U.S. Slipping in Phone Technology, Study Says
The United States is falling behind the blistering pace set by most of its major trading partners in modernizing its telecommunications system, a survey released Tuesday finds.
Unless the trend changes, Americans will buy more and more of their information services from foreign suppliers and the overall competitiveness of U.S. industry may suffer, the survey concluded.
“We are falling behind in deployment of next-generation technologies and services,” said William H. Davidson, a USC professor and international telecommunications consultant who prepared the survey for an agency of the Commerce Department. “The trend is not encouraging.”
In the survey, Davidson found that “while the United States has been a leader in many aspects of public telecommunications, its lead has narrowed or disappeared altogether in a number of critical areas.”
For example, in the costly effort to convert conventional voice networks to high-speed digital systems that can transmit pictures and computer data as well as sound, Davidson found that the United States not only ranks fourth now (behind France, Hong Kong and Canada) but will fall to last place by 1995 among the 10 countries surveyed.
Davidson also found that investment by U.S. phone companies in new technology declined in 1989 for the fourth straight year. While U.S. firms spent an average of $194 per telephone line, their counterparts in Japan invested $290, West Germany more than $300 and Switzerland more than $400.
The quality of telecommunications services not only provides needed social and civic services but improves a nation’s economic performance at a time of increasing international competition, Davidson said. He warned that U.S. businesses and consumers may buy more and more of their information services from foreign suppliers, as has already happened in the automobile industry.
Moreover, despite some recent changes, he said, many “regulatory and structural impediments” continue to slow the pace of investment. For example, he said, it takes phone companies years longer to recover the cost of their investment in needed new equipment.
Davidson undertook his survey in response to a request for an international comparison of telecommunications made late last year by the National Telecommunications and Information Assn., an agency of the Commerce Department.
THE SLOW PACE OF U.S. CHANGE
One measure of how nations encourage or inhibit investment is how quickly they allow firms to depreciate and replace basic equipment. The following table compares depreciation rates in years: The longer the life of the equipment, the slower the pace of change.
Digital Optical Circuit Country switches fiber gear Computers United States 17.5 27.2 12.3 6.2 United Kingdom 10.0 23.7 14.0 5.0 West Germany 10.0 20.0 10.0 8.0 Singapore 8.0 12.0 8.0 2.0 Japan 6.0 10.0 6.0 6.0
Source: Management Education Services Associates
