Issues for the Future

Lastly, we identify two areas that policy makers and managers need to address when considering the possibilities of the NII: freedom of market access and the potential for value chain configuration.

Market Access
Because of the vast volume of economic activity that will take place on the NII once fully implemented, policy makers need to set guidelines for the three areas where access may be restricted:

The Electronic Market. If the market maker owns or has a substantial interest in any suppliers, it can bias the market in their favor and both the consumer and other suppliers will be disadvantaged. In the airline reservation system, the airline market maker was stopped from continuing this tactic (Copeland & McKenny, 1988).

Electronic Channels. If the owner of a physical communication channel such as TCI, a long distance carrier, or a regional telephone operating company restricts access to any market channel because of interest in other specific market channels, it limits a consumer's free access. The potential, but dissolved, TCI-Bell Atlantic merger posed such a threat, since both own electronic channels into the home. Moreover, TCI has substantial interest in market suppliers of entertainment programming and home shopping. Thus they could have restricted access to producers, retailers, and market makers to suit their own economic interests. In addition, the channel owner, which also has a monopoly on supplying information to the consumer, can keep access costs unnaturally high and curtail the rate of technology advancement, as when AT&T maintained a total monopoly in telecommunications.

Regardless of how many channels are connected to consumers' homes, for the electronic market effect to occur, those channels must not limit or control access to the product or service providers wanting to reach the home.

The Market Choice Box. By design the market choice box can exhibit access to or from the consumer. It is not at all clear that the hardware processor, operating system, or other architectures that have dominated the PC evolution will maintain that status on the NII. The computing capabilities and innovation required in an operating system and user interface for interactive multimedia may result in new designs. Dominant architectures, such as IBM's in the 1960s through the early 1980s and now Intel's and Microsoft's, have demonstrated the economic benefits of ownership most clearly. However, the architectures were limited in their revenue potential to the information industry, whereas architectures that may control electronic transactions on the NII may have the ability to tap a vastly larger revenue stream of retail transactions to the consumer. Openness then becomes not only desirable but essential. However, we need to understand what openness means in terms of the market choice box.

In summary, stakeholders in the NII evolution need to think about the consequences of market constraint, and what legislative and other policies are needed to ensure a fair playing field. Moreover, stakeholders, such as consumer goods manufacturers, have as many interests in this evolution as do telecommunications and information technology companies.