Statement
of John M. Eger
Professor of Communications and Public Policy
San Diego State University
Before the Senate Committee on Energy Utilities and Communications
Sacramento, California, February 10, 1998
Good afternoon Mr. Chairman and members of the Committee. My name is John Eger. I am a professor of communications and public policy at San Diego State University. I appear before you today in my primary role as Chairman of the California Institute for SmartCommunities™, a 501(c)(3) educational organization which is part of the SDSU Foundation responsible for promoting the concept of smart communities throughout the State of California. I also currently serve as Chairman of the California Information Technology Committee, a commission created by Senate Bill 1 to assist the State of California, as California repositions itself to be a leader in the global, knowledge-based information economy.
I am particularly pleased to appear before this committee to talk about Senate Bill 1148 having to do with telecommunications services, and particularly as it relates to the need for new infrastructures for the information age. As this committee knows well, a major and dramatic shift in the economy is occurring because of the convergence of technology and economics -- the technology of telecommunications and information technology, and the economics of a global economy. Importantly in the wake of this convergence, power is being realigned, with more and more power flowing from the nation-state back to the state and individual communities, at the same time as wealth is being redefined.
Walter Wriston, former chairman of Citibank, takes great pains to emphasize these fundamental trends in his book "The Twilight of Sovereignty," as he points out what happened when Great Britain entered into an agreement with the People's Republic of China for control of Hong Kong. "Trading screens began to light up all over the world and the traders began to trade," he said, and like a "global plebiscite" reflected world public opinion that the treaty was not good for Hong Kong. Overnight billions of dollars left Hong Kong, leaving it teetering on the edge of bankruptcy and causing Wriston to confirm that "information had replaced gold as the new monetary standard."
Wriston also believes as I do, and many others who are students of this shift from an industrial to a post-industrial knowledge-based economy, that it is not only information and knowledge that is the new wealth, but information technology which are the critical tools of wealth creation. No surprise then that almost every developed country in the world is developing its own national information strategy. Singapore as you know launched an aggressive plan called IT2000. By wiring every home, school, office and hospital, business large and small, and connecting every institution to every other, with fiber optic cable, Singapore hopes to leap-frog well into the next millennium as an international information region, an intelligent hub if you will, for the emerging Pacific.
For the same reasons, Japan launched a $450 billion dollar program to do the same thing by the year 2015. Malaysia launched its plan for a Multimedia Supercorrider, and France as early as 1976 initiated its "Telematique" program, replacing telephone directories with "Mini-Tel" computers in every home.
The impetus for these national strategies, like the Clinton/Gore National Information Initiative (NII) is the same. But California, I believe, was quick to realize that these plans were faulty. National Information Infrastructures already exist. It is state and local information infrastructures which do not. In many ways, these are the on-ramps and the off-ramps and the by-ways of the global information highway, and for that reason we believe that is where our energies should be focused. That in essence is the case for Building Smart Communities, communities aggressively deploying information technology to transform the region. A recent San Diego Union-Tribune Insight piece, entitled "Cyberplace," was published last October, which together along with a copy of Building Smart Communities is enclosed. Together, they form the basis of the educational mission of the California Institute for SmartCommunities™ and provide a fuller argument for the "smart community" concept.
In the time allowed today, I would like to briefly address three overarching conclusions that we have come to which might be helpful as we consider the importance of building California's new information infrastructures:
1) Firstly, it must be recognized that no national or even state information initiatives or policy can have the truly transforming affect unless individual communities and individual citizens within those communities are actively participating in the renewal and re-engineering of their community. No matter how grand or frankly well-funded a national information initiative is, it is only as strong as its weakest link. Consequently, only a new federalism, a new federal, state and local partnership if you will, for the development and implementation of public policy and information initiatives, will have value in the vital area of telecommunications.
2) Secondly, the task before us is not just about building new communications infrastructures. It is about re-engineering all our existing institutions and our national, local and institutional ways of thinking. For example, in preparing the City of the Future initiative for Mayor Susan Golding in the early 1990s, we invited an architect of Singapore's IT2000 strategy who emphasized the importance of "fiber optics" and "bandwidth in the ground," as he put it. But upon questioning, our Singaporian expert concluded that more important than the "bandwidth in the ground," was the "bandwidth in people's heads." His point was well taken, and we now believe firmly, that everyone at every level of business and society must understand that this effort to transform ourselves for a knowledge based economy was not about technology, but about jobs, dollars and the quality of life.
3) Thirdly and lastly, is a need for a consensus-making spirit and a recognition that cooperation is a fundamental ingredient in any competitive strategy -- cooperation between government and industry, cooperation between governments within a region, and cooperation between heretofore competing industries.
Let me elaborate on this last point, for it touches directly on the issues of concern in this hearing today.
When we launched the San Diego City of the Future initiative, Mayor Golding expressed her goal for the commission, i.e., that she wanted San Diego to be the "first fiber optic wired city in the world." Soon, however, we found that San Diego was already the most fiber optic wired city. We noticed that trenches were being dug throughout the city by the cable companies, the telephone company, the new competitive access providers, the electric utility, and the city itself, among others. It was not unusual, indeed to have five or six trenches being dug, going along the same corridor, and fiber optic cables being thrown in them all resulting sadly in a huge waste of valuable resources. The motivation it seemed was a belief on the part of those digging the trenches and laying the fiber that the one closest to the building or the home will be declared the winner, and thus I suppose the ultimate provider of the services carried over those fibers.
With a worldwide shortage of capital and a race for connectivity it would seem that we should be able to find a basis for cooperating in this important area of infrastructure development, if only perhaps an agreement for digging one trench and for sharing the fiber. That is happening by the way, in a few instances.
More importantly, perhaps, if we find that we ought to radically accelerate that process, it may be time to recognize that our competitive policies to date have already served us well, and that at least with respect to one sector of the market -- wireline infrastructure -- we have so much competition, we can see the outlines or the opportunities for a new quasi-monopoly; a utility-type service provider who would insure broadband to every home, office, school, hospital, and library in the region. Such a utility would, for a small fee, provide bandwidth on demand.
If in fact the real competition should be in services -- not infrastructure -- by providing such a utility -- and there are a number of ways to accomplish this, including using the existing facilities of all the current providers -- then we should be in a position to dramatically increase both the price and number of services not heretofore considered viable.
Unfortunately, neither the PUC or the FCC or the Legislature or the Congress has looked at separating the concept of content delivery from conduit, and indeed the 1996 Telecommunications Act designed to free the marketplace by loosening restrictions on all the existing players at the same time as it encouraged new entry, has in fact exacerbated our problem. Others yet may argue that it is too soon to draw those conclusions. I do believe that these hearings are an important effort to get at the truth and I am pleased to be part of your effort.
Let me conclude at this point with a final observation. This committee has heard, and undoubtedly knows, the computerization of society provides tremendous opportunities for major advances in health care, education, business and government itself on a scale unimaginable a decade ago. The potential benefits for economic development, and social well being to the citizens of the State of California are enormous. Such new challenges and opportunities, however, require new and radical thinking if we wish to retain our preeminence in this important field of information production and information technology, and I look forward to working with this committee as it struggles to develop a statewide policy, particularly affecting the need for broadband telecommunications infrastructure.
At this time, I would be happy to answer any questions you have.
Thank you.