Introduction

Not surprisingly, there are no simple or universal answers to the many questions that are asked in the course of this debate. Experience and history provide lessons and information, but -- at least not as of 1992 -- no blueprint for a successful restructuring of the telecommunications market. Variations among national political, social, and economic forces, differences in levels of development, disparities in natural resources and geographic and demographic factors, and basic cultural attributes prohibit the wholesale exportation from one country to another of a national approach to restructuring or development.¹

At the same time, efforts to proceed in isolation, and without regard to the trends and experiences that now exist in abundance, are misguided and counter productive. For this reason, in 1991 The Annenberg Washington Program in Communications Policy Studies of Northwestern University ("The Annenberg Washington Program") decided to devote substantial economic and intellectual resources to promoting an exchange of ideas about the restructuring, oversight, and financing of national telecommunications markets, particularly in developing countries. During 1991 and into 1992, especially during three intensive seminars that were held in October 1991 (with a delegation from Poland), January 1992 (with a delegation from Hungary), and February 1992 (with a delegation from Bulgaria), The Annenberg Washington Program sought to share with decision makers from outside of the United States the views, experiences, and perspectives of state and federal regulators and policy makers, private sector representatives, and leading academics from the United States. This exchange of ideas was feasible because of the cooperation and support of former and current state telecommunications regulators from Florida, Idaho, Illinois, Maine, New York, Rhode Island, and Vermont,² the Office of International Communica-tions and Information Policy of the U.S. Department of State,³ the National Telecommunications and Information Administration of the U.S. Department of Commerce,⁴ the Federal Communications Commission (the FCC or the Commission),⁵ and other public and private sector participants (including academics) who generously committed their time and energy to the process. The process evolved into a valuable transnational dialogue because of the enormously interested, knowledgeable, and spirited members of the delegations from Poland, Hungary, and Bulgaria,⁶ who helped us better understand the perspectives of some of the many people around the world who are struggling with these complicated issues. We hope that we have begun to help at least a few of them. At the very least, we believe we have promoted new avenues of discussion and additional opportunities for exchanges of views and information. We expect to continue in this role as the process of sectoral restructuring continues around the world.

This report represents a modest attempt to assemble some of the many illuminating and provocative ideas that were exchanged during the 1991 and 1992 sessions. Where appropriate, we have amplified certain concepts with additional factual or explanatory material drawn from available sources. In addition, we have included in footnotes many references that will direct readers to additional, more specific and detailed information.

In preparing this report, we have chosen to follow a question-and-answer format for several reasons. First, this format captures the dynamic and the spirit of the role of The Annenberg Washington Program in the process of educating and exchanging ideas on these subjects. We are seeking to help answer the questions of those who are attempting to solve very real and perplexing problems; we have not purported to be in a position to dictate absolute solutions or universal answers to anyone. The questions appearing in the report summarize or highlight many of the concerns that decision makers expressed during the 1991 and 1992 sessions. Thus, the report attempts to preserve, and to address in writing, the matters that were of most concern to the decision makers with whom we have spoken.⁷ Second, we concluded that this type of presentation would allow an extremely complex subject to be broken into shorter -- and, we hope, more understandable -- pieces. The questions have been written intentionally to emphasize particular dilemmas or to underscore specific concerns that, we believe, will place the information provided in the answers into a more helpful context. Third, our experience suggests that many decision makers find it useful to be able to extract brief portions of existing written materials. Often, such extracts may be used by decision makers to support their own views in discussions with third parties. The question-and-answer format should lend itself to such use, as one or two questions and answers could be reproduced in a way that would illuminate the problem being addressed and the solution being proposed.

It also is important to emphasize what this report does and does not purport to accomplish. First, and foremost, the report's objective is not to convince other countries to adopt a U.S.-style regulatory scheme. In fact, great attention has been devoted in the report (as it was during the 1991 and 1992 sessions) to explaining the unusual rationale for the existing U.S. system, as well as the many objections to and criticisms of various aspects of U.S. regulation of the communications market. Without question, many features of U.S. policy have been praised and advocated as worthy of study and consideration. Many others, however, have been questioned and even ridiculed. Virtually no one, for example, has suggested that countries consider a wholesale divestiture process, an elaborate rate-of-return system of profit regulation, or an extensive licensing scheme. On the other hand, the report clearly advocates competition over regulation of a noncompetitive market, which is a position that U.S. interests increasingly advocate. In this regard, however, the report candidly admits that the precise degree of competition or regulation that is necessary or appropriate is likely to vary from one situation to the next, as well as over time. A specific level of competition cannot be posited in a universal or absolutist manner.

Second, the report is not intended to serve as a comprehensive reference work or instructional manual. Rather, it seeks to discuss many central issues; to highlight important concepts and considerations; to provide a basis -- and a stimulant -- for further study, discussion, and exploration; and to memorialize many of the helpful and insightful contributions of the participants in the 1991 and 1992 sessions.

Third, although the report necessarily is a static work, it is intended to be part of a dynamic process. We hope and expect that additional gatherings of decision makers and additional reports will, over time, lead to the creation of a more complete record. Accordingly, the report should be considered one part of a work in progress.

Finally, and at a personal level, I cannot emphasize enough the contributions that so many creative, generous, and supportive people have made to the process out of which this report has grown. In addition to The Annenberg Washington Program and its staff, especially Newton Minow and Yvonne Zecca, the director and associate director of the Program, respectively, all of whom have supported this effort and contributed to its viability, each of the people listed in Appendix A to this report shares in any of the accomplishments (but in none of the shortcomings) of this report and the process that surrounds it.