WASHINGTON-Overarching economic, trade and political policies evolving in the United States and abroad are likely to eclipse telecommunications policy as the key drivers of wireless commerce in the next century.
The trend toward telecommunications deregulation around the world is making telecom policymakers less relevant and shifting the balance of power into the hands of trade czars, finance ministers, central bankers, diplomats, industrialists, financiers and, of course, the free market.
The foundation for this new economic order is beginning to take shape.
The 1996 telecommunications act extended the wireless deregulatory model of 1993 to the rest of industry. As such, it’s the law of the jungle for wireless operators, local telephone companies, long-distance carriers, videocasters and Internet service providers.
Already, though, winners and losers in the digital game have been largely determined. It is a field dominated by telecom giants the likes of AT&T Corp., MCI Communications Corp., Sprint Corp. and the regional Bell telephone companies. Ultimately, the field will be comprised of multinational conglomerates.
The Federal Communications Commission, following last week’s rulings on universal service and access charges, has now implemented the three major components of the telecom act.
The courts likely will get the next crack at it. And if some Republicans get their way, the FCC will go the way of the dinosaurs.
In February, nearly 70 nations that comprise most telecom business worldwide agreed to an unprecedented free trade agreement on basic telecom services. As a warm-up to that deal, another international deal was struck to sunset tariffs on telecom and computer equipment beginning in 2000.
In the midst of U.S. trade gains was born a bright new star on the Clinton team, U.S. Trade Representative Charlene Barshefsky. And a powerful new global bureaucracy emerged, the World Trade Organization.
A deregulated wireless industry, built on public stock offerings, may find it difficult getting its hands around a fluid landscape that will be influenced by currency fluctuations, trade surpluses and deficits, political stability and unrest, and economic policies of uncertain meaning and validity.
News of a balanced budget deal between the Clinton administration and the GOP congressional leaders a week ago sent the stock market soaring, just at the moment the bears had declared victory on Wall Street.
In addition to giving a morale boost to the slumping high-tech issues, the budget agreement provided a capital gains tax cut to wireless businesses.
Whether lawmakers can translate the budget blueprint into a tangible piece of legislation this summer that erases the federal deficit by 2002 is another question. Heavy dependence on rosy economic assumptions, like spectrum auctions generating $36 billion during the next five years, gives the budget deal shaky legs.
Indeed, by the time the U.S. baby-boom business machine shuts down and begins to draw on federal entitlements, a new deficit could balloon for the next generation. At that time, the bulls on Wall Street will be in retreat.
For the wireless industry, the unwelcome presence of the government and the stifling stability of the status quo is giving way to vicious volatility of free-market forces. Witness the wireless slump on Wall Street, consolidation among telecom giants, and causalities of entrepreneurs and incumbents in the paging, mobile telephone and dispatch radio sectors.
Or consider the cautious and uneasy treatment given to the strong U.S. dollar when the world’s seven largest industrialized nations, the so-called G-7, met little more than a week ago in the nation’s capital.
The United States, which has a competitive advantage in telecommunications and information technology, appears stuck in a policy contradiction. The White House wants a strong dollar, but at the same time complains loudly about growing trade imbalances with Japan and China.
The strong U.S. dollar can make it hard for American high-tech companies to sell products overseas, even with trade barriers coming down. Some firms simply hedge with various financial instruments to reduce exposure to currency shifts.
“We continue to see a lot of growth in international markets across the board,” said Lynn Newman, a spokesperson for Lucent Technologies Inc.
Yet, left unchecked, trade deficits can trigger protectionist complaints in the United States, which, in turn, could complicate Clinton administration free trade policy. Japan is particularly sensitive on that point.
“We do not want a weak dollar simply to improve our trade position,” President Clinton said recently. “We think that is not good economic policy to go out a seek a weak dollar. We want our dollar to be healthy and strong because we have a good, strong economy and good economic policies.”
As such, Treasury Secretary Robert Rubin is the major figure in dollar politics for U.S. wireless firms doing business overseas.
On the political side, the collapse of communism and the shaky emergence of developing economies and democratic governments around the world have opened the way for new trade opportunities.
That makes Secretary of State Madeleine Albright and Commerce Secretary William Daley major players on the world stage. Both second-term Clinton appointees work in complicated territory where trade policy, foreign policy and domestic politics intersect. Today, that intersection is home to the Democratic fund-raising scandal.
Daley no doubt would like to expand on trade progress with China-a huge multibillion dollar wireless telecom market. But there are political restraints on Daley, real and perceived.
Justice Department and congressional investigations are probing serious allegations that trade missions were used to solicit and/or reward political donations and that improper contributions from China may have been designed to influence elections as well as U.S. trade policy.
In doing so, some GOP lawmakers believe U.S. economic security and national security interests may have been compromised.
Meanwhile, there is growing friction between House Speaker Newt Gingrich (R-Ga.) and the administration regarding renewal of most favored nation trade status for China and its membership in the WTO in light of continued human rights abuses in China.
As such, Albright and Daley will have to choose their words carefully as they attempt to sell the American way to Europe, Latin America, Asia, the Middle East and other lands ripe for conquering by U.S. telecom barons.
