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I would like to start by a remark about the catchword "Knowledge Economy". There is no economy without a society. This is why we should not limit ourselves to the restrained aspects of a mere economy of knowledge but start conceptualizing the "governance" of the global "Knowledge Society".
One cannot compare knowledge to other commodities. Knowledge has very specific properties, very different from the outputs of the industrial model. Like fire, it can spread quickly, at almost no marginal cost, with the proper winds. The "net-economy" shows that knowledge can allow extremely high returns, or none at all. Besides one can argue that knowledge is really not a product but rather a mindset. It may even be a way of life, as scholars or monks show. It may have strong non-linear effects, deep social and political impacts. This is why the so-called "Digital Divide" is in essence a social and economic divide that gets only aggravated by the mere power of IT.
Because of this deep social impact, a Knowledge Society comes with a political price. Recently, during the Kuala Lumpur Global Knowledge II conference, the Prime Minister of Malaysia announced his political will to launch a "K Master Plan" to leap Malaysia into the Knowledge Economy. But in the same time he underlined the serious risks that outperforming competitors from more advanced on-line-economies would just "hollow out" Malaysian economy.
In effect there is a problem. There is a contradiction in the phenomenon of economic « globalization », which is so facilitated by the globalization of IT. On the one hand, globalization allows for and benefits from growing returns, snowballing effects and competitive gains, which in some cases do lead to obvious (and unacceptable) monopolies. This is the "Winner Takes All" effect, at the world level.
On the other hand, globalization does not always answer to local needs. This could be called the "Global Winners Local Losers" effect. In other words globalization does allow enormous gains for the global winners, but one can suspect that if no proper action is taken, it aggravates in many ways the situation of local losers.
The crux of the matter is that globalization is tautologically "global" in nature, and hence does not necessary give due consideration to local problems and specificities. There are numerous bottlenecks at local level. There is no reason to think that the "invisible hands" of globalization will solve the very special needs of local situations. On the contrary, one should be confronted with the fact that an unregulated globalization does aggravate the "Global Divide".
Let me give you some examples.
Internet access disparities are considerable. Although telecom privatization and deregulation have made traditional operations more efficient, they are not a guarantee for local universal access to the Internet. Furthermore, the trans-border nature of telecom industry is more favorable to those who can impose revenue terms because of their advanced technology, high speed Internet backbones and net-concentration, developed over a period of time. This advantage has allowed few dominating operators to exert pressure on others to shoulder their access costs, making it even more difficult to provide the most basic services in developing countries.
With this mounting pressure to abolish bilaterally negotiated cost sharing arrangements, developing countries will face with an unprecedented burden to maintain their telecommunication systems. The net result of this "rate re-balancing" is that the operators in developing countries will be forced to offset the costs by increasing their local call charges. ISPs in developing countries are normally located in urban centers, hence the dial-up connections to rural areas are already expensive. Further increases in local call charges would mean exclusion of many in rural and distance places from access to knowledge resources.
Secondly, the over-concentration of Internet backbone business in the USA, and with no requirement for US operators to share costs of full circuits, is an another disadvantage particularly for the ISPs in developing countries, who in most cases must pay the entire costs of two way links. Currently, even for intra-Asian networks the majority of Asian ISPs are linked to the US operators. This is even true with the most intra-European networks, which often use Virginia as their international Internet hub. Thus, positioning of the USA as the World Internet hub has created a situation, whereby operators in the United States benefit far more than the connected peripheries. Ironically, under these circumstances, both the Internet providers and the users in the United States gain free Internet access to rest of the world at the expense of other countries, including the poorest of them trying to join information highways despite many other pressing priorities. This has led to a sort of exploitation, a situation which is, indeed, in the long run counterproductive to Internet penetration and eventually will prevent many in developing countries from tapping knowledge resources.
What counter-measures are available to developing countries? In this connection, the issue of strengthening regional peering arrangement and intra-regional networks has to be brought forward to be high in the agendas of regional forums. Serious thought should be given to the possibility to establish high capacity regional backbones to connect each country within a multi-hub global network in which nobody dominates connectivity.
The civil society in developing countries could sensitize parliamentarians and regulatory authorities to address this important issue and to mobilize the relevant regional political bodies to act with determination.
The need for a global regulation
Everyone is now familiar with the famous Microsoft suit, and the victory of the Antitrust Law over Microsoft monopoly practices. Similarly, on 27 June 2000, the US Department of Justice (DOJ) announced its opposition to the mega-fusion WorldCom-Sprint. Mario Monti, the EU commissioner in charge of competition was going to announce a similar move, after a cooperative effort between the Commission and the DOJ and the Federal Trade Commission (FTC), but WorldCom and Sprint almost immediately withdrew their project (1). These two examples show clearly the power of "political" regulation over the market. They also indicate a trend that could lead to some further, more global development, raising hopes to achieve some sort of framework for a better global governance.
The question of a "public sphere" capable of setting norms for regulating the private and market interests in favor of the global common good, which should provide and encourage fair opportunities for the market as well, is absolutely essential. There are certain elements, such as access to information and education, and access to limited resources such as the broadcast spectrum, which require regulation from the perspective of global good. A recent book (2) sponsored by UNDP explains why the market forces alone cannot regulate the global public goods. This requires enlightened interventions measures by governments and international agreements incorporating "public goods" within the norms for regulatory systems at national and international levels.
Cyberspace is not a no-man's land, any more than fiscal paradises are. If the governments of the world decided to unite in order to clamp down on all possibilities of tax evasion or illegal money trafficking, they could very well impose their will on offshore fiscal and money laundering paradises. A recent OECD report shows the way in pointing out "rogue states" in that matter. Similarly, if sometime in the future, the governments of the world decided to impose a strict reinforcement of a future global regulation of the cyberspace, this could very well be done. After all, computers and networks are very material objects that are still needed by the immaterial cyberspace, and the police and justice system could very well act on the "real estates" of cyberspace.
Privacy issues, for example, are too important to be entrusted to the marketplace alone. The protection of privacy has become one of the most important human rights issues of this turn-of-the-century. Some Big Brothers are watching our every move in order to attain strategic pre-eminence. One recalls the on-going UKUSA pact (binding the United States, Great Britain, Canada, Australia, New Zealand) using the ECHELON network supervised by the US National Security Agency in order to monitor and process more than 3 billion phone calls, faxes, e-mails per day throughout the world. But one should add the Big Sisters of economic, financial and intellectual surveillance. From now on a mere click on a hypertext link, the most casual consultation of a site on the World Wide Web generates "cookies" which feed uncontrollable databases. The technique of data mining (exploitation of data) enables governments and private organizations to carry out mass surveillance and personalized profiling, in most cases without any controls or right of access to examine this data in most cases. From medical care to transport systems, to financial transfers or commercial transactions, enormous quantities of information are accumulated every day, yielding information whose treatment and correlation make it possible to draw up extremely indiscreet portraits of each one of us. Thus, a tight network of surveillance surrounds us in the office and the hospital, from cradle to grave. Commercial interests want to be left free-handed to exploit powerful data-mining resources for marketing research or for information reselling to data brokers and to the "individual reference service" industry.
What level of anonymity and privacy protection is desirable? It is essentially a philosophical and political issue.
In Europe a Directive governing the protection of individuals with regard to the processing of personal data and the free movement of such data came into effect in October 1998, four years after it was adopted in 1994. Its Article 25 states that "the transfer to a third country of personal data which are undergoing processing or are intended for processing after transfer may take place only if (...) the third country in question ensures an adequate level of protection". But in the U.S., the chosen path is one of self-regulation. Private companies are expected to demonstrate self-restraint. But why should they comply when the fact of collecting data on consumers is an extremely lucrative business ? In fact, some companies base their very existence on this data, which, in turn, they sell. Since it remains to be seen if there is any adequate level of protection in the U.S., the question is still pending: who is going to have the last word? The free market or the privacy-conscious global citizen?
There are many other issues than privacy that should be dealt with from a "global common good" viewpoint. The definition of the "global common good" cannot be left to bureaucracies. It implies the emergence of a global political legitimacy and the creation of a global civil society. The market cannot be the answer to all problems. In particular market is not concerned by social redistribution. Important social issues (such as basic education, basic health or maintaining social or even international peace) belong to the "political" sphere. After a period of deregulation, we now need a re-regulation at a higher level. We need some sort of global governance, including a global fiscality (such as the famous Tobin Tax on all financial transactions proposed by Nobel Prize Laureate James Tobin). Why not imagine a global "telecommunications tax", a global "energy tax", or a tax on the use of global public goods such as the frequency spectrum, geostationary orbits or the sea-floor used by transoceanic communications cables, to help reducing information access imbalances and fighting global ecological concerns?
Market is based on competition. Hence the strongest emerge, with a non-linear effect: the fall of weaker competitors creates monopolies or oligopolies. Problems of monopolies are even bigger in the net economy of networks and software with the very strong non linear effect of "growing returns". This non-linear effect calls for a non-linear regulation such as the U.S. Sherman Antitrust Act or the Treaty of Rome. This is why the regulators still have a role to play. However there is not (yet) a global antitrust law. If monopolies do threaten "fair competition" provisions in the US or in the EU, there are some possibilities of regulation. But no regulatory mechanism on antitrust is available at the world level. WTO or the ECOSOC council of the UN (which is far from being an "economic security council") have no legislative tool nor political mandate to "regulate" monopolies or oligopolies that would have passed the internal US antitrust law test, but could still be very damaging for a worldwide "fair" competition, outside the US. In other words, the weaker countries (significantly dubbed as ROW or the "Rest of the World" by American commentators) need to unite to create the global legal framework that would prevent monopolistic behaviour at the world level.
Regulators are supposed to incarnate the « general interest ». For instance they are supposed to define the need for "universal access" at the information age and to ensure its financing. What should be the new "universal access" paradigm? Should it be only based on physical access? Should it include fair telecommunications tariff policies, including adequate subsidization of certain classes of users ? Or should it also include free access to certain "contents", for instance access to all public domain data and governmental information relevant to citizens imbued with their duty of being well informed on all affairs of state and eager to enforce democracy? What should be the minimum level of service for users? Is it possible to cost obligations to the public service mission in a meaningful way? What should be the "consumer's rights"? Are these rights interfering with the "citizen's rights", if they are limited by the interest of the "market" ?
Problems of interconnection, interoperability of networks and services are also to be regulated as well as fair allocation of resources (access to numbers, availability of radio-frequency spectrum, pricing the spectrum, frequency auctioning). It is not certain that solutions like ICANN will ultimately work, given the relative opacity of its "democratic" process. One cannot really control the weight of the different lobbies in such NGOs, that are not submitted to thorough accountability.
In recent years, telecom regulators have been unsuccessful in restraining the anti-competitive behaviour of the dominant operators and promoting effective market competition. For instance, the FCC admitted its inability to regulate AT&T at the time of AT&T divestiture. Today, in nearly all countries, on the major regulatory issues, the big players are going straight to the politicians and make pressure to impose their views. Thus, following the new 1996 USA telecom legislation liberalizing all telecom markets, the first mergers involved the regional Bell holding companies (RBHCs) in defensive moves to strenghten their monopoly positions in local telecom markets.
The public telecom operators (PTOs) often represent a bottleneck that can slow down or even stop improvements, especially in new service development.
If policy makers and regulators adopt a hands-off or laissez-faire position on the issue of competition, most telecom customers run a risk of being served in a marketplace with a competition policy but few real competitive options.
This is even truer for developing countries, notwithstanding the compelling ideology of deregulation. Developing countries have been "strongly invited" to opt for American or European models of deregulation. That is to say general deregulation (the "fox in the poultry" model) and heavy regulation on the incumbent operator to ensure that new operators (often mobile) are able to gain market share. But in developing countries the situation should be reversed. New entrant mobile operators have heavy financial and technical backing from their non-national partners (often very powerful global oligopolies, themselves limited on their own turf by antitrust laws). Whereas, the incumbent operator has no such support and therefore the regulations should be reversed to protect the incumbent from the new entrant. This is often complicated by the fact that any universal access provision is applied to the incumbent whilst the new entrant is given time to build his network and gain market share.
In other words, there is not one regulation model but many. And it should be the responsibility of a future World Antitrust Commission to decide which model should apply to which countries in order to guarantee real and fair competition.
An equally important "regulatory" issue is the access to knowledge content. There is undoubtedly a market-driven trend to merchandise information. Is it really wise to let knowledge being tranformed into a commodity? The knowledge base for the knowledge economy is in fact being developed largely through publicly funded ventures such as universities and research grants, while the exploitation of knowledge to produce products has become mainly a concern of private industry. While it is true that industries increasingly do their own product research, it is also true that the publicly funded institutions produce the researchers, and publicly funded academic institutes continue to be the fountain of knowledge. Then who should own the knowledge? Shouldn't there be a fair access to knowledge produced by both private and public enterprises, with due regard to the intellectual property rights? Shouldn't there be an arrangement to ensure at least that all research grants of public funds are issued on the condition that research information is made available for fair use in the public domain? For that, the principles of free access to information in the public domain will have to be defined and promoted.
Current law and practice generally concept allow "fair use" of published information for research, study, reviewing and reporting. Access to knowledge resources on the Net, if ethically applied, can be seen as an application or a corollary to this fair use principle.
But the "fair use" concept is more and more threatened. The most forceful counter-arguments to extending the concept of fair use to the electronic domain come from publishers. This reflects the tension between access and ownership. The analogous printed materials are browsed either in a library or a bookshop, hence they are less vulnerable to copyright infringements. But electronic text available in the Internet is not only storable but also can be duplicated and re-distributed at will. Therefore, pressure is mounting from publishers to tighten copyright laws and to make browsing on screen and sharing them through networks without permission, illegal. Policing of such tightened laws will be problematic with the difficulties of proving how and where the material is obtained and with ample opportunities to make changes to electronic text. In extreme cases some preventive technological solutions such as disabling of printing can be applied. However, it would seem more fruitful to expand the definitions of "fair use" and to inculcate "info-ethics" principles of respect for intellectual property rather than to tighten the legal framework.
Another, perhaps even more important strategy for development of knowledge resources is to increase the volume of public domain information available on the Internet. To this effect the governments and publicly funded institutes such as universities should be equipped and obliged to make their information available in public domain. The global public domain of information should be freely available, at no cost, to everybody, but should also be protected by "copyleft" regime such as the General Public License (GPL) used for instance to protect LINUX against predators.
Finally, one should consider with the utmost attention the actual trend to patent almost anything. Through the patenting of software, all intellectual methods may be patented in the future (3), such as business methods, education methods etc. which are already granted more and more patents in the US and Japan. In the US, for instance one can already patent business methods (4) or even learning methods. This virtual land grab could have disastrous consequences on the free access to knowledge and to fair competition. The European Patent Office will likely start considering how to grant such patents in Europe, with the help of American multinationals that will probably suggest clever ways to consider a business method as "the technical solution of a technical problem".
What would happen to Internet creativity if British Telecom succeeded in having its alleged patent on hyperlinks recognized as valid? This type of question should oblige us to start a complete re-foundation of the intellectual property rights global framework in the context of the Information Society. Until now, we have witnessed a continuous and relatively unchallenged international move in strengthening IPR laws. It is time to open a very wide international democratic debate on the very goals that should be socially pursued in terms of intellectual property. It is a philosophical and political debate that should not be obstructed by mere juridical constructions, and should be conducted out of reach of sectorial lobbies, in order to search for the "global common good". For instance the viewpoint of developing countries regarding access to knowledge should be particularly taken into consideration if we are serious about bridging the gap between inforich and infopoor.
Global markets without people capable of both producing and consuming knowledge are unsustainable, and it will remain as the task of publicly funded projects to produce these skilled and knowledgeable people. With the advent of the knowledge society the opportunities for life-long education will become the most important requirement for our future. Education systems with their traditional approach of fixed courses to make us ready for our adult careers will no longer suffice to meet the demands of knowledge society and economy. Due to accelerating rate of knowledge accumulation, the education we gain with 3 to 4 years in a university will become obsolete shortly after we are recruited for a job. Therefore people will have to have more avenues to obtain continuing formal education at various stages of their careers. This is where the strength of the Internet to facilitate on line education would count the most. Education investments in general should not only be raised, but also should include provisions to provide facilities and opportunities for lifelong education along with the required level of ICT support. Telecommunication and ISP operators could assist these efforts and promote the development of their own future markets by establishing concessionary rates for Internet access in schools, academic institutes and public libraries. Such schemes, sometimes known as "e-rates", have been successfully promoted by governments and regulating agencies in several countries, most notably the USA.
In a wider sense, the national policies to promote public domain information and to ensure that they provide information and applications to improve education, health, environment and government functions should be considered as a priority. The availability of public domain and other heritage information is an indispensable investment in education and therefore in the development of a knowledge society for all.
The importance of the "public sphere" for education is central to ensure re-usability of contents, methods and tools, interoperability of services, quality, multilingualism, and harmonization of curricula. Educational systems and other public service organizations will have to work closely with industrial concerns to develop standards which are flexible, open, freely available, and meet the needs of both industrialized and developing countries. It is clear that the international community, including UNESCO, has a special role in promoting and guiding this process.
As a conclusion, I would like to stress that the technological and economic globalization impose a political and legal globalization. We need a world law to regulate world processes. It is an urgent task that will be possible only through the rise of a global civil society, fully conscious of its historical role in mankind's history.
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