Microseconds and Macropolicy

Wriston, Walter B.


Domestic Reaction


In 1980, after seven years of study and the expenditure of excessive amounts of taxpayers' money, the Federal Communications Commission gave up trying to determine where computing stops and telecommunications starts-- gave up, that is, rules barring AT&T from entering the computer business. The effect of the bureaucratic delay on AT&T and IBM--and therefore on America's competitive position in the world--was immense. At a time when other countries were rapidly integrating computers and communications, there did not appear to be any central recognition within our government of the strategic importance of information technology. Meanwhile we all watched as a federal judge, doubtless doing his best, oversaw the breakup of the finest telephone system in the world and designed a new one in his courtroom, with no apparent concern for America's defense capability or our position in the world. Perhaps we still labor under the illusion that we really do not live in a global marketplace--that technology stays within political borders.

Yet, as the world marketplace has moved from slogan to reality, an awareness has been growing in this country about how heavily the world relies on the free flow of data across national borders. This reality is not yet fully appreciated, but its recognition must and will become central in the formation of policy on this matter. The flow of data affects the safety of the planes we fly in, the words we read, the TV programs we watch, the missiles that defend us, and the conduct and control of business, both public and private. All of this in turn affects the way we structure our society and creates a pressing need for the United States to put together and implement a policy on domestic and international information flow. We have not yet done so.

-What is, or should be, our policy on foreign taxation of transborder data flows? What should our response be when a foreign country asks U.S. multinational companies to register their computer codes with a government agency --or when a government-owned telephone and telegraph company charges U.S. companies more for telephone lines than it charges its own nationals, or even denies companies lines that are vital for the conduct of business? Congress recognized the importance of questions such as these in 1984 when it extended section 301 of the Trade Act of 1974 to cover the proliferation of non-tariff barriers to trade in services, including "restrictions on the use of data processing facilities" and "direct or indirect restrictions on the transfer of information." This new law is a step toward giving services equal standing with other vital exports. It authorizes the President to respond to protectionism in the services area as well as in goods. It also authorizes the President to promote bilateral and multilateral trade negotiations to remove foreign barriers to U.S. service exports, including requirements that data be processed locally and other barriers to international information flows. Since much of the world's development depends on keeping these circuits open, we must give still more priority to implementing an American policy that encourages the free flow of international information.

U.S. regulators at last November's meeting of the General Agreement on Tariffs and Trade understood this need. At that meeting GATT--created in 1948 to bring about contractually binding multilateral reductions in trade barriers--agreed to study whether communications services can come within its framework. This decision is a giant step toward defining and then resolving the emerging issues of the information age.

-What is, or should be, our policy when foreign governments permit their nationals to steal our research, or our policy on keeping national secrets secret? The lead we enjoy in information technology was created by men and women from Silicon Valley on one coast to Route 128 on the other. Our advantage rests on our unstructured society that encourages innovation. More than half of America's net employment growth in the five years ending in 1981 came from firms with twenty or fewer employees. But these firms are producing new technology faster than our government has produced new policies to protect it. Since American competitiveness will depend more and more on advanced technology, restoring the effectiveness of our patents and copyrights is a new and urgent policy challenge.

- Finally, what should our policy be on allocating slots in the geostationary arc? Should we support demands from some developing nations for access to that arc? Or should we hold to the position that the arc belongs to those who use it--the countries that have actually launched the satellites?

  • This document was created from the article, "Microseconds and Macropolicy" by Walter B. Wriston for the March/April 1985 edition of "Regulation: AEI [American Enterprise Institute] Journal on Government and Society." The original article is located in MS134.003.026.00019.
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