Digital highways: the new telecommunications era

w1ct718s/Y2 $5.w+o.w Q lYY2 Pergamon Press Ltd

Geoforum, Vol 23. No. 3, pp. 317-332. IF%? Pnnred in Great Britain

Digital Highways: the New Telecommunications Era

KEVIN

MORGAN,*

Cardiff,

U.K.

Modern telecommunications constitute a major segment of the wider information and communications technology sector. a hybrid sector created by the convergence of telecommunications, computing and office systems. The new telecommunications era has been spawned by three major forces: a radical technological shift associated with the ‘digital revolution’, the quickening pace of deregulation and the growth of global markets. This paper examines the contention that telecommunications will redefine the parameters of competitive advantage, for cities and regions on the one hand and for industries and firms on the other. A key conclusion of this paper is that, while telecomxnunications does have the potential to deliver certain competitive advantages, the realisation of this potential is dependent upon a series of contingent factors. At the corporate level, the growing concentration and integration of communication networks within and between large firms betoken new threats for smaller and less powerful firms. At the city and regional level, while telecommunications offers hitherto unavailable opportunities for overcoming major developmental Abstract:

barriers, the technical possibilities will count for nought unless they are integrated into a regional innovation strategy which is attuned to local circumstance and alive to the social and organisationa~ structures through which technology is deployed.

1. lntrodu~ion Telecommunications has evolved way beyond the stage when it was synonymous with telegraphy and telephony. Today it embraces a bewildering array of technologies, products and services, many of which have yet to penetrate the popular imaginati~)n. Even SO, modern telecommunications networks and services-the so-called ‘digital highways’ of the information age-consi.itute a major segment of the wider information and communications technology sector, a hybrid sector created by the convergence of telecommunications, computing and office systems. The rapid evolution of telecommunications services is shown in Figure 1.

“Department of City and Regional Planning, University of Wales, Coilegc of Cardiff. PO Box 906, Cardiff CFI 3YN, U.K. 317

It is sometimes suggested that telecommunications can redefine the parameters of competitive advantage, for cities and regions on the one hand and for sectors and firms on the other (KEEN, 1986). One of the aims of this paper is to examine this thesis. The main argument is that telecommunications does indeed have the potential to deliver certain competitive advantages, but the reaiisation of this potential is contingent on a whole series of other factors. To examine this and other issues this paper is organ&d as follows: Section 2 tries to identify some of the determinants of the new telecommunications era; Section 3 seeks to explain why national regulatory regimes exhibit such uneven development; Sections 4 and 5 focus on the corporate level. where global strategies are the name of the game; and Section 6 considers whether the new telecommllni~ations era offers threats or opportunities for less favoured regions.

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$/Text

Facsimile T.letex Facsimile Videoten _I ^^L____

Figure 1. Telecommunications:

2. The New Telecommunications

prospects

Era

Computer-based communication, offering hitherto unavailable opportunities to annihilate space with time, is one of the premier technologies in the era of the ‘flexible firm’. Indeed, some writers go so far as to say that telecommunications has induced a new ‘informational mode of development’ in advanced capitalist countries (CASTELLS, 1989). Given the significance of this ‘mode of development’ is it not a little surprising that it gets so little attention in the vast corpus of literature on flexible specialisati~~n~~ Where telecommunications figures at all it tends to be treated either as a ‘black box’, which is rarely if ever unpacked, or else as a technology which is pliable and unproblematical in the hands of firms. As we shall see, however, telecommunications is far from being an unproblematical issue. Indeed, a whole series of problems have to be confronted and negotiated-like uneven regulatory regimes, incompatible standards, chronic skill shortages, hierarchical corporate structures etc.-before firms can begin to reap the full benefits of advanced telecommunications. The new teIec~~mmunications

era has emerged

from a

for the year 2000. Source:

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facsimile

Spach facsimile Telephony Hi-R telephony TeLephono-conferance Videoconfarencg

CEC study.

confluence of four different factors: technological convergence, deregulation, the growth of the ‘information economy’ and the globalisation of markets, each of which deserves some attention. T~~~~~~~l~~~i~~~ convergence between telecoms, computing and office systems is now well underway, a process driven by two factors. First, the digitalisation of the public switched network, which greatly increases the volume, speed and reliability of sending information, be it voice, data, text or image. Second. the spread of distributed data processing, which imposes greater demands on fast and reliable communication links. LJpgrading the public switched network in the form of the integrated services digital network (ISDN), which provides users with a single access to a stream of Inulti-media services, is the most significant development underway right now as regards the public network. The ISDN is one of the major weapons in the arsenal of the Pelts (i.e. the postal, telegraph and telephone administrations) as they struggle to stem the growth of private networks. Technological convergence has been aided and abetted by the political trend towards deregulation, which has induced major changes in the institutional structure of the telecom market. In the past this market

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a highly

provision

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distinctive

was dominated

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institutional by a public

form:

service

monopoly

(the

of this puts enormous to

the

demands

PTT), and the latter procured all its equipment from a small band of nationally-based private manufac-

accounts

turers.

It is this combination

In each country

suppliers domestic

the PTT and its equipment

formed a closed ‘club’, protected from both and international competition (CAWSON

et al., 1990). This

traditional

model

is now under

intense pressure the world over, as a result of the deregulatory thrust pioneered in the U.S. and the U.K. By and large deregulation represents a victory of the ‘telematic’ coalition over the ‘postal-industrial’ coalition, Section

a conflict

which

is examined

further

in

3.

The third trend is a more general development, namely, the growth of the ~~~OrrnfftiuFz economy, in which the processing, storage, transmission and retrieval of electronically-coded information assumes ever more strategic significance. The main point to be made here is that telecommunications has become a major cost item in the information-intensive corporate sector and, therefore. leading edge corporate users have waged a sustained campaign to win more control over their telecommunications budgets. This has taken two forms: politically, they have sought to reduce the role of the traditional PTT moIlopoly by pushing for deregulation; and, economically, they have voted with their pockets by, wherever possible, building private networks which enable them to bypass the public networks of the PTTs, and these private networks are especially pronounced in the U.S. and the U.K. Finally, the gkhdisation of markets has placed a very high premium on fast and reliable intercontinental communication links. It is not too much to say that telecommutiications now constitutes part of the central nervous system of far-flung corporate empires, so much so that it is much more than a mere cost item. Furthermore, being exposed to different regulatory regimes gives firms first-hand knowledge of how variable the telecommunications infrastructure is between countries, with the result that firms in high-cost and restrictive regulatory environments (like the F.R.G.) are obliged to lobby for the advantages which accrue to large firms in low-cost, liberal regulatory environments (like the U.S.). In addition, multinational firms have the ability to vote with their feet, moving to countries with the lowest tariffs. All

(MORGAN,

neo-liberal created

pressure

of these

politics

on the PTT to respond lucrative

big

business

1990). of forces-digital and giobat

technology,

markets-which

the new telecommunications

era,

has The

up-

heaval currently underway in the telecommunications sector is all too often reduced just to technological change,

especially

to the ‘digital revolution’.

this is so why is it that, in the face of similar logical pressure, national responses revolution’ have been so divergent? consider

But if techno-

to the ‘digital Let us turn to

this question.

3. Deregulating

the Highways

In very simple terms it is possible to distinguish two basic forms of regulatory regime: (1) the traditional public utility form, which was pre-eminent during the monopoly era; and (2) the liberal form, which is emerging in the wake of deregulation. Although it is common to speak of deregulation-hence the use of the term in this paper-what we need to appreciate at the outset is that deregulation does not signal the end of regulation. On the contrary, what is emerging throughout the OECD countries is a less restrictive and more transparent form of regulation. In other words, what we are witnessing today is the advent of a new form of regulation. This simple, but fundamental, point needs to be made because even in the most liberalised countries-like the U.S. and the U.K.telecommunications continues to be a highly regulated sector. The fact that the PTT monopoly lasted so long is a tribute to the strength of the ‘postal-industrial’ coalition, the main elements of which were social democratic governments, the PTT, private equipment suppliers and the PTT unions. What also fortified PTT monopoly was the fact that telecommunications was based on a mature analogue technology providing a fairly standardised service. With the advent of digital technology, driven by a new ‘telematic’ coalition, the PTTs found it more and more difficult to keep pace with corporate demand, the nature of which was becoming ever more differentiated (NOAM. 19S7). To carry

the

day

the

new

‘telematic’

coalition-

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consisting equipment

of large corporate users, data processing suppliers and a new breed of private

value-added service vendor-needed political support, in the form of governments committed to a neoliberal agenda. This political ingredient was nowhere more pronounced two

countries

than in the U.S. and the U.K., which

pioneered

the

former much

resistance countries more

we must

remember

the ‘telematic’

developed,

corporate

coalition

that

in the

was that

user groups

were

better organised and more powerful and, most significant of all perhaps, there was no equivalent on the continent to Reaganism and Thatcherism, movements which shared a deep ideological to regulation and public-sector provision.

political aversion

While all countries are now moving towards a more liberal regime of regulation for telecommunications, the pace of deregulation has been decidedly uneven; hence we can still speak of national nuances. To illustrate some of these nuances let us look briefly at the politics of deregulation in the U.K. and the F.R.G., until recently the two extreme poles in Europe.

3. I. National

nuances:

cial aim union-was

for deregulation-apart of

30992

from the unoffi-

undercutting a strong public-sector the claim that an inefficient public mon-

opoly threatened the position of the City as a premier centre of international finance.

the

neo-liberal

agenda. To explain the contrast between the AngloAmerican fetish for deregulation and the FrancoGerman

justifications

23 Number

the U.K. vs the F. R. G.

With the U.S. providing the early inspiration, the U.K. has gone further than any other European country in deregulating its telecommunications regime. Indeed, it was the pioneer of deregulation in Europe. By 1984 the U.K. had removed most of the barriers to entry in the three main segments of the market, i.e. customer premises equipment, networks and value-added network services. With the exccption of the ‘postal-industrial’ coalition. the public monopoly had few political allies, and this can be explained by the fact that the public monopoly had so little to show for its privileged position. In short, the telecommunications sector was ripe for radical political surgery and the Thatcher government exploited this situation to the full. To accomplish its goals the government helped to mobilise and empower the ‘telematic’ coalition, the main component of which was the financial services lobby in the City of London. In fact, one of the main

The crucial deregulation

point

to be made

in the U.K.,

about

however,

ernment was not simply responding the ‘telematic’ coalition. Indeed, went way beyond

these demands:

the politics

of

is that the govto the demands of the government

in other words, the

process of deregulation was first and foremost a politically-inspired move. There is no better illustration British

of this point than the decision to privatise Telecom (BT), a move which was never part of the ‘telematic’ coalition’s agenda. Once this was achieved, in 1984, the U.K. became all the more distinctive in European terms: not only was it the first to deregulate, but it was the only country to have privatised its telecom operator and the only country to have broken the basic network monopoly by licensing a rival carrier in the form of Mercury (CAWSON et al., 1990). Privatisation created as many problems as it solved. For example, if privatisation was to be successful BT would have to be made suitably attractive to potential investors. This, in turn, meant that it should not be subjected to a heavy regulatory regime, still less should it be broken up along the lines of AT&T in the U.S. But, since BT held a near-monopoly position, the logic of deregulation was to a large extent compromised by the decision to privatise. Despite this qualification the fact remains that the U.K. is still the most deregulated telecommunications market in Europe. The IJ.K. experience could not have been further removed from the situation in the F.R.G. For most of the 1980s the F.R.G. remained a ‘fortress’, seemingly opposed to deregulation in any shape of form. Indeed, the Deutsche Bundespost (DBP) was reported to have one of the most restrictive public telecommunications monopolies in the whole of the Western Europe. The explanation as to why the DBP was able to sustain its monopoly for so long lies in the power of the F.R.G.‘s ‘postal-industrial’ coalition, a power buttressed by the country’s political constitution. For example. the Basic Law of the F.R.G. stipulates that the DBP must be ‘an administration owned by the

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a provision

to privatise

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which makes

In sharp

it exceedingly

the DBP because the support national the parliament-the

of

towards

contrast

to the U.K.,

deregulation

the F.R.G

two-thirds of Bundestag-is required to amend the law, and this is no small task (MORGAN and WEBBER, 1986).

process of political consultation. In other stable evolution was the guiding philosophy F.R.G., rather than sharp discontinuity,

In no other

informed the U.K. approach. What these nuances show is that technological change

alition

country

have more

did the ‘postal-industrial’

scope

to express

than in the F.R.G. For example, DBP hierarchy stood the PTI administrative

council,

co-

itself politically

tiated in different

moved

on the basis of a wide-ranging words, in the which national is nego-

ways.

at the head of the Ministry and an

and the membership

of the

council included delegates from the Deutsche Postwerkschaft, the powerful post office workers’ union. The latter was invariably supported by state governments, the Bundestag and Siemens, the F.R.G.‘s premier hardware supplier. The status quo was further bolstered by an unholy alliance between the ‘postal-industrial’ coalition and the right-wing Christian Social Union party, which was concerned that deregulation would induce higher tariffs for its clients in rural areas (MORGAN and WEBBER, 1986). Despite this prodigious support for the status quo, the right-wing Kohl government was obliged to put deregulation on the political agenda for two reasons. First, external pressure from the U.S. government, which threatened to restrict German firms’ access to the U.S. market unless there was more reciprocity between the two countries. Second, the opportunity costs of the tight public monopoly became more evident over time: prices for equipment and services were way above (other countries, high tariffs were driving some foreign investors to more liberal regulatory climes and the indigenous value-added network services sector had not taken-off to the same extent as in the U.K. For both these reasons the Kohl government launched a wide-ranging and timeconsuming review of telecommunications regulation in the F.R.G. The review, which began in 1985, eventually came out in favour of deregulation and the new, more liberal regulator regime was finally ratified in spring 1989, nearly 10 years after the deregulatory momentum had started in the U.K. The most important changes were the separation of the DBP’s business divisions (telecommunications, posts and banking) and the opening of all services, with the crucial exception of voice telephony, to full competition (SCHMIDT, 1991.).

3.2.

From national to international

regulation

To overcome the problems of uneven regulatory development a potentially powerful lobby began to emerge in the 1980s which sought to take regulatory control over telecommunications out of the hands of national governments. The traditional national regimes have created a whole series of problems for companies engaged in international trade and investment. Among other things incompatible national standards constitute a major non-tariff trade barrier; national regulations make it that much more difficult and costly for firms to interconnect their private networks between countries; national tariff structures remain decidedly uneven, with the result that corporate planning is rendered more difficult. The pressure for greater and more coordinated international deregulation was reinforced by the recent discovery that the world’s telecommunications operators were charging their customers between $10 and $20 billion a year more than their costs for international calls. These operators-BT, AT&T, France Telecom etc.-have been making exorbitant profits because the benefits of technological advances, which have dramatically reduced costs, have been retained rather than being passed on to customers (DIXON, 1991a). The key organisation in this cartel is the International Telegraph and Telephone Consultative Committee, the Geneva-based club composed of telecommunications operators and their respective government representatives. This cartel is slowly beginning to crumble, as liberal governments, corporate user groups and aspiring new service vendors all chip away at the foundations. The two key players pushing for lation are the U.S. on the one pean Commission on the other. of its ‘telematic’ sector-which

international dereguhand, and the EuroActing at the behest includes the likes of

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IBM, Citibank

and American

Express

on the services

side and AT&T on the equipment side-the U.S. government was the prime mover. Somewhat belatedly, the U.S. realised that it was suffering from what we might

call the

country’.

In other

process

of unilateral

burden

of ‘deregulation

regulatory

the result that its telecommunication ket was flooded by the products had not deregulated. regulatory campaign

in one

words the U.S. had engaged disarmament,

in a with

equipment marof countries which

To overcome

the problem

of

asymmetry the U.S. began a sustained for a ‘level playing field’ in the global

telecommunications

sector

(MORGAN

and PITT,

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service provision anywhere in the Community. Second, it is also trying to create a Community Telecommunications Committee, a pan-European regulatory namely, national

authority.

to prise regulatory authority out of the arena so as to promote wider competition in

the provision services.

In each case the aim is the same,

of telecommunications

Although

these reforms

products

and

look set to succeed

in the 199Os, the pace of reform will depend on the balance of forces within the Community, with the U.K.

pushing

for rapid implementation

orchestrating the fight against SON et al., 1990).

and France

deregulation

(CAW-

1991). The U.S. campaign consists of a twin-track approach. The first attack is epitomised by the 1988 Trade Act, the most assertive and mercantilist piece of U.S. trade legislation since 1945. Among other things this Act threatens to impose sanctions on countries which deny market opportunities to U.S. products and services. In addition to this unilateralist approach, the U.S. is also pushing for telecommunications to be subjected to the General Agreement on Tariffs and Trade (GATT), the pro-liberal regulatory regime for international trade, a regime from which it has been excluded up till now. Indeed, apart from agriculture, telecommunications has been the main stumbling block to the Uruguay Round of GATT negotiations. The European Commission is the other pro-liberal player. As part of its plans for a Single European Market after 1992, when internal barriers to trade and investment are supposed to be removed, the Commission is trying to outlaw public monopolies in telecommunications in the European Community. In recent years the Commission has become much more assertive in this field, using its powers-especially Article 90 of the Treaty of Rome-to impose deregulation on recalcitrant member states. Many of the barriers have already been dismantled, but two major barriers remain, namely, the public monopolies in telephony and basic network infrastructure, both of which are to be reviewed at the end of 1992. The absence of a Community-wide regulatory authority has clearly hampered the pace of deregulation in Europe. However, the Commission is now addressing this issue. Among other things it is considering Single Community Licences for telecommunications

4. The Global Strategies

Imperative:

New

Supply-side

With the exception of the military sector, telecommunications is the least internationalised of all the ‘hightechnology’ sectors. A combinations of factorschauvinistic public procurement on the equipment side, public monopolies on the service side and a mosaic of nationally-specific technical standardsconspired to this end. This cosseted and self-serving set-up was a haven of guaranteed profits for manufacturers and service providers alike, since neither side had to worry about competitive threats. But with the advent of deregulation in the U.S., which among other things allowed AT&T to compete abroad, competitive pressures have progressively intruded into this telecommunications haven. with the result that hitherto nationally-based suppliers are being forced to expand abroad. This global imperative may be more pressing for equipment suppliers than it is for the less exposed service providers, but both are developing new global strategies. Let us focus first on the equipment suppliers.

4.1.

Going globul: the hardware

suppliers

The telecommunications hardware suppliers-which produce everything from simple telephones to highly sophisticated digital exchanges-are in the midst of the biggest upheaval in their long history. Like it or not they are all being forced into the global arena as a result of two rather different pressures. On the one hand deregulation is admitting new entrants into their

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markets

and,

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on the other,

the escalating

costs of digital exchanges, reputed to be in excess of $1 billion, cannot be amortised in a single domestic market (MORGAN 1991b). In short, political and technological pressures overseas expansion. Since

the

pace

point

in the same direction,

has

been

highly

are most acute in the deregulation, i.e. the U.S.

and the U.K. These pressures forced AT&T, the premier U.S. supplier, to shed over 90,000 jobs between 1984 and 1990, equivalent to nearly 25% of its entire workforce. Of the three suppliers in the U.K., STC has been acquired by Northern Telecom, while Plessey and GEC were effectively forced to merge their telecommunications activities with Siemens, one of the strongest European producers. Looking at the overall picture two of the most significant trends are concentration (to secure economies of scale) and strategic alliances (to secure access to foreign markets). The top 10 producers are shown in Table 1, with AT&T at the top. Despite its number one status AT&T is still something of a novice abroad on account of the fact that it was prohibited from operating overseas up until 1984. Since then, however, it has concluded some 20 alliances overseas to gain access to foreign markets, the main ones being in Italy and the Netherlands. What this illustrates is that telecommunications equipment markets are still highly restricted, so much so that a strategic alliance with a domestic partner is seen as a necessary entry fee.

Table 1. Top

ten

telecommunications suppliers, 1989’”

Company

Country

AT&T Alcaltel Siemens Nippon Electric North Tclecom Ericsson Motorola Philips Fujitsu Bosch ” Source:

Co. (NEC)

Dataquest,

U.S.A. France F.R.G. Japan Canada Sweden U.S.A. Netherlands Japan F.R.G.

equipment

Sales (US$ billion) 10.24 9.41 6.81 5.82 5.40 5.04 3.02 2.80 2.49 2.16

the three

main

players

are Alcatel,

each of which is trying

Sie-

to pene-

trate the U.S., which accounts for some 40% of the global market. Having a U.S. supply base is crucial because the beach is littered with the bones of foreign producers

of deregulation

uneven these pressures countries which pioneered

In Europe

mens and Ericsson,

which have tried to penetrate

the U.S. via

an arm’s length export strategy. The reason for this is simple: the products of the telecommunications industry

are becoming

more software-intensive

and,

since software needs to be enhanced on a regular basis, this necessitates close buyer-supplier relations (MORGAN, 1991b). However, the costs of trying to penetrate the U.S. market, where AT&T and Northern Telecom have an unassailable position, are enormous;

indeed

Alcatel

has already

withdrawn.

Of the three European suppliers only Siemens seems to have sufficient resources to remain a global player. This is deeply disturbing from a European perspective because while U.S. and Japanese firms are moving into Europe the latter firms are making little headway in the U.S. and Japan. As chilling as the commercial logic seems, however, political forces in Europe would not tolerate a situation which threatened the very survival of the major indigenous suppliers.

4.2.

Going global: the service providers

Service providers fall into two camps: the traditional PTTs, which are largely responsible for basic services like telephony (e.g. BT, France Telecom etc.) and the private value-added network service vendors, which provide enhanced services (e.g. IBM, EDS, Geisco etc.). In this section I shall focus on the first group, which are now commonly called public telecommunications operators (PTOs), even though some of their number, like BT and Mercury, are actually private companies. The global telecommunications services market, worth some $300 billion a year, is many times larger than the equipment market; hence the stakes are potentially that much greater. To date the competitive pressures in the PTO service sector have been much less acute than in the equipment sector because, other than in the U.K., the European PTOs have retained their monopolies in two key areas: (1) basic network infrastructure (exchanges and trans-

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and (2) voice traffic,

which accounts

for between 85 and 90% of the PTO’s communications revenue (CEC, 1987).

total

tele-

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widely seen as the first salvoes in the looming war.

service

Along However,

the PTOs

are fully alive to the threat

of

competitive pressures in the near future. The control of voice traffic is not as comforting as it appears, and there are two reasons for this. First, data traffic is growing much faster than voice traffic, and the PTOs have no monopoly in this burgeoning data market. Second, the European Commission will be reviewing the PTO monopolies on basic networks and voice traffic at the end of 1992 and, some time thereafter, new entrants

might well be admitted

into these mar-

kets. Why is this such a spectre for the PTOs? The short answer is that private firms could use the lines they currently lease from the PTOs to resell capacity on the most profitable routes, thus diverting traffic from the public network. The PTOs would be unable to compete on price with these private ‘resale’ vendors because they would still be required to provide universal basic service at comparable prices throughout their national territory. This is perhaps the most intractable regulatory issue of all in a dcregulatcd environment: competition could undermine the PTOs’ ability to provide a uniform service and, if this were to happen, peripheral regions could find themselves facing higher tariffs relative to central regions, where the cost of supply is lower (see Section 6).

Just as the 1980s was the decade of upheaval in the equipment sector. the 1990s seem set to be the decade of upheaval in the service sector. Animated by the twin pressures of deregulation and privatisation, B7 was the first PTO in Europe to develop a global service strategy, along with Cable and Wireless, Mcrcury’s parent company, which is busily constructing a fibre-based Global Digital Highway. Among other things this signals the beginning of the end of the cosy cartel of international telecommunications. a cartel in which each PTO obeyed the golden rule: to stay out of each other’s national territory. Faced with basic network competition in its domestic market-a unique phenomenon in Europe-BT launched itself into the international services arena when. in 1989. it acquired Tymnet, which operated the largest specialised data network in the U.S. In the same year, AT&T acquired Istel, one of the U.K’s leading vcndors of value-added network services. These were

with deregulation,

what has also stimulated

the PTOs to act globally is the alluring prospect of becoming a supercarrier for large multinational companies. For a whole series of reasons to do with costs, quality and reliability, these companies have built their own private networks, rather than entrusting these activities to the PTOs. However, a new ‘outsourcing’ trend is now said to be emerging, whereby multinational

companies

are putting

out the manage-

ment of their telecommunications networks, a global market which is estimated to be worth some $50 billion

a year.

With the creation of a new subsidiary, Syncordia, BT appears to have been one of the first PTOs to try to exploit this nascent multinational market. The rationale for Syncordia is that it would manage multinationals’ internal networks, supplying them with voice, data and video communications; in other words it would offer an integrated one-stop shop, instead of them having to knit together facilities provided by a multitude of PTOs in different countries. BT has chosen to base Syncordia in Atlanta because the largest concentration of multinationals is in the U.S. (DIXON, 199lb). Serving multinationals around the globe is an awesome task, too great for a single company. For this reason BT has invited Germany’s Deutsch Telekom and Nippon Telegraph and Telephone of Japan to take minority stakes in Syncordia, which is designed to be a supercarrier consortium. The significance of this rnove was underlined by the fact that it immcdiately induced a furious bout of internecine conflict among the PTOs, some of which offered rival bids to Deutsch Tclekom to forestall BT’s global plans. For this reason BT has yet to attract any partners to its bold Syncordia venture. The Syncordia experience underlines the fact that a new era has arrived in the telecommunications scrvices sector. an era which spells the end of the nationally-based PTO cartel on the one hand and the rise of the supcrcarrier on the other. Among the PTOs only the biggest are likely to be credible supercarriers and. as can be seen from Table 2. this means

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Table 2. Traffic

base of the top international carriers, 1990 (MITT = minutes of telecommunication traffic)* Outgoing MIlT (millions)

Carrier AT&T DBP Telekom BT France Telecom Telecom Canada Swiss PTT Cable & Wireless MCI Italcable/ASST PTT Telecom Netherlands

whole series of new ways, all of which have the same end in view, namely, tive advantage. generic

the likes of AT&T, France Telecom.

Telekom,

firm’s internal

Firm: Corporate

activities,

on the one hand integration of the

e.g. R and D, production,

distribution etc. (2) upstream nerworking: one of the main aims here is to forge deeper relationships with the firm’s key

BT and

Furthermore, in view of the growing convergence between teiecomnlunications and computing other potential members of a supercarrier consortium might be the large computer vendors, like IBM DEC, etc. In fact, BT and IBM have discussed the possibility of forming a global alliance to provide a wideranging package of communications services to muftinationals; hence IBM could eventually become a partner in Syncordia. An alliance between one of the leading PTOs and the world’s top computer company raises important regulatory issues, indeed some analysts believe that we are seeing the emergence of quasi-monopolies at the international level (GTLHOOLY, 1991). If so, this underlines the need for new international regulatory agencies.

5. The Ne~orking egies

three

strategies:

cycle of new products or services and, on the other, to secure greater

Institute of Communications.

Deutsche

networking

with let us identify

(1) ~nter~af net~~rk~~g: here the emphasis is on using telecommunications to abbreviate the development

5780 3146 2170 1921 1420 1356 1291 1132 1045 90s

suppliers, *Source: International

to secure some form of competi-

To begin

User Strat-

With the advent of the ‘information economy’ telecommunications has begun to assume a truly pivotal role in the corporate strategy of the firm. For the multinationals in particular, telecommunications has been propelled from the back-office to the boardroom as an issue of major corporate significance. The reason for this is simple: telecommunications now plays a crucial role in the corporate repertoire of product, process and organisationai innovation. Corporate users are deploying telecommunications in a

through

the

medium

of electronic

data

interchange (EDI), for example. (3) do~~~t~ea~ net}~ork~ng: in this case the emphasis is on using telecommunications as a new interface with the market, which is very important in the information-intensive service sectors, e.g. airline, retail and financial services sectors (MORGAN and DAVIES, 1989). These networking strategies attest to the growing significance of what we might call the ‘electronic trading’ phenomenon, a subject which raises important regulatory issues. Before we address some of these issues, however, it is worth elaborating on some of the generic networking strategies in three rather different sectors: airlines, autos and retailing. Along with financial services the rrirfirzesector was one of the pioneers of electronic trading, through the use of computer reservation systems (CRSs). One of the first companies to fully appreciate the potential of CR% was American Airlines, which has built its Sabre network into one of the biggest CRSs in the world. The CRS, which lists the flight schedules of every major airline in the world, raises income in two ways: by charging airlines every time a ticket is booked through its system and from fees from terminals which are rented to travel agents. Sabre terminals have penetrated into one of every three U.S. travel agents and the latter were inclined to choose American Airlines because its own flight information was listed ahead of other airlines. In other words, the Sabre network was partly designed as a surrogate for the market. Although American Airlines has been forced to remove the more overt biases of its Sabre network, a

326 number

Geoforum/Volume of less obvious

biases remain,

e.g. the tend-

ency to underestimate the flight times of its parent company, etc. Futhermore, small travel agents tend to be locked in because they have incurred sunk costs. CRS vendors are now fighting to sign up travel agents in Europe.

where

Sabre

is competing

with Galileo

activities

23 Number

lies in the fact that externally

sourced

3/1992 com-

ponents account for some 60% of the value of a car, whereas labour costs have fallen to around 20% of the total. In an effort to improve quality, cut costs and expedite the flow of information Ford has dramatically reduced the number of its suppliers. For its

and Amadeus, the rival European systems. However, this battle is not limited to airline seats. The CRS

‘preferred suppliers’-those which have a major input into the final product-Ford is placing a greater

vendors are fully alive to the fact that many other travel-related services can be ‘farmed’ off the seat,

emphasis on shared communications links, as part of its policy of forging deeper and longer-term relation-

e.g. cars, hotels, insurance etc. Without a CRS network an airline is deprived of a share of this

ships with these upstream firms. One example of this shift to electronic trading is the increasing use of EDI.

burgeoning

Apart from the direct savings involved

services

market.

The Sabre network

is a

in having less

perfect example of downstream networking, in which networks are being used as a new interface with the

paperwork, Ford believes that ED1 is the key to justin-time logistics and that this, in turn, will enable it to

market.

achieve demand.

The automobile industry is undergoing a massive investment in new computer-communications technology, and auto firms are involved in each of the three generic networking strategies that were identified earlier. Let us look at the internal and upstream strategies at Ford. Along with other western auto firms Ford is alarmed by the success which Japanese auto firms have achieved, especially in the areas of price, quality and lead-times. For example, Toyota claims that it is able to deliver a car to its Japanese customers just 4 days after it has been ordered. Because Western firms cannot replicate the highly productive Japanese factory regimes, they hope that better computer-communications will help them to reduce the lead-time deficits in other areas. This is certainly the case at Ford, where the initial priorities lie in using telecommunications to cut product development cycles and enhance component sourcing. On the internal networking side strategy Ford is building a private telecommunications network (Fordnet) as part of its new global ‘centres of excellence’ strategy, which gives each centre full responsibility for the design and engineering of a particular model. Among other things this network aims to secure better synergy among Ford’s 20,000 designers and engineers worldwide, the ultimate aim being to save time and resources by cutting out the duplication of basic engineering tasks. To complement these internal changes Fordnet is being used to rationalise and enhance Ford’s global supplier base. The key significance of these upstream

a better

alignment

between

supply

and

Let us now turn to the retail sector. In the U.K., which has one of the most efficient retail sectors in the world, the key retailing firms are exerting more and more control over their suppliers. Computercommunications allows them to do this to a greater extent than ever before. Second to none in U.K. retailing is Marks and Spencer (M&S), which has a procurement budget of some $4.5 billion, over 80% of which is spent with U.K. suppliers. M&S is the key player in the U.K. clothing industry, for example. where it buys at least 25% of total clothing output. One of the main trends in the clothing industry today is ‘quick response’, i.e. the trend towards ever shorter lead-times. To manage this time-dependent supply chain M&S insists that all its suppliers work through a particular EDI network, Tradanet. This EDI network allows M&S to call-off orders from stock more frequently and, when discrepancies arise between what is selling and what has been ordered. to alter the mix of orders at short notice. Though ED1 has given M&S much greater flexibility, it has caused no end of problems for the smaller suppliers, many of whom find it difficult to alter their production schedules at short notice. To cope with these new pressures smaller suppliers feel obliged to be economical with the truth: they build a ‘buffer of flexibility’ for themselves by giving M&S a less than perfect account of stocks. thereby reducing what can be called-off at short notice. These

are just some of the ways in which computer-

Geoforum/Volume communications

23 Number are being

firms. At the inter-firm networking relationships

327

3/1992

used within

and between

level it is clear that certain embody the asymmetrical

power relations that exist in the market, e.g. the ways in which American Airlines and M&S tend to dominate their network partners. Furthermore, large firms across a wide range of sectors tend to be giving the same

message

to their

suppliers,

namely,

‘no

EDI, no deal’. In other words, if a supplier is not in the network, it will almost certainly be shut out of the market (SCHENKER, 1989). This raises important regulatory ‘electronic exit-switching

issues, one of the most important being capture’. In this situation the costs of from

one

information

network

to

another-may be so prohibitive as to compel a small supplier to stay in a network when commercial prudence dictates otherwise. As we move further into the electronic trading era it becomes ever more important that regulatory authorities attend to this issue by ensuring, for example, that both access and exit points are easily available. Among other things this means that industry-wide standards should be substituted for proprietary standards, where the potential for electronic capture is greatest. Finally, let us look at the ‘battle of the networks’, i.e. the changing balance between public, private and third-party networks. According to some theorists, private networks are the hallmark of the most advanced corporate users, the only sure way to exploit telecommunications for competitive advantage (URWIN, 1988). .4lthough this notion is still deeply ingrained, to the point of being the received wisdom, its relevance is now being questioned. Private networks (i.e. in-house corporate networks controlled and operated by users themselves) are most pervasive in countries which have deregulated-indeed over 8000 private networks are thought to exist in the U.S. alone, while the U.K. has the biggest installed base of private networks in Europe, with over 25% of the European total (LOGICA, 1987). In both of these countries multinational users have much less of a stake in the public network than their corporate counterparts in other countries. However, all the traditional incentives for building a private network-more control. reduced cost, better connectivity, single billing, lack of effective alternatives--are being accommodated by more ‘intelligent’ public: networks on the one hand and, on

the other, by third-party network vendors (e.g. EDS, INS, Istel etc.). In addition a number of other factors are causing

firms to reassess

their

commitment

to

private networks, e.g. the shortage of skilled staff, increasing technical complexity and growing demands on managerial time (MORGAN and DAVIES, There

1989).

is a bitter irony in all this: having crusaded

deregulation fully exploit straints

for

many corporate users are not able to their new freedoms because of the con-

of skill,

complexity

and time.

Indeed,

it is

now being suggested that a crisis is approaching because “each day the demands of the business on networking are increasing, yet each day their long term ability to provide and support these services grows weaker” (NORTON, 1989). Here are the dilemmas of freedom (MORGAN, 1990). If the multinationals do indeed decide to cede control of their networks to others-which is by no means assured-then this will induce a battle royal between the PTOs and the new breed of third-party network vendors. Right now, however, few of the PTOs are in a position to offer a credible worldwide service; they have little direct experience of operating beyond their own turf and they have a poor image in the large corporate sector. This means that the multinationals will be very reluctant to hand over their computercommunications networks to the PTOs. What is much more likely is that these corporate networks will slowly evolve into something akin to a patchwork quilt, a network of networks, utilising segments from each of the three network variants. Whatever the future holds we can be sure of one thing, namely, that in a deregulated era the multinationals will be much more important than ever before in shaping the priorities of the PTOs. To the extent that the PTOs remain the primary gateways to the telecommunications network, to the resources of the ‘information age’, regulatory agencies should be pressed to become that much more vigilant about the networking needs of the less lucrative segments of the market. 6. Digital Highways: Development All the self-conscious North America and

the

Spectre

of Uneven

cities and regions of Europe, the Far East are addressing

328

Geoforum/Volume

themselves to the new telecommunications era. And well they might because, with the advent of the ‘information economy’, areas which are not hosting and using advanced telecommunications seem destined to become the technological backwaters of the twenty-first opportunities urban

century. Animated by the threats of the new telecommunications

and regional

authorities

are discovering,

and era belat-

edly perhaps, that access to digital highways is becoming every bit as important as access to land, labour and capital on the one hand and to the tradi-

by technological position, which

determinism. has a much

23 Number

3/1992

In contrast the second stronger purchase on

actual corporate trends, is much more and this is the position adopted here.

sustainable,

In this section, where the focus will be upon Europe, the aim is twofold: first, to identify some of the threats which the new telecommunications era carry for less favoured regions (LFRs) and, second, to illustrate what is being dome uneven development.

to counter

the threat

of further

tional infrastructures of road, rail and air transport on the other. Computer-communication networks may be less palpable than road or rail networks, are no less significant today.

but they

Conceptualising telecommunications in terms of a transportation metaphor-like ‘digital highways’ for example-is common nowadays. But let us be clear about one thing at the very outset: to the extent that the ‘digital highways’ image conveys an impression of equal access to a public infrastructure it is grotesquely misleading. As we have seen, many telecommunications networks are nothing like public thoroughfares, indeed they are more like private lanes-lanes from which large swathes of the population are excluded (GILLESPIE et nl., 1989; BAR, 1990). The spatial dimension of provision and usage helps to shed further light on this point. The debate about the spatial effects of telecommunications has exposed two basic positions. The first might be called the ‘liberation’ position on account of the claim that the new telecommunications technologies will liberate firms from traditional locational attractions, leading, among other things, to the demise of the city (DOWNS, 1985; KUTAY, 1986). On the other hand we have the ‘dialectical’ position, which maintains that telecommunications facilitates both centrulisation (of high-level command and control functions) and decentralisation (of lower-level back-office functions) at one and the same time (MOSS, 1987; GILLESPIEetul., 1989; CASTELLS, 1989). While the first position contains a grain of truth, it tends to isolate telecommunications from the corporate structures and social practices through which it operates-that is, from the agents which control and deploy the technology-and to this extent it is marred

6.1.

The new logic of spatial inequality

The advent of deregulation poses new and potentially devastating problems for LFRs in Europe today. Very simply, deregulation is forcing the PTOs to push prices closer to costs. This, in turn, is undermining the complex system of cross-subsidies through which heavily-used traffic routes (urban areas) subsidised lightly-used routes (rural and peripheral areas). What this means is that, in a completely deregulated environment, there would be “little incentive to provide services to areas which will yield little or no profit” (NONHEBEL, 1990). In the absence of strong countervailing measures, therefore, spatial disparities in the provision and use of telecommunications will be accentuated. Herein lies the new logic of spatial inequality. Spatial bias in telecommunications provision is not a recent phenomenon. In the monopoly era network provision was guided by engineering criteria, such as circuit congestion etc., and this tended to favour capital cities and other heavily-used trunk routes. Even so, this spatial bias was tempered by the principle of ‘universal service’ provision, which required services to be supplied wherever the demand arose at prices that were broadly comparable from one end of the country to the other (GILLESPIE et al., 1989). Although this ‘universal service’ principle still applies to plain old telephone service in deregulated countries like the U.K., it does not apply to the more advanced telecommunications services. Long before the deregulation era the European Community exhibited profound spatial disparities in telecommunications provision, even for basic services like telephony. As recently as 1989, for example. the

Geoforum/Volume average

number

23 Number

329

3/1992

of lines per 100 people was 25 in the

The rebalancing

of tariffs also makes it more difficult

regions, compared to 46 per 100 in in the less France. In general, “telecommunications developed regions is about ten years behind the rest of the Community” (CEC, 1991). The paradox of the

to increase the proportion of residential customers which have access to the telephone network. In the

new era lies in the fact that:

telephone

most deprived

The people most likely to be adversely affected are those whom the new telecommunication technologies could help the most: the poor, the educationally disadvantaged, the geographically and technologically isolated, and the struggling small and medium-size businesses (CEC, 1990).

There

are two reasons

why we should

expect

to see

spatial disparities in the provision and use of telecommunications, especially in a deregulated environment: (1) On the demand-side, the take-up of new services tends to be highest in the most prosperous cities and regions. This is because firms in the centre of economic activity tend to be much more alive to the potential of such services: they have the skills to exploit this potential activities are biased intensive financial

and, most important of all, their towards the more information-

sectors and functions (e.g. sectors services and functions like HQs)

like

(2) Uneven usage is being reinforced on the supplyside by the new demand-driven strategies of the PTOs, especially the PTOs in deregulated and privatised environments like the U.K. For example, over 90% of Mercury’s revenue in 1988-1989 was derived from sites in the City of London, where the largest business users are located. BT’s new services are also biased towards these lucrative corporate customers. [For example, its new fibre-based broadband transmission London

system was deployed (MORGAN, 1991a).]

first in the

City

of

Taken together, these new pressures do not augur well for the LFRs. To the extent that prices are pushed closer to costs as tariffs are rebalanced then the peripheral regions, where the real costs of supply are above average, may eventually have to pay higher charges for telecommunications provision. This, in turn, will act as a disincentive to usage in areas which, because of their geographical peripherality, need to make greater use of new telecommunications services.

so-called

‘information

age’ it is worth reminding

our-

selves that nearly 20% of U.K. homes did not have a in 1986, a figure

which

Wales and to nearly

30% in Northern

in the South

of England,

East

region, nearly 1 million people basic terminal of the ‘information 1991 a). The fact that London illustrates

the point

social (e.g. poverty) in nature. However, access without

6.2.

in

Ireland.

Even

the premier

U.K.

were without this age’ (MORGAN,

is not a ‘remote’

that the barriers

region

to access

are

as well as spatial (e.g. distance) more equitable social and spatial

to telecommunications more robust

rose to 25%

regulatory

will not be achieved intervention.

Containing the spectre?

To bring the most deprived regions in the European Community up to the level of telecommunications provision enjoyed by the most developed regions would cost some 50 billion ecu (CEC, 1991). On cost grounds alone, then, it is impossible to imagine uniform provision ever being politically acceptable. But to pose the problem in this way-as a supply-side problem of provision-is wholly inadequate because, among other things, it ignores the most important determinant of uneven provision, namely, uneven take-up. If this uneven demand-side landscape is not addressed then, as sure as night follows day, better provision in the LFRs will create ‘cathedrals in the desert’, i.e. facilities that are massively underutilised. Indeed, in certain circumstances the provision of advanced telecommunications may actually damage the economic prospects of a region, for instance in the case of ‘offshore processing’, by tying it all the more low-skill employment securely to low-wage, (SIOCHRU, 1991). In other words if telecommunications technologies are to empower-rather than denude-the LFRs these facilities have livered as part of a more comprehensive

to be deregional

innovation strategy. In this way better telecommunications provision is articulated as part of a wider repertoire which includes new training initiatives to stimulate demand and promote effective utilisation (MORGAN, 199la).

Geoforum/Volume

330 This is perhaps

the main lesson to have emerged

the first generation policies in Europe, STAR gional

(Special Telecommunications Development). Sponsored

Commission

the STAR

Action for Reby the European

programme

1991 with a total budget 80% of which

from

of regional telecommunications the most important of which was

ran from 1986 to

of 1580 million

was devoted

focuses

exclusively

on

better

23 Number

telecommunications

provision can, inadvertently, undermine the developmental potential of the LFRs. This reinforces the point that better be embedded

telecommunications

in a locally-attuned

strategy

(MORGAN,

Despite

all the potential

provision regional

innovation

ecu, some

to the provision

of ad-

pitfalls the fact remains

cities and regions

have

urban and regional development strategies WORTH, 1989; BATTY, 1990; GRAHAM,

average

(PASCAL,

GDP

of 25%

or less of the EC

1991).

harness

in and beyond

the potential

STAR

the supply-side

has a very positive situation,

effect in improving

considerable

doubts remain

as to whether these new networks are being sufficiently utilised. This underlines the point that poor network provision is merely one part of the problem. To overcome the barriers to wider utilisation the European Commission launched its Telematique initiative in 1991, which is designed to foster demand, especially demand for data communications services in the SME sector. To accomplish this task the Commission is building on the positive experiences of STAR, which identified the crucial significance of telecommunications service centres in each of the LFRs to raise awareness through demonstration projects, training schemes and innovative user groups (MORGAN, 1992). The Commission is also hoping that these new telecommunications networks can help the LFRs to participate in its advanced R and D programmes by, for example, allowing research teams in the LFRs to become viable nodes of a continental ‘network of excellence’. The aim here is to ensure that kxcellence is not drained away from the regions of Europe which have not had the same tradition of technological development as others . . . giving local industry the opportunity to access the most advanced research locally (METAKIDES, 1991). As laudable

as this aim may be in theory,

however,

such a strategy carries the risk that advanced research expertise in the LFRs becomes progressively decoupled from prosaic local needs by creating new incentives for research teams to engage in wider, and more prestigious, intellectual projects-projects which may have little or no local resonance. Here is a perfect example of the way in which a strategy which

economic

payoff

Europe

from

the

that

are trying to

of telecommunications

By and large these strategies While

must

1991a).

vanced telecommunications networks in the most deprived LFRs, i.e. the Objective 1 regions, which a per capita

30992

to their (HEP1991).

seek to emphasise

the

‘intelligent

city’ or the

‘wired region’ etc. All the more reason,

then, for us to

highlight what is potentially innovative local strategies

one of the most socially anywhere in Europe,

namely, the HOST project being developed by Manchester City Council. Launched in 1991 the Manchester HOST is said to be the first locally-controlled public communications and information system in the U.K. The aim is to provide a wide array of services to ‘marginalised’ groups in the city-like small firms, bodies, voluntary associations, public-sector women’s groups, the disabled and ethnic minoritiesand these services are either free or provided at a nominal cost, subsidised by commercial users. Ultimately it is hoped that a national network of locallybased systems will emerge, thereby extending the reach, and therefore the use-value, of the HOST (GRAHAM, 1991; MANCHESTER CITY COUNCIL, 1991). No matter how inspiring, it is difficult to avoid the conclusion that locally-controlled and publiclyoriented telecommunications strategies (like the HOST) are few and far between. At both national and international levels the dominant trend is towards less regulated forms of service provision, the result being that market-driven criteria-ability to pay and so forth-are becoming ever more important determinants of social and spatial access to the facilities of the ‘information age’. In the absence of a more robust regulatory commitment to social and spatial equity the spectre of greater uneven development looms large on the horizon. To the extent that the divisions between ‘informationrich’ and ‘information-poor’ do indeed become more acute the consequences will be debilitating in the

Geoforum/Volume extreme, Equally

and

23 Number not

important,

just

331

311992

in terms

the prospects

of social

justice.

for bridging

the

technological gulf between the LFRs and the regional heartlands will fade further and further into the distance, with the result that the burden of innovation in Europe will continue to be carried by a minority of core regions.

In other words,

there is an economic-

as well as a social--case to be made for more balanced development in Europe, especially in the era of the ‘information economy’. With the advent of sophisticated telecommunications networks there would seem to be fewer technological reasons for equating geographical peripherality with economic peripherality. Only time will tell whether Europe has the will and indeed the vision to realise these new technological possibilities.

7. Conclusions The new telecommunications era has been spawned from the interplay of three major forces; a radical technological shift associated with the ‘digital revolution’, the quickening pace of deregulation and the growth of global markets. Taken together these forces have created new threats and opportunities for regulatory authorities, firms and urban and regional development agencies. On the regulutory front the most important point to establish is that regulatory authority is slowly, but surely, being prised out of the hands of national governments, and this could well accelerate the pace of deregulation. At the corporute level two dimensions were examined, supplier and user strategies. The most striking feature of the supply-side environment is that both manufacturers and service vendors are becoming much more global in their activities, so much so that the 1990s are likely to witness a new breed of service provider, the ‘supercarrier’, the aim of which is to operate global networks on behalf of the multinationals. As regards corporate user strategies the most conspicuous phenomenon is the growth of electronic trading networks, through which major firms are trying to secure higher levels of integration within and between firms, a phenomenon which betokens new threats for smaller and less powerful members of the network. Finally,

the spatial implications

of the new telecom-

munications purely

era

technical

are

nothing

if not

profound.

In

terms we might say that telecommu-

nications offers hitherto unavailable opportunities for the LFRs to overcome some major developmental barriers, by enriching the information stock that is accessed

locally,

by abbreviating

the diffusion

of best

practice, by facilitating stronger inter-firm communication channels regardless of distance, etc. However, technical possibilities count for nought unless they are integrated into a regional innovation strategy which is attuned to local circumstance and alive to the social and organisational technology is deployed.

structures

through

which

Even so, it is difficult to see how the social and spatial disparities in provision and use of telecommunications can be contained in the face of the new logic of inequality which attends deregulation, a logic which favours the ‘information-rich’ over the ‘informationpoor’ throughout the advanced industrialised world. Such disparities are most acute at the global level, where the picture is now truly alarming. Of the global stock of telephones-and the telephone is the most ubiquitous terminal of the ‘information age’-75% are to be found in just nine countries. By any measure this is a damning index of the social poverty of technological progress. Acknowle&igements-For

collaborating

on an earlier ver-

sion of this article I would like to thank my friends and former colleagues, Robin Mansell (Science Policy Rcsearch Unit, University of Sussex) and Susanne Schmidt (Max-Planck Institut fur Gesellschaftsforschung, Kiiln). The earlier version was presented to the International Symposium on Regulation, Innovation and Spatial Development at the University of Wales, College of Cardiff. 1315 September 1989. I would like to thank the participants at the symposium. especially Francoise Bar (UC Berkeley), Phil Cooke (Cardiff), Andy Gillespie (Newcastle) and Michael Storper (UCLA), for their constructive comments.

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