Armstrong speech:from WSJ (nothing major)
June 4, 1998
AT&T's Armstrong: Sees Internet Access
Through Telephone
Dow Jones Newswires
NEW YORK -- The U.S. needs to rethink the direction of its trade
policy, AT&T Corp. (T) Chairman and Chief Executive Michael
Armstrong said Wednesday evening.
Instead of focusing on cutting tariff's, the effort should now concentrate
on opening up overseas and U.S. markets to competition, he told a
meeting of the Economic Club of New York in Manhattan.
"U.S. trade policy is becoming a victim of its own success," Armstrong
said.
Tariffs on international trade have already been reduced from an average
of 40% to just 6%, he noted.
Further progress would be subject to the law of diminishing returns, he
added.
"The time has come for trade policy to give way to competition policy,"
Armstrong said. "Competition policy understands that removing border
barriers is not enough. Stopping there can still leave in place an internal
environment that leaves an economy that's nominally open but
effectively closed."
The test of an open economy is whether new players can come in and
compete, Armstrong said.
To persuade its trade partners to make changes, the U.S. must
emphasize that there will be economic benefits from creating an open
and competitive marketplace.
Furthermore, the U.S. should lead by example, making its own
economy more open.
For example, it called on Congress to pass legislation which would
requires "regulatory impact statements," assessments of the costs and
consequences of any new laws or rules under consideration.
Continuing this theme, he highlighted the regional Bell operating
companies. Although in 1996, the Telecommunications Act had
intended to open up their markets, it has had little impact in practice
because it has been tied up in litigation, Armstrong said.
The act, he added, identified two important principles affecting
competition in the local phone market. For one, owning the wire
connecting to the consumer gives an advantage so the Bell's should be
required to resell access at "an economically viable rate."
Secondly, the cost to connect should either be lowered by competitive
pressure or cut by the Federal Communication Commission.
Currently, the local phone companies charge about 3 cents a minute at
each end to connect even though, Armstrong said, that actual cost is a
half cent a minute.
Because competition has not developed in local phone markets,
Armstrong said he wanted to see the Bells prevented from entering the
long-distance market and the FCC force them to cut what he believes are
the excess access charges.
Looking further ahead, he foresaw the telephone becoming a tool for
connecting to the Internet.
Currently, 75% of Internet traffic is messages, e-mail and chat,
Armstrong said, commenting "that's AT&T business."
But many people do not want to pay $3,000 for a machine with three
million lines of computer code that has to sit on a desk to exchange
messages, he added.
The answer, he said, is the telephone, probably in its wireless version.
That would make using the Internet "as simple as answering the
phone."
- Peter Heap 201-938-2381 |
