Telecommunications and the Internet Boom: Analysis and Economic Perspectives

Abstract

In the 1990s the increasing use of information and communication technology (ICT) stimulated economic growth and innovation in the US and in Europe. ICT consists of information technology — computer and software — and telecommunications network operation and services. Both pillars of the ICT sector are interdependent: Cheaper and more powerful computer equipment can be used to build faster communication networks and to launch innovative digital services. Modern digital telecommunications at the same time accelerate the diffusion of knowledge and information so that there is an increasing demand for storing and processing this new knowledge/information via computers. While the US, after the splitting up of the old AT&T in 1984, has already experienced a certain level of competition in telecommunications, continental Europe and Japan have only begun to embrace competition in telecommunications in the late 1990s: 1998 was the magic date on which national operators in EU countries were forced to accept competition in network operation and in telecommunications services. The UK had already introduced competition in 1984, at which time a duopoly was introduced. This gave way to more open competition in the fixed network business after 1990. Since the early 1990s mobile telecommunications has grown rapidly in Europe, the US and Japan — the latter being quite successful with the so-called imode which offers mobile internet services.