Section A:
The Telecommunications Revolution
(The Telecommunications Revolution)
A transformation is occurring that should greatly boost living standards in the developing world. Places that until recently were deaf and dumb are rapidly acquiring up-to-date telecommunications that will let them promote both internal and foreign investment. It may take a decade for many countries in Asia, Latin America, and Eastern Europe to improve transportation, power supplies, and other utilities. But a single optical fiber with a diameter of less than half a millimeter can carry more information than a large cable made of copper wires. By installing optical fiber, digital switches, and the latest wireless transmission systems, a parade of urban centers and industrial zones from Beijing to Budapest are stepping directly into the Information Age. A spider's web of digital and wireless communication links is already reaching most of Asia and parts of Eastern Europe.
All these developing regions see advanced communications as a way to leap over whole stages of economic development. Widespread access to information technologies, for example, promises to condense the time required to change from labor- intensive assembly work to industries that involve engineering, marketing, and design. Modern communications "will give countries like China and Vietnam a huge advantage over countries stuck with old technology".
How fast these nations should push ahead is a matter of debate. Many experts think Vietnam is going too far by requiring that all mobile phones be expensive digital models, when it is desperate for any phones, period. "These countries lack experience in weighing costs and choosing between technologies," says one expert.
Still, there's little dispute that communications will be a key factor separating the winners from the losers. Consider Russia. Because of its strong educational system in mathematics and science, it should thrive in the information age. The problem is its national phone system is a rusting antique that dates from the l930s. To lick this problem, Russia is starting to install optical fiber and has a strategic plan to pump $40 billion into various communications projects. But its economy is stuck in recession and it barely has the money to even scratch the surface of the problem.
Compare that with the mainland of China. Over the next decade, it plans to pour some $100 billion into telecommunications equipment. In a way, China's backwardness is an advantage, because the expansion occurs just as new technologies are becoming cheaper than copper wire systems. By the end of 1995, each of China's provincial capitals except for Tibet will have digital switches and high-capacity optical fiber links. This means that major cities are getting the basic infrastructure to become major parts of the information superhighway, allowing people to log on to the most advanced services available.
Telecommunications is also a key to Shanghai's dream of becoming a top financial center. To offer peak performance in providing the electronic data and paperless trading global investors expect, Shanghai plans telecommunications networks as powerful as those in Manhattan.
Meanwhile, Hungary also hopes to jump into the modern world. Currently, 700,000 Hungarians are waiting for phones. To partially overcome the problem of funds and to speed the import of Western technology, Hungary sold a 30% stake in its national phone company to two Western companies. To further reduce the waiting list for phones, Hungary has leased rights to a Dutch -Scandinavian group of companies to build and operate what it says will be one of the most advanced digital mobile phone systems in the world. In fact, wireless is one of the most popular ways to get a phone system up fast in developing countries. It's cheaper to build radio towers than to string lines across mountain ridges, and businesses eager for reliable service are willing to accept a significantly higher price tag for a wireless call — the fee is typically two to four times as much as for calls made over fixed lines.
Wireless demand and usage have also exploded across the entire width and breadth of Latin America. For wireless phone service providers, nowhere is business better than in Latin America — having an operation there is like having an endless pile of money at your disposal. BellSouth Corporation, with operations in four wireless markets, estimates its annual revenue per average customer at about $2,000 as compared to $860 in the United States. That's partly because Latin American customers talk two to four times as long on the phone as people in North America.
Thailand is also turning to wireless, as a way to allow Thais to make better use of all the time they spend stuck in traffic. And it isn't that easy to call or fax from the office: the waiting list for phone lines has from one to two million names on it. So mobile phones have become the rage among businesspeople, who can remain in contact despite the traffic jams.
Vietnam is making one of the boldest leaps. Despite a per person income of just $220 a year, all of the 300,000 lines Vietnam plans to add annually will be optical fiber with digital switching, rather than cheaper systems that send electrons over copper wires. By going for next-generation technology now, Vietnamese telecommunications officials say they'll be able to keep pace with anyone in Asia for decades.
For countries that have lagged behind for so long, the temptation to move ahead in one jump is hard to resist. And despite the mistakes they'll make, they'll persist — so that one day they can cruise alongside Americans and Western Europeans on the information superhighway.