voice communication.) The Early Bird satellite decisively outclassed telephone cable with its 480 telephone channels, compared with the 256 then carried by telephone cable. Additionally, satellites covered a much greater area. Thus, until the advent of fiber optics it appeared satellites would dominate international communications. In December 1988 TAT-8, the first fiber-optic transoceanic cable, became operational. Owned by thirty firms, including AT&T, MCI, British Telecom, and France Telecom, the optical cable had a capacity of 37,800 voice channels. TAT-8 was only the first of many such optical cables laid on the floors of the Atlantic and Pacific Oceans. Signaling the new competitive challenge to Intelsat, AT&T immediately reduced its transatlantic rates when TAT-8 opened. Not only did bandwidth costs drop, but line errors decreased and fiber optics overcame the time-delay problem of satellites.40 The advance of fiber optics from the opening of TAT-8 was rapid; for example, by late 1995 optical links carried 65 percent of the United Kingdom’s international connections. TAT-13 became operational in fall 1996. TAT-12 and TAT-13, owned by forty-eight carriers (linking the United States and Europe), have the capacity to carry more than one million telephone conversations at the same time.41
By 1991 it was clear that technology had forced the advent of competition. On November 27, 1991, the State Department and the Commerce Department’s National Telecommunications and Information Administration fully endorsed eliminating interconnection restrictions for Intelsat’s satellite competitors by 1997. The F.C.C. endorsed the interconnection principle in 1992, pointing out that the delay until 1997 would allow Intelsat a reasonable amount of time to adjust to the new competition. By late 1994, Intelsat’s officials saw the clear handwriting on the wall. Irving Goldstein, its director general, proclaimed, “The spread of deregulation, the corporatization and privatization of national telecommunications providers, the growth of competitive industries, and the proliferation of new satellite companies have created greater choice in the marketplace, and, therefore, greater competition for market share. In light of these dynamic changes, Intelsat is transforming itself in order to remain competitive.”42 And looming as still another threat is the Internet (which we will look at in Chapter 8).43
Completing the Circuit: Alliances
The convergence of the political trends toward liberalization and privatization in communications, albeit at different rates throughout the world, globalization of the world economy (thanks significantly to telecommunications), new competitors, and new technologies have reshaped the global market for telecommunications. Industrial and service companies that conduct transactions throughout the world have an obvious incentive to reduce their communications costs, assure a high standard of service, and obtain a wide variety of information services. The preferred solution for large companies is one-stop shopping, in which a company enters into a single contract for all or most of its telecommunications needs. Consider the experience of Grand Metropolitan, a major British consumer-goods manufacturer: “Instead of haggling one-by-one with hundreds of the world’s local telephone companies, Grand Met is turning its entire global voice and data network over to Concert, a joint venture of BT and MCI.”44 In general, companies that do business in many locations—an increasingly widespread phenomenon—have provided the impetus for the establishment of global communications networks. And, of course, it follows that these large consumers of telecommunications services desire intense competition between multiple providers.
The result of global companies’ demand has been telephone company creation of a complex web of cross-border agreements, mergers, external growth, and so-called strategic alliances. Some of these arrangements have failed, while others have succeeded. Some arrangements have increased the number of their participants, while others have maintained the same number of participants as they had at the times of their creation. The most important global arrangements are those led by the two major American long-distance carriers, AT&T and Sprint, and by British Telecom PLC, which acquired MCI in 1996 and 1997. But before looking at these alliances, we will look more closely at what “strategic alliance” conventionally means and the important objectives, in addition to satisfying customer needs, that these arrangements serve. As we explore these issues, it is important to bear in mind that there may be several reasons two or more firms enter into such an arrangement. For example, two or more firms may collaborate not only because this provides a better opportunity to secure the business of a large customer, but also because technology sharing may benefit both telecommunications providers.
A strategic alliance “links specific facets of the businesses of two or more firms. At its core, this link is a trading partnership that enhances the effectiveness of the competitive strategies of the participating firms by providing for the mutually beneficial trade of technologies, skills or products based on them.”45 Thus, strategic alliances are neither mergers of two or more firms nor overseas subsidiaries. Nor are they agreements between firms that are country specific; their ambition is to circle the globe or large portions of it. Obviously, strategic alliances between potential rivals are made with the expectation (not always fulfilled) that the marginal benefit from cooperation will outweigh the marginal cost from conflict that inevitably arises when two or more different corporate cultures are blended. Based on a wealth of experience, the chief executive of Corning Glass offered four criteria for the success of a strategic alliance: compatible strategy and culture, comparable contribution, comparable strengths, and no conflict of interest. He emphasized that, in addition to these threshold factors, luck and determination were also required.46
In the telecommunications area strategic alliances as well as cross-border alliances can occur for a variety of reasons in addition to meeting the enlarged needs of customers. First, they can be driven by a disparity in the factors of production. For example, in telecommunications equipment manufacture, one partner may have large amounts of surplus cash while the other may be strapped for cash but have access to low-cost, efficient labor. Second, the huge sunken costs of capital equipment may create vast economies of scale so that the linkup can greatly enlarge the customer base over which costs may be amortized. Third, two or more firms may lower their individual research and development costs by collaborating. Fourth, the two or more firms may have complementary technologies or skills. For example, one firm may have great strengths in marketing while the other may have great technological prowess. Fifth, there may be regulatory or legal barriers that restrict one firm from operating effectively or at all in another country or region. An alliance is the answer. For example, Canada’s Telecom Act requires that facilities-based carriers must have 80 percent Canadian directors and Canadians must own 80 percent of the voting shares. Sixth, even without formal barriers to entry, one firm may find it difficult to operate in another country or region because of the cozy business relationships between national companies that have been established over many years. For example, as early as 1983 AT&T entered into separate alliances with Olivetti and Philips (the Dutch electronics company), two giant European firms, to market telecommunications equipment in Europe. Both alliances were intended to facilitate AT&T’s entry into the European market, in which it had little experience.47 Parenthetically, both of these early strategic alliances were dissolved because they failed to live up to their partners’ expectations. Seventh, strategic alliances can be driven by market-share considerations. An alliance, for example, may reduce the number of potential competitors or increase the overall market shares of the two or more partners in a nation or region. Finally, strategic alliances may be defensive in nature. If your rival does it, you must do the same in order to compete effectively.
Canada, whose cross-border long-distance traffic with the United States is the largest in the world, provides an example of some of these considerations in practice. Initially, as we observed, Canada restricts foreign ownership quite severely; many countries do. Nevertheless, in September 1992 MCI entered into a strategic alliance with Stentor, the major Canadian long-distance company. In January 1993 AT&T entered into a parallel alliance with Unitel, the second largest Canadian long-distance carrier. Inevitably, Sprint then allied with Call-Net, another Canadian long-distance carrier, in August 1993. Each of these alliances were within the permitted level of voting shares allowed to non-Canadians. Each alliance was based on other considerations as well as market ones. Stentor acquired MCI’s intelligent network software, which could enable it to develop new services. Unitel obtained switches, transmission equipment, and software in exchange for AT&T’s 20 percent share of the company. Additionally, Unitel was able to appoint senior AT&T operating personnel and was provided access to AT&T’s extraordinary research and development prowess. Call-Net received the rights to Sprint’s network and billing technology as well as other Sprint products. Additionally, Call-Net could undertake marketing programs using the name “Sprint Canada.”48
As the strategic-alliance structure developed, by late 1996 three such groups predominated among the many that have been formed. The oldest of these is Concert Communications, the members of which were BT and MCI. Announced in June 1993, it allowed BT to purchase 20 percent of MCI’s shares and was intended to offer customers a full complement of voice, video, data, and multimedia services. Analysts saw BT’s cash investment in MCI as quid pro quo for MCI’s marketing prowess in obtaining global corporate customers and technical skills. At the time of the investment MCI was expected to use the new cash to make other alliances and acquisitions in the cable, television, cellular, and multimedia industries in the United States and elsewhere. Most importantly, the two companies intended to create a seamless telecommunications service throughout the world with one-stop billing and ordering for its customers. Notwithstanding AT&T’s regulatory objections, the United States Justice Department approved the agreement in June 1994. The Concert arrangement did not preclude BT from establishing other alliances in Europe and Asia. On November 4, 1996, BT-MCFs ties moved even closer when BT agreed to acquire MCI.49
The second major alliance, dominated by AT&T, is very different in structure from Concert. Called World Partners, it is a complex arrangement consisting, first, of Unisource, a European consortium of Dutch, Swedish, and Swiss PTTs. Unisource is linked with AT&T and Unitel as well as other carriers in Asia, most importantly KDD in Japan. The alliance between AT&T and Unisource, which was preceded by some of AT&T’s Asian alliances, completed AT&T’s global system in June 1994. Again, the underlying idea was to create seamless, one-stop global shopping for telecom services. The arrangement was to some extent defensive on AT&T’s part. John Finnegan, AT&T’s international-alliances vice president, conceded that AT&T would have lost key corporate customers if it had not constructed a strategic alliance that embraced Europe, North America, and Asia.50
Different from both AT&T’s and British Telecom-MCI’s ventures is the alliance into which Sprint has entered. Originally called Phoenix (later Global One), it includes France Télécom and Deutsche Telekom, the PTTs in their respective countries. Each of the PTTs agreed to take a 10 percent stake in Sprint. Unlike the other alliances, Phoenix was greeted with considerable dismay by analysts and the stock market on the ground that Sprint’s aggressive corporate culture could not be blended with the stolid PTTs that, unlike BT, were still state-owned at the time of the alliance’s formation. The alliance was conceived largely as defensive on Sprint’s part. Nevertheless, Sprint’s chairman was extremely enthusiastic, envisioning worldwide voice, data, and video transmission services for multinational companies, as well as international consumer services, such as calling cards. Sprint received a huge cash injection while its PTT partners received access to the world’s largest market. Again, American and European regulators and antitrust authorities eventually approved the alliance.51
There are many other alliances, mergers, and arrangements as we move irrepressibly forward into the global economy and, of course, there will be yet more. No industry has made more rapid strides in this direction than telecommunications, beginning in 1984 when the industry was largely a collection of state enterprises that did not reach beyond their borders. Telecommunications has been both a cause and effect of the trends that we examined in this chapter. But as the three grand alliances illustrate, the rest of the world appears to be mirroring the American model in the telecommunications sector. One conclusion is clear as the firms form and re-form alliances. The major players will attempt to offer virtually all services and will employ all transmission systems that are economically viable. Because mistakes can be very costly, each alliance will attempt to cover all bases in the converging international hypercommunications marketplace.