Towards a New Model of Communication Network Management

7/28/2019 Towards a New Model of Communication Network Management

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Patrice FlichyLiz Libbrecht

Towards a New Model of Communication Network ManagementIn: Rseaux, 1996, volume 4 n2. pp. 259-269.

Abstract

Summary: It is often thought that a new management model for communication, totally opposed to that which prevailed until the

1970s, is emerging. By drawing upon various historical examples this article shows that numerous management models have

existed in the telecommunications and broadcasting sectors. These can be characterized by f ive variables:

monopoly/competition, public/private, universal/specific, mass/elite, and national/regional/international. Since the restructuring

which is currently taking place influences these variables simultaneously, it is likely - as in the past - to give rise to a number of

management models.

Citer ce document / Cite this document :

Flichy Patrice, Libbrecht Liz. Towards a New Model of Communication Network Management. In: Rseaux, 1996, volume 4 n2.

pp. 259-269.

http://www.persee.fr/web/revues/home/prescript/article/reso_0969-9864_1996_num_4_2_3314
http://www.persee.fr/web/revues/home/prescript/author/auteur_reso_53http://www.persee.fr/web/revues/home/prescript/author/auteur_reso_51http://www.persee.fr/web/revues/home/prescript/article/reso_0969-9864_1996_num_4_2_3314http://www.persee.fr/web/revues/home/prescript/article/reso_0969-9864_1996_num_4_2_3314http://www.persee.fr/web/revues/home/prescript/author/auteur_reso_51http://www.persee.fr/web/revues/home/prescript/author/auteur_reso_53


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TOWARDS A NEW MODEL OFCOMMUNICATIONNETWORK MANAGEMENT

Patrice FLICHY

Translated by Liz Libbrecht

Summary: It is often thought that a new management modelforcommunication, totally opposed to that which prevailed until the 1970s,is emerging. By drawing upon various historical examples this articleshows that numerous management models have existed in thetelecommunications and broadcasting sectors. These can be characterized

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by five variables: monopoly/competition, public/private,universal/specific, mass/elite, and national/regional/international. Sincethe restructuring which is currently taking place influences thesevariables simultaneously, it is likely - as in the past - to give rise to anumber of management models.

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TOWARDS A NEW MODEL OF COMMUNICATION NETWORK MANAGEMENT

3 TOWARDS A

NEW MODEL OFOMMUNICAT

IONETWORKMANAGEMENT

Patrice FLICHY

As far as telecommunication and broadcasting policy is concerned, the eightiesand nineties seem, to a large extent, tobe the decades of deregulation. On theeve of total liberalization of telecommunicationsn Europe, when interventionby the Brussels Commission has led tothe establishment of new rules, itappears highly relevant to consider thedifferent aspects of the transformation ofpublic telecommunications and broadcasting policies.We note, first, that the concept of deregulation does not have entirely the samemeaning on both sides of the Atlantic. InAmerica, as Jean-Paul Simon illustratedin an excellent synthesis (Simon, 1993),deregulation is characteristic of thepolitical and legal tradition of fighting

against monopolies. By favouring competition, the public authorities defendthe consumer. In Europe, on the otherhand, whereas the Commission has formulated a doctrine that is fairly similarto that of the United States, the samecannot be said for the member states.For a long time deregulation in Europemeant the opening of a public activity toprivate enterprise. Governments eitherprivatized public institutions (BritishTelecom in the case of telecommunications,F1 in that of broadcasting) oropened the sector to private capital (Mercury, Fininvest). This dual character ofEuropean deregulation (privatization,competition) indicates the complexity ofthe phenomenon, the dimensions ofwhich need to be measured.In the seventies in Europe, the dominantmodel of communication services wasoften described as that of a publicmonopoly, proposing universal massservices on a national basis. Can it besaid that deregulation constructs a diametrically opposed model: competitive,private services for specific or elitepublics on a regional or internationalbasis? This does not seem to be the case.Contrary to Eli Noam's suggestion(Noam, 1987), there has been no unifiedmodel of the FIT derived from an absolutist conception of the State (of whichAT&T was only a North American variation), and to which a patchwork of hundreds of interconnected networks was tobe opposed in the future, 'serving different geographical zones, particularclasses of user and types of service, withno clear-cut classification or possiblepartitioning'. The intention of this articleis to show that the organization of communication networks has been morediversified than is often believed, andthat new forms in the future will

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probably be even more diverse and willinduce restructuring among the variousorganizational players.Five characteristics of communicationservices can be distinguished. Theseexist in one of two forms, as shown inthe table below, although the items maybe combined differently. The history ofcommunication policy shows that the1960s model of public service monopolystemmed from a complex social construction which led to a system that wasrelatively stable but never unique inEurope. The present restructuring ishardly likely to generate an entirely newmodel. In order to understand this evolution, it is necessary to examine successively the following polarities ofcommunication systems.

MonopolyPublicUniversalMassNational

CompetitionPrivateSpecificEliteRegional or internationalMonopoly/ competitionUnlike Eli Noam, we assert that telecommunication services were not managed ina monopolistic framework from the outset. Although that was indeed the case inFrance, it was an exception; in the UK, asin the US, the telegraph was launched ina competitive context. In the US a privatemonopoly (Western Union) developed intwenty years. In liberal nineteenth century England, it was through the firstnationalization in modern history thatthe government set up a telegraphicmonopoly. The same was true for broadcasting. In England the BBC monopolywas established in 1922 only, while inFrance a mixed competitive system withpublic and private stations developedbetween the tw o World Wars.How can one explain the fact that, inmost cases, there was a move from a

competitive to a monopolistic situation?The explanation given by economists isthat the framework was naturally one ofmonopoly; economies of scale and ofscope were such that a monopoly situation as more effective.The recent debate attending deregulationas fuelled numerous controversiesamong economists over this issue -which seems to suggest that the effectiveness of natural monopolies is notuniversally recognized. One may, however, question whether the answer tosuch a controversy lies in economics.David Allen has shown that on a numberof important questions concerning theeconomy of telecommunications (e.g.mixed local and long-distance call subsidies, r the risk of minority rivals skimming off the most lucrative links), widelydiverse positions are to be found amongAmerican economists (Allen, 1992). Inreality the grounds for breaking upAT&Twere far more legal than economic.In a much earlier book on the BBCmonopoly, R.H. Coase, a recent Nobelprize winner for economics, consideredthat technical or economic justificationsfor monopoly are hardly convincing(Coase, 1950). Instead, he explained theconstitution of the BBC by a series ofhistorical coincidences which broughtabout a consensus in the British political lass. Behind the question of amonopoly lay other issues, primarilythat of the public service.There are basically tw o political traditions in North America and Europewhich lead to differing standpointsregarding monopolies. If we agree thatthere is a natural tendency towards theformation of a monopoly in a stronglycapitalistic activity such as networkmanagement, the political establishmentcan either thwart this tendency by

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breaking up monopolies, or place themat the service of the nation, i.e. thenationalization of public services practised in Europe. However, within a European Community of liberal inspiration,as defined by the Treaty of Rome andagreements on the Single Market, theAmerican concept is replacing the oldtradition of a public monopoly.Public /privateThe principle of the public managementof communication systems dates back tothe nineteenth century. In France, military and law enforcement considerationswere successively invoked to justifyState intervention, followed by thescarcity of networks (in this century, thescarcity of frequencies) and finally theSaint Simonian perspective of Stateintervention to build the infrastructuresneeded for economic development. InBritain, nationalization of the telegraph(1868) was demanded by the chambersof commerce who wanted a service to beavailable throughout the country andnot only in the major industrial centres.1In the United States, the first telegraphline built by Morse operated within apublic framework. The weakness of thefederal State in the middle of the nineteenth century caused it to relinquishany claims in this domain and the telegraph was built by private enterprise.This choice was never to be called intoquestion. When, during the First WorldWar, the military powers wanted to institute a public monopoly over radio communications, they were to encounterfierce opposition from the public whosaw therein an unacceptable threat to itsfreedom.Thus, by the end of the nineteenth century the models of public and privatecontrol had definitively taken shape as

regards the telegraph. With the developmentf the telephone this model was tobe reconsidered. While in Germany thetelephone was taken over by the postaladministration, in France and England itwas initially launched by private companies.n France it was soon to be nationalized, with England following suit onlylater. During the inter -war period thequestion of the State's role in the management of the telephone was debated atlength in both countries. In France privatization was seriously considered andfinally, in 1923, the PTT was given managerial autonomy with the creation of anannex to the budget. Its managementthus came to be of an essentially industrial nd commercial nature since it hadto balance its accounts. It could not besubsidized from the general budget, andthe telephone tax became the price of aservice and no longer a tax.Similar measures were debated at lengthin England by several parliamentarycommissions, but were finally rejected. Itappears that in an area which concerneddaily life so closely, control over the public as considered indispensable andachievable by Parliament only (Garnhamet al., 1994). It was only in 1961 that thePost Office obtained financial autonomy.In the historical evolution of the organization of telecommunications, anotherdebate appeared in the 1980s: the distinction between operation and regulation.t is interesting to note that thisseparation between tw o functions, whichis today being established in all European countries, was not immediatelyapparent to legislators. The proof is thatwhen in 1982 Mrs Thatcher's government ut an end to the British Telecommonopoly, the latter retained the PostOffice's powers in respect of the grantingof licences. It was only in 1985 that an

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independent regulatory authority,OFTEL, was created.While the role of the State in communications as been clarified since the1920s, it should also be noted that theboundary between public and private isless clear-cut than it is often thought tobe. In the UK the status of public corporation, which the Post Office did nothave, was granted to the BBC in 1922when it was still a private company. Itsubsequently became a public enterprise. The status of public corporationwas also chosen for commercial television. Thus, there is no one-to-one correspondence between the ownership ofcapital on the one hand and the characterf a public service, an institution'sdefence of the public interest, on theother.It was in broadcasting that the notion ofa public service had the most specificmeaning for a long time. For the pre-wardirectors of the BBC, this notion corresponded to an educative and culturalgoal. As Garnham so clearly shows (Gar-nham et cd., 1994), this project characterized the Victorian tradition ofeducation of the masses by the middleclasses. In France, Italy and Germany,the post-war public broadcasting servicefixed itself similar objectives, hoping tobroadcast the major classics to themasses (theatre, opera, etc.). Since themid -seventies the bottom has, however,fallen out of this educative and culturalmission.In telecommunications, an observersuch as C.D.Foster considers that thenotion of public interest is an 'emptybox' that everyone can interpret as theysee fit (Foster, 1992: 369, quoted byBustamante et al). It does indeed seemrelevant to wonder whether the publicinterest is that of the users, the national

industry, or the staff of telecommunicationsnstitutions.To conclude this reflection on the relationship between public and private, wenote that there exist mixed institutionscombining public and private capital.This type of structure has been functioningor a long time in the transport,water and telecommunications sectors.Telefonica, the Spanish operator, is thebest-known example. Although initiallyit was a specific case related to Franco-ism, the recent expansion of Telefonicashows that, in a context in which distinctions between public and privatetend to become blurred, a mixed company enables the State to maintain itsprerogatives and the operator to enjoyprivate management.2Universal/SpecificUntil the end of the nineteenth century,telephone operators mainly offered userspoint-to-point links which were not systematically switched. The network comprised small zones, usually urban, thatwere often unconnected. It was at thebeginning of this century that, primarilyin the United States with the Bell System, another conception of telecommunicationsmerged - that of a universalnationwide service allowing for communication between any tw o points in thenetwork. Three elements define a universaletwork: its scope, its uniformity,and its capacity for interconnection. Fora long time the Bell System slogan 'Onesystem, one policy, a universal system'was the watchword of telecommunicationsperators throughout the world.Paradoxically, in Europe where the PTTadministrations were theoreticallygrounded in the principles of a publicservice, obligations concerning a universalervice had not always been codified.

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TOWARDS A NEW MODEL OF COMMUNICATION NETWORK MANAGEMENTGarnham (1994) shows that it was onlywith the creation of OFTEL and the grating f a licence to that the obligationsof a universal service were specified inthe UK. The same applied to other European countries where it was also duringthe preparation of regulatory and operational missions that the obligation toprovide a universal service was defined.In the current context, in which telecommunications are no longer limited to thetelephone, the question of a universalservice is, however, presented in different erms. The development over thepast tw o decades of data transmissionsystems has profoundly changed thetelecommunications landscape. For thewealthiest and most up-to-date users(essentially businesses) a wide range ofdiversified services is available. Moreover, technological progress has reducedthe cost of switching as compared totransmission. We thus witness theappearance of what Peter Huber (1992)calls a 'geodesic network'; rather thanbeing linked up in a hierarchical structure, the network connects different private corporate networks in a highlyflexible way. Whereas in the past thetelephone was, for businesses, like wateror electricity - that is to say, a networkto which they were connected but onwhich they could not intervene - todaythat is no longer true. Firms see information networks as an element of competitiveness, and therefore prefer todesign their own systems. These enablethem to innovate far more rapidly andthus to obtain a competitive lead.3 However, as soon as such firms want toextend their network towards other organizations, they encounter difficulties.They may initially be able to impose theirchoice on their suppliers or customers,but beyond this first circle it is

sary to build complex systems of interconnection.A risk therefore exists of these differentnetworks not linking up into a coherentwhole. Is the geodesic network an illusion? Franois Bar and Michael Borrussuggest that it is: 'If geodesic domes arestable structures, it is precisely becausethey are made of regular and highlystandardized polygonal cells assembledtogether in a coherent fashion. Try tobuild a geodesic dome with a few bricks,breeze blocks, constructional timber, afew sheets of plywood and some stones;if it doesn't collapse immediately there'sa good chance it will end up looking likethe tower of Babel.' (Bar and Borrus,1990: 32).This universal/specific service debate isnot peculiar to telecommunications; asimilar dichotomy can be found inbroadcasting. In France, DominiqueWolton (1990) became a defender of general-interest TV channels which he sawas being threatened by the developmentof specialized channels. He is of theopinion that one of the basic tools in thefunctioning of democracy risks beingundermined. His plea would probably bemore relevant in the United States wherethematic channels are becomingincreasingly important; in Europe thatdoes not seem to be the case. However,the recent bankruptcy of the Cinq showsthat the space reserved for general-interesthannels is indeed limited.Mass /eliteCommunication, telephone and television services are today mass serviceswhich, for a long time, were consideredelite services. For almost eighty yearsthe telephone was considered in mostEuropean countries as being intendedsolely for a small sector of the

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population. In the sixties the Frenchpolitical authorities still considered thatno mass demand existed for the telephone. The situation was entirely differentn the United States where a quarterof all households were already equippedby 1910 . Were cultural features peculiarto the US responsible for the differencein demand? Unquestionably so, as far asthe rural world was concerned, for isolationwas far greater there than in contemporary Europe.4 One must, however,also take into account the particulardynamism of supply. Until the mid-18908, the 'Bell System' had had a timiddevelopment policy for the telephone.The targeted clientele consisted essentially of businesses; only a small percentage of all households wereconnected to the system. However, theday on which the Bell patents expired inthe public domain and competitionbecame possible, domestic demand grewsteadily, especially in rural areas (farmsare both businesses and homes). TheBell System' subsequently restructuredits monopoly, but it was unquestionablythe period of unrestrained competition(rival networks were not interconnected)that enabled the telephone to take off inthe United States. Ought we to concludethat competition alone can spawn amass communication service, as MiltonMueller (1994) suggests? The example oftelevision which from the outset becamea mass medium both in the US, thecountry of competition, and in Europewhere a State monopoly had been instituted, seems seriously to undermine thisargument if not to invalidate it.What can be said today of the mobiletelephone which is developing on bothsides of the Atlantic in a competitiveenvironment? Some operators believethat it is a service intended solely for a

business clientele; others, particularly inthe Scandinavian countries, see it, onthe contrary, as a mass service.More broadly-speaking, tw o opposingstrategies exist among the major operators.One, adopted by British Telecom,consists of promoting a limited market -that of major corporations; the other, bycontrast, has set its sights on mass markets - SMEs and households. Eitherway, the strategy adopted by FranceTelecom when it launched the videotext- i.e. households rather than businesses- does not seem to be relevant today.Contrary to widespread belief, themass/elite distinction does not correspond to that between a universal and aspecific service. The telephone, from the1920s to the 1960s, was a universal butelite service. We nevertheless note thatthe legitimacy of a universal serviceoperator is far greater in the context of amass service than in that of an elite service. Moreover, as soon as a service hasa mass dimension, it faces the questionof universality.Thus, whereas a number of new servicesare being developed today in a specificand elite framework, as soon as theybecome mass services it will be necessary, as in the case of the telephone, togive them a universal character. Cali-fornian consumers, for example, havedemanded certain value-added servicesas part of an extended universal service.National/internationalFrom the outset European communicationetworks adopted either a nationalor a regional form. In most cases theysubsequently converged, in the post-waryears, towards a strong national structure. The most centralized ones have notalways been those that are generallythought to have been so. In Great

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TOWARDS A NEW MODEL OF COMMUNICATION NETWORK MANAGEMENTBritain, for example, after nationalizationf the telegraph and then the telephone, networks were set up to cover theentire territory. The BBC also started ona national basis.The same was true in Germany. InFrance, while the telegraphic and telephonic network rapidly assumed anational character, the Jacobin state didnegotiate with the communes anddpartements which partly financed theservice in rural areas. As for the radio, itfunctioned between the two World Warson a regional basis.It was under Fascist regimes that centralized broadcasting structures were setup in Germany, Italy and Spain, as wellas in France under the Vichy government.With the Liberation, in France andItaly, the existing structures inherited bythe new political powers were barelyamended. By contrast in Germany,under pressure from the Allies, broadcasting was organized along the lines ofthe federal structure and the Landerwere given a prominent role.We subsequently witnessed the re-emergencef a local dimension in broadcasting,nitially in British commercial TVstations, local radios in Italy and thenFrance, and the birth of Catalonian andBasque TV stations in Spain. This hasbeen followed, during the past fifteenyears or so, by the first steps taken byregional authorities in the field oftelecommunications networks. There iseven a precedent dating back to thebeginning of the century when the English town Hull operated its own telecommunications network. In France theCable Plan drew the attention of localauthorities to the role of telecommunicationsn urban development. Until nowachievements have, however, beensomewhat modest and largely confined

to a handful of data networks used in anacademic and research context.Another element has fragmented theuniformity of the national territory as faras telecommunications are concerned:the granting of licences for new telecommunications services. The regulatoryauthority grants licences, notably formobile telephones, for limited geographicalones. As a result, mobile techniquesvary from one zone to the next. It seemsthat there is a strong chance of this leading o a reorganization in which the mostsuccessful techniques will spread acrossthe territory. There is, however, also aserious risk that certain sparsely populated zones might never be connected.The national communications networksmust also contend with the emergence oforganized networks in a far broader context - that of Europe. Satellites are opening p a whole new range of possibilitiesin the telecommunications field and inbroadcasting. For example, Europeansports or variety channels are starting toappear on television, and firms rentsatellite links to transmit data or voiceacross Europe.The dominant position of the Astra satellites n Europe today has made televisionwithout borders a reality. Whereas linguistic barriers protected the variouscultural zones for a long time, the arrivalof multilingual channels has made regulatory protection redundant.It is also in the area of professionaltelecommunications that the nationalframework is in the process of disintegrating. Firms that are today largelyinternationalized would like to have virtual networks enabling them to link uptheir branches in all corners of theglobe. They would like to negotiate withtelecommunications operators who canoffer them a global network and a single

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ReferencesAllen, D. (1992): 'Le dbat d'ides avant etaprs le dmantlement d'ATT, Rseauxn56. CNET.Bar, F. and Borrus, M. (1990): 'De l'accspublic aux connections prives :politique de rseaux et intrt national'.Rseaux n 41. CNET.Bustamante, E. et al (1993): Tlphone ettlvision, enqute sur une convergenceeuropenne', collection Rseaux, CNET.Coase, R.H. (1950): British Broadcasting, astudy in monopoly. Longmans, London.Fischer, (1992): America calling. A socialhistory of the telephone to 1 940.University of California Press, Berkeley.Flichy, P. (1995): Dynamics of ModernCommunication. The shaping and impactof new communication technologies.Sage, London.Foster, CD. (1992): Privatization, publicownership and the regulation of naturalmonopoly. Blackwell, Oxford.Garnham, N.. Joosten, M. and Owen, J.(1994): 'Le dveloppement du servicepublic au Royaume-Uni dans lestlcommunications et l'audiovisuel'.Rseaux n 66. CNET.Huber, P. (1992): 'Le rseau godsique'.Rseaux n 56. CNET.Mueller, M. (1994): 'Le service universel dansl'histoire du tlphone, une reconstruction'. Rseaux n 66. CNET.Noam, E. (1987): The publictlcommunications network - a conceptin transition'. Journal of CommunicationVol 37.1, pp.30-48.Rallet, A. (1994): Telecommunications andCompetitiveness', Rseaux: The FrenchJournal of Communication n 2(1). JohnLibbey, London.Simon, J.-P. (1993): The Invisible Hand',Rseaux: The French Journal ofCommunication n 1(2). John Libbey,London.Wolton, D. (1990): Eloge du grand public.Flammarion, Paris.

Notes1 On the origins of the public telegraph inrance and England, see Flichy. 1995.2 The reader is referred to Bustamante et cd .(1993) fo r a contemporary presentation oftelecommunications management in Europe.3 On this point see Rallet. 1994.4 On this point, see Fischer. 1992 and Flichy.1995, chapter 5.

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Towards a New Model of Communication Network Management