Pit Schultz on Mon, 28 Oct 96 19:08 MET |
[Date Prev] [Date Next] [Thread Prev] [Thread Next] [Date Index] [Thread Index]
nettime: THE TOPOI OF E-SPACE - Saskia Sassen 1/2 |
Saskia Sassen Professor of Urban Planning Columbia University THE TOPOI OF E-SPACE: GLOBAL CITIES AND GLOBAL VALUE CHAINS This paper was held as a lecture during the DEAF96 Symposium, Digital Territories, in Rotterdam on 19 September 1996. Electronic space is easily read as a purely technological event and in that sense as self-contained and neutral. But this is a partial account. In this brief essay I will argue that what is left out of this technological reading is that electronic space is embedded in the larger dymanics organizing society. Whether in the geography of its infrastructure or the structuration of cyberspace, it is inscribed and to some extent shaped by power, concentration, contestation, as well as openness and decentralization. Thus it is by now well known that the particular features of the Internet are in part a function of the early computer hacker culture which designed software that strengthened the openness and decentralization of the Net and which sought to make it universally available. It is also clear that in the last two years, when business discovered the Net, we are seeing attempts to commercialize it through the development of software that can capitalize on the net properties and through the extension of copyrights--in other words, the opposite of the early hacker culture. In this regard, it seems to me that we need to re-theorize electronic space and uncouple it analytically from the properties of the Internet which have shaped our thinking about electronic space. We tend to think of this space as one that is characterized by distributed power, by the absence of hierarchy. The Internet is probably the best known and most noted. Its particular attributes have engendered the notion of distributed power: decentralization, openness, possibility of expansion, no hierarchy, no center, no conditions for authoritarian or monopoly control. [1]. Yet the networks are also making possible other forms of power. The financial markets, operating largely through private electronic networks, are a good instance of an alternative form of power. The three properties of electronic networks: speed, simultaneity and interconnectivity have produced strikingly different outcomes in this case from those of the Internet. These properties have made possible orders of magnitude and concentration far surpassing anything we had ever seen in financial markets. The consequence has been that the global capital market now has the power to discipline national governments, as became evident with the Mexico "crisis" of December 1994. We are seeing the formation of new power structures in electronic space, perhaps most clearly in the private networks of finance but also in other cases. The concern in this brief essay is to elaborate the proposition that electronic space is embedded and to do so through an examination of what I think of as cyber-segmentations. The focus here is particularly on economic electronic space, and the digitalization of a growing component of the economy. This focus privides a particular set of analytic pathways to the broader notion that electronic space is embedded. These are pathways grounded in realms of practice rather than in ideas about electronic space. It is the beginning of a research inquiry and presents only elements of a new theorization. Whether this analysis is pertinent, or can be used for other types of electronic space and realms of practice is a question I cannot answer and probably is a question for research. There is another side to this story which I will only touch on briefly which has to do with the fact that the ascendance of digitalization and virtualization is also, in turn, inscribing lived experience and the mental categories through which we experience and understand, as well as engendering new mentalites till now largely confined to particular subcultures. [2] Here I examine three ways in which the embeddedness of electronic space can be captured: 1) There is no fully virtualized enterprise nor fully digitalized industry. Leading economic sectors that are highly digitalized require strategic sites with vast concentrations of infrastructure, the requisite labor resources, talent, buildings. This holds for finance but also for the multimedia industries which use digital production processes and produce digitalized products. 2) The sharpening inequalities in the distribution of the infrastructure for electronic space, wheter private computer networks or the Net, in the conditions for access to electronic space, and, within electronic space, in the conditions for access to high-powered segments and features, are all contributing to new geographies of centrality both on the ground and in electronic space. 3) Commercialization of public networks and hierarchical concentrations of power in private networks are producing what I think of as cyber-segmentations--instantiations of dynamics of inequality and of power. After an examination of these three subjects the final section incorporates these issues in a larger discussion about space and power. 1. THE TOPOI OF E-SPACE: GLOBAL CITIES AND GLOBAL VALUE CHAINS The vast new economic topography that is being implemented through electronic space is one moment, one fragment, of ean even vaster economic chain that is in good part embedded in non-electronic spaces. There is no fully virtualized firm and no fully digitalized industry. Even the most advanced information industries, such as finance, are installed only partly in electronic space. And so are industries that produce digital products, such as software designers. The growing digitalization of economic activities has not eliminated the need for major international business and financial centers and all the material resources they concentrate, from state of the art telematics infrastructure to brain talent (Sassen 1996a). Nonetheless, telematics and globalization have emerged as fundamental forces reshaping the organization of economic space. This reshaping ranges from the spatial virtualization of a growing number of economic activities to the reconfiguration of the geography of the built environment for economic activity. Whether in electronic space or in the geography of the built environment, this reshaping involves organizational and structural changes. Telematics maximizes the potential for geographic dispersal and globalization entails an economic logic that maximizes the attraction/profitability of such dispersal. One outcome of these transformations has been captured in images of geographic dispersal at the global scale and the neutralization of place and distance through telematics in a growing number of economic activities. Yet it is precisely the combination of the spatial dispersal of numerous economic activities and telematic global integration which has contributed to a strategic role for major cities in the current phase of the world economy. [3] Beyond their sometimes long history as centers for world trade and banking, these cities now function as command points in the organization of the world economy; as key locations and marketplaces for the leading industries of this period (finance and specialized services for firms); and as sites for the production of innovations in those industries. The continued and often growing concentration and specialization of financial and corporate service funtions in major cities in highly developed countries is, in good part, a strategic development. It is percisely because of the territorial dispersal facilitated by telecommunication advances that agglomeration of centralizing activities has expanded immensely [4]. This is not a mere continuation of old patterns of agglomeration but, one could posit, a new logic for agglomeration. [5] A majority of firms and economic activities do not inhabit these major centers. Centrality remains a key property of the economic system but the spatial correlates of centrality have been profoundly altered by the new technologies and by globalization. This engenders a whole new problematic around the definition of what constitutes centrality today in an economic system where i) a share of transactions occur through technologies that neutralize distance and place, and do so on a global scale; ii) centrality has historically been embodied in certain types of built environment and urban form. Economic globalization and the new information technologies have not only reconfigured centrality and its spatial correlates, they have also created new spaces for centrality. [6] As a political economist interested in the spatial organization of the economy and in the spatial correlates of economic power, it seems to me that a focus on place and infrastructure in the new global information economy creates a conceptual and practical opening for questions about the embeddedness of electronic space. It allows us to elaborate that point where the materiality of place/infrastructure intersects with those technologies and organizational forms that neutralize place and materiality. And it entails an elaboration of electronic space, the fact that this space is not simply about transmission capacities but also a space where new structures for economic activity and for economic power are being constituted. 2. A NEW GEOGRAPHY OF CENTRALITY We are seeing a spatialization of inequality which is evident both in the geography of the communications infrastructure and in the emergent geographies in electronic space itself. Global cities are hyperconcentrations of infrastructure and the attendant resources while vast areas in less developed regions are poorly served. But also within global cities we see a geography of centrality and one of marginality. For instance, New York City has the largest concentration of fiber optic cable served buildings in the world; but they are mostly in the center of the city, while Harlem, the black ghetto, has only one such building. And South Central Los Angeles, the site of the 1993 uprisings, has none. There are many instantiations of this new unequal geograhpy of access. Infrastructure requires enormous amounts of money. For example, it is estimated that it will cost US$ 120 billion for the next ten years just to bring the Central and East European countries communication networks up to date. The European Union will spend US$ 25 billion a year to develop a broadband telecommunications infrastructure. The levels of technical development to be achieved by different regions and countries, and indeed, whole continents, depend on the public and private resources available and on the logic guiding the development. This is evident even with very basic technologies such as telephone and fax: in very rich countries there are 50 telephone lines per person; in poor countries, fewer than ten. In the US there are 4.5 million fax machines and in Japan, 4.3 m., but only 90,000 in Brazil, 30,00 in each Turkey and Portugal, and 40,000 in Greece. (Garcia 1995). [7] And then there are the finer points. The worldwide deployment of integrated services digital networks (ISDN) depends on interoperability and on a technology base. Both of these conditions severely restrict where it will actually be available. For example, even in Europe where there is a common communications policy calling for harmonization, ISDN deployment varies greatly: in France it has reached 100%; in Greece it is virtually nonexistent. Another instance, the establishment of the General European Network which provides 8 channels of two megabits per second each, does so only among nodes in Frankfurt, Paris, London, Madrid, and Rome--a select geography. The availability of leased two Mbps circuits in Europe is highly uneven--from 40,000 circuits in Great Britain to 17 in Ireland (as of the early 1990s). [8] The growing economic value and hence potential profitability of communications are creating enormous pressures towards deregulation and privatization. The fact that the top players need state of the art communication systems further creates pressure for immense amounts of capital and high level expertise. This has meant that public telecoms all over the world are finding themselves between the pressure to privatize coming from the private sector and the insufficiency of public funds to develop state of the art systems -- systems which may well largely benefit top players. Even in countries such as France and Germany, with long held preferences for state control, we are now seeing partial privatization. Similar devolopments are taking place in countries as diverse as Japan, Australia, New Zealand, Singapore, Indonesia, Malaysia. The notion, particularly in less developed countries, is that privatization will help them gain access to the foreign capital and expertise they need to develop their national infrastructure. Thus Mexico, Argentina, Venezuela, India and even China are considering such initiatives. [9] Deregulation and privatisation are facilitating the formation of megafirms and global alliances. Further, new technological developments are facilitating convergence between telecommunications, computers and TV leading to the formation of a mega multimedia sector. [10] Globalisation is a key feature of the new multimedia sector. And all developments signal that this will only grow. (Serexhe, 1996) These global players and the state of the art infrastructure and technologies they will have access to, can only increase the distance between the technological have and have nots among firms and among consumers. [11] Finally, once in cyberspace users will also encounter an unequal geography of access. Those who can pay for it will have fast speed servicing, and those who can't will increasingly find themselves in very slow lanes. For instance, Time Warner ran a pilot project in a medium sized community in the U.S. to find out whether customers would be willing to pay rather high fees for fast services; they found that customers would, that is, those who could pay. The next section examines some of these issues. 3. EMERGENT CYBER-SEGMENTATIONS. One way of beginning to conceptualize the possibility of forms of structuration in electronic space is to specify emerging forms of segmentation. There are at least three distinct forms of cyber-segmentation we can see today. One of these is the commercializing of access, a familiar subject. A second is the emergence of intermediaries to sort, chose, evaluate information for paying customers. A third, and the one I want to focus in some detail is the formation of privatized firewalled corporate networks on the Web. Regarding commercialization of access, what matters for me here is not the current forms assumed by paid services, but what lies ahead. [12] Curruent commercial forms of access are undergoing change. Microsoft, after being an Internet laggard is now offering free Internet access and browser programs. And AT&T, the world's largest telephone company, has just announced it will offer free access to the Internet to its customers. All this free access offered by giants in the industry is tactical. There is right now an enormous battle among the major players to gain strategic advantages in what remains a fairly unknown, underspecified market. Microsoft's strategy in the past has been to set the standard, which it did for operating systems. The issue today, it seems, is once again to set standards, and to do this by providing the software for free in order eventually to control access and browsing standards and thus be able to charge. [13] We cannot underestimate the extent of the search for ways to control, privatize, commercialize. [14] Three major global alliances have been formed that aim at delivering a whole range of services to clients. [15] While the mechanisms for commercialization may not be available now, there is enormous effort to invent the appropiate billing systems. It is worth remembering that in the U.S. the telephone system started in the late 1800s as a decentralized, multiple-owner network of networks: there were farmers telephone networks, mutual aid societies telephone networks, etc. This went on for decades. But then in 1934 the Communications Act was passed defining the communication systems as a "natural monopoly situation" and granting AT&T the monopoly. AT&T is up to 60% a billing company: it has invented and implemented billing systems. And much effort today is likely to be addressing the question of a billing system for access to and use of what is now public electronic space. [16] The approach towards gaining control is through strategic partnerships. Growth strategies and global alliances are not only geared to provide computer services and telephone calls, but also data transmission, video conferencing, home shopping, television, news, entertainment. Mergers and acquisitions have risen sharply in the global IT industries, as companies are seeking the size and technology to compete in global markets. In 1995 these transactions reached record numbers, with 2, 913 deals, that is a 57% increase over the 1,861 recorded in 1994. The total value of these deals was US$ 134 billion, which is a 47% increase over the US$ 90.5 billion in 1994. [17] Deregulation is a key step towards the expansion in service coverage and the formation of global alliances. But experts are forecasting that after a period of sharp global competition, a few major global players will monopolize the busines. AT&T already has the nation-wide infrastructure and a billing system in place to provide and charge for services. Intranets: Towards firewalled citadels on the Web? Perhaps one of the most significant new developments is the use of the Web and firewalls by firms to set up their own internal computer networks. Rather than using costly computer systems that need expert staffing and employee training, firms can use the Web to do what those systems do at almost no cost and with little need for expert staffing. Firms save enormous amounts of money by using the Web for their own internal corporate purposes. Is this a private appropriation of a public good? It seems to me there are definite elements of this here, especially in view of the millions of dollars firms can save. Are the firewalled intranets the citadels of electronic space? The formation of private intranets on the Web is probably one of the more disturbing instances of cyber-segmentation. I would like to give some details about it here since it is a very recent development but one that is growing very rapidly. About a year ago business discovered that the WWW is a great medium to communicate with customers, partners, investors. [18] Now they are using the WWW to set up internal networks, surrounded by firewalls. Beyond very elementary uses such as information about new developments, directories that can be updated easily, these intranets create access to a firm's various databases, and make these easy to use for everyone in the firm, no matter what computer systems, software or time zone they are in. [19] Firms can avoid complicated, costly and time consuming retrieval procedures which have often meant that these databases were de facto of little use in decision-making. Lotus Notes, the leading provider of internal computer network technology has far more complexity than is often necessary; and it is expensive and requires expert staffing. Private intranets use the infrastructure and standards of the Internet and WWW. This is cheap and astoundingly efficient compared to other forms of internal communication systems. [20] Because Web browsers run on any type of computer, the same electronic information can be viewed by any employee. Intranets using the Web can pull all the computers, software and databases of a corporation into a single system that enables employees to find information wherever it is in the system. Computer and software makers have been promising this for a while but have not yet delivered it. Now firms have found that the Web can do it for them. [21] This all has had sharp effects in changing the software industry. At first software makers focused on Web browsers and other programs aimed at making the Web a consumer medium. Now its increasingly aimed at building intranets for firms using the Web. [22] Thus the firewalling of sites on the Web is only going to continue to expand at growing speed. CONCLUSION: SPACE AND POWER Electronic space has emerged not simply as a means for transmitting information, but as a major new theater for capital accumulation and the operations of global capital. This is one way of saying that electronic space is embedded in the larger dynamics organizing society, particularly the economy. There is no doubt that the Internet is a space of distributed power that limits the possibilities of authoritarian and monopoly control. But it is becoming evident over the last two years that it is also a space for contestation and segmentation. Further, when it comes to the broader subject of the power of the networks, most computer networks are private. That leaves a lot of network power that may not necessarily have the properties/attributes of the Internet. Indeed, much of this is concentrated power and reproduces hierarchy rather than distributed power. The Internet and private computer networks have co-existed for many years. But there is something different today, and that drives my concern with the need to re-theorize the Net and the need to address the larger issue of electronic space rather than just the Net, or public electronic space. The three subjects discussed above can be read as an empirical specification of major new conditions: the growing digitalization and globalization of leading economic sectors has further contributed to the hyperconcentration of resources, infrastructure and central functions, with global cities as one strategic site in the new global economic order; the growing economic importance of electronic space which has furthered global alliances and massive concentrations of capital and corporate power, and contributed to new forms of segmentation in electronic space. These have made electronic space one of the sites for the operations of global capital and the formation of new power structures. -- * distributed via nettime-l : no commercial use without permission * <nettime> is a closed moderated mailinglist for net criticism, * collaborative text filtering and cultural politics of the nets * more info: majordomo@is.in-berlin.de and "info nettime" in the msg body * URL: http://www.desk.nl/~nettime/ contact: nettime-owner@is.in-berlin.de