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nettime: THE TOPOI OF E-SPACE - Saskia Sassen 2/2 |
What these developments have meant is that suddenly the two major actors in electronic space --the corporate sector and civil society-- which until recently had little to do with one another in electronic space, are running into each other. Then as today, corporate actors largely operate in private computer networks. But two years ago business had not yet discovered the Internet in any significant fashion, the World Wide Web -- the multimedia portion of the Net with all its potentials for commercialization-- had not yet been invented, and the digitalization of the entertainment industry and of business services had not exploded on the scene. This is also the context within which we need to read the recent and sharp trends towards deregulation and privatisation which have made it possible for the telecommunications industry to operate globally and in a growing number of economic sectors. It has profoundly altered the role of government in the industry, and, as a consequence has further raised the importance of civil society as a site where a multiplicity of public interests can, wittingly or not, resist the overwhelming influence of the new corporate global actors. Civil societey, from individuals to NGOs, has engaged in a very energetic use of cyberspace form the bottom up. To the extent that national communication systems are increasingly integrated into global networks, national governments will have less control. Further, national governments will feel sharp pressure to help firms become incorporated into the global network, to avoid the risk of being excluded from the increasingly electronically operated global economic system. If foreign capital is necessary to develop the infrastructure in developing countries, the goals of these investors may well rule and shape the design of that infrastructure. This is of course reminiscent of the development of railroads in colonial empires, which were clearly geared towards facilitating imperial trade rather than the territorial integration of the colony. Such dependence on foreign investors is also likely to minimize concerns with public applications, from public access to uses in education and health. There are today few institutions at the national or global level that can deal with these various issues. It is in the private sector where this capacity lies, and then only among the major players. We are at risk of being ruled by the MNCs, accountable only to the global market. Most governmental, non-profit and supranational organizations are not ready to enter the digital age. The political system even in the most highly developed countries is operating in a pre-digital era. The overshwelming influence that global firms and markets have gained in the last two years in the production, shaping and use of electronic space along with the shrinking role of governments, has created a political vacuum. Bit it does not have to. Because the ascendance of digitalization is a new source of major transformations in society, we need to develop it as one of the driving forces of sustainable and equitable development in the world. It should be a key issue in political debates about society, particularly equity and development. We should not let business and the market shape "development" and dominate the policy debate. The good side of the new technology, from participation to telemedicine, is not necessarily going to come out of market dynamics. Further, even in the sites of concentrated power, these technologies can be destabilizing. The properties of electronic networks have created elements of a crisis of control within the institutions of the financial industry itself. There are a number of instances that illustrate this: the stock market crash of 1987 brought on by program trading and the collapse of Barings Bank brought on by a young trader who managed to mobilize enormous amounts of capital in several markets over a period of 6 weeks. Electronic networks have produced conditions that cannot always be controlled by those who meant to profit the most from these new electronic capacities. Existing regulatory mechanims cannot always cope with the properties of electronic markets. Precisely because they are deeply embedded in telematics, advanced information industries also shed light on questions of control in the global economy that not only go beyond the state but also beyond the notions of non-state centered systems of coordination prevalent in the literature on governance. [23] Finally, the Net as a space of distributed power can thrive even against growing commercialization. But we may have to reinvent its representation as impervious to such commercialization and as universally accessible. It may continue to be a space for defacto (i.e. not necessarily self-conscious) democratic practices. But it will be so partly as a form of resistance against overarching powers of the economy and of hierarchical power, rather than the space of unlimited freedom which is part of its representation today. It seems to me that there are enough changes in the last two years to suggest that the representation of the Internet needs to be subjected to critical examination. Perhaps the images we need to bring into this representation increasingly need to deal with contestation and resistance, rather than simply the romance of freedom and interconnectivity. Further, one of the very important features of the Internet is that civil society has been an energetic user; but this also means that the full range of social forces will use it, from environmentalists to fundamentalists such as the Christian Coalition in the U.S. It becomes a democratic space for many opposing views and drives, and for a range of criminal uses -- often referred to as the "blacknet." This is a particular moment in the history of electronic space, one when powerful corporate actors and high performance networks are strenghtening the role of private electronic space and altering the structure of public electronic space. But it is also a moment when we are seeing the emergence of a fairly broadbased--though as yet a demographic minority-- civil society in electronic space. This sets the stage for contestation. NOTES 1. It might be worth repeating that even if we just consider IP compatible networks, there are about 40,000 networks today and that the Internet is constituted by about 12,000 of these. The Internet is a global computer network that provides technical compatibility and transparent connectivity based on a widely used suite of protocols, Transmission Control Protocol/Internet Protocol (TCP/IP). Usage of IP networks by 1994 broke down as follows: 50% commercial; 29% research; 9% government; 7% defense; and 4% educational. For the Internet, the corresponding figures were: 29% commercial; 48%research; 7% government; 9% defense; and 6% educational. In Europe, networks based on the IP protocol have been developed in conjunction with E-bone, a consortium of 35 groups including regional networks, universities, and laboratories. New commercial IP networks are also underway in Europe. Today there are IP internets in 91 countries. In 53 these internets are linked to the Internet, which provides electronic mail and other gateways to 127 countries. The number of foreign IP networks connected to the Internet is growing at an average monthly rate of almost 9%; the growth rate in the U.S. is 7%. (Garcia, 1995) 2. There is quite a literature on this aspect. Perhaps the most radical analysis and theorization can be found in the work of Arthur and Mary Louise Kroker (e.g. "Cyberstories for the Road", presented at the Museum fur Gestaltung in Zurich, March 9, 1996). In German, see some of the work carried out by the Telepolis project of the Akademie des Jahres Dreitausend in Muenchen (and now the Telepolis Online journal); the work of the Interface project in Hamburg, and the long-standing Ars Electronica of Linz (e.g. selections by such authors as Peter Weibel, Geert Lovink, Timothy Druckrey or Pierre Levy in the 1995 volume). For a different interpretation from these see, for instance, the 1995 Roemerberg Gespraeche in Frankfurt/M. on 'Die Neuen Medien'. 3. Cities are production sites for the leading service industries of our time and they contain the infrastructure of activities, firms and jobs that is necessary to run the advanced corporate economy. Specialized services are usually understood in terms of specialized outputs rather than the production process involved. A focus on the production process in these service industries allows us a) to capture some of their locational characteristics and b) to examine the proposition that there ia a new dynamic for agglomeration in the advanced corporate services because they function as a production complex, a complex which serves corporate headquarters, yet has distinct locational and production characteristics. It is this producer services complex more so than headquarters of firms generally that benefits and often needs a city location. This dynamic for agglomeration operates at different levels of the urban hierarchy, from the global to the regional. At the global level, some cities concentrate the infrastructure and the servicing that produce a capability for global control. The latter is essential if geographic dispersal of economic activity -- whether factories, offices or financial markets -- is to take place under continued concentration of ownership and profit appropriation. This capability for global control cannot simply be subsumed under the structural aspects of the globalization of economic activity. It needs to be produced. It is insufficient to posit, or take for granted, the awesome power of large corporations or the existence of some "international economic system." (For a detailed discussion of these issues please see Sassen 1996a). 4. This is well illustrated by the case of the leading telecommunications firms in the world. Let me elaborate. The combination of the global scope of operations and the lack of a seamless communication network at the global scale has meant that it is becoming cheaper and easier for multinational firms to outsource the management of their communication networks. For example, J.P.Morgan, one of the largest US financial services firms, has contracted with British Telecom North America to handle its overseas, terminal to host networks. And BT North America has contractedwit h Gillette Co, to manage its telecom operations in 180 countries. AT&T provides the network linkages for General Electric in 16 countries. And so it goes on. This expanding network of services has significantly raised the complexity and importance of central functions in all these major telecommunications firms. 5. The formation and continuity of an economic center in the types of cities which I all global, rests on the intersection of two major processes: a) the growing service-intensity in the organization of all industries, a much neglected aspect that I consider crucial, and b) the globalization of economic activity. Both growing service-intensity and globalization rely on and are shaped by the new information technologies and both have had and will continue to have pronounced impacts on urban space. The growing service-intensity in economic organization generally and the specific conditions under which information technologies are available combine to make cities once again a strategic "production" site, a role they had lost when large-scale mass manufacturing became the dominant economic sector. It is through these information-based production processes that centrality is constituted. 6. We are seeing the formation of a transterritorial "center" constituted via telematics and intense economic transactions. The most powerful of these new geographies of centrality at the inter-urban level binds the major international financial and business centers: New York, London, Tokyo, Paris, Frankfurt, Zurich, Amsterdam, Los Angeles, Sydney, Hong Kong, amongst others. But this geography now also includes cities such as Sao Paolo and Mexico City. The intensity of transactions among these cities, particularly through the financial markets, trade in services, and investment has increased sharply, and so have the orders of magnitude involved. 7. The enormous growth in the worldwide trade in communications services and products has occurred against this background of sharp inequalities in the infrastructure, further strengthening these inequalities in so far as much of it is going to the technological haves. E.g. in 1990 the market for international telephone calls was US$ 50 billion; but that for telecommunications equipment and services was US$ 370bn, and up to US$ 400bn in 1992. Business demand has increasingly become more important than consumer demand in some of these industrial sectors. 8. The case of frame relay technology is of interest here as well: many TNCs would use it as a networking technology; but it is only available in a few major cities. 9. There is also a trend towards the privatization of international agencies. This is well illustrated by the case of INMARSAT, an international treaty organization established in 1979 to provide communications services to ships, especially those from poor countries. As INMARSAT has expanded into increasingly profitable activities (services to media, portable satellites, airlines) there have come pressures to privatize it; this particular agency has been growing at 20% a year for the last ten years. (Garcia 1995) 10.This is supported and made possible through a range of innovations and technical developments: digitalization, optical fibers, compression, navigation software, Pcs' new capacities, networks such as the Internet and other internets. Further, global corporations need seamless worldwide networking technologies that can support applications such as electrodic data interchange, computer-integrated manufacturing, databases for information management, video conferencing, etc. This will require enormous investment and expertise and will favor global players. 11. he leading telecommunications firms are positioning themselves to become part of the lucrative outsourcing market to provide seamless global communication networks to the world's 5000 largest MNCs. This market is estimated at $10bn. a year and is growing rapidly. AT&T has established WorldPartners, a one-stop shopping consortium and joint venture, in conjunction with Japan's largest international provider, KDD and Singapore Telecom, and after an anxious search, with ... as its European partner -- essential if it was to be a provider of global services. What I find interesting and politically significant, though rarely noted, is that to provide such telecommunication services which neutralize distance, they need access to very material land, because the main technology is still fiber optic cable, and it is also very material. Here lies a possibility for governments to exercise regulatory power, but this point is lost in the ascendant rhetoric of dematerialization. (see Sassen 1996b) 12. There is also a widespread conviction that we will see the emergence of intermediaries to sort out, edit, and evaluate information and services available on the net. The enormous growth and proliferation of information and options is creating a need for "editors" who will read, sort and rank information for their clients. Brandnaming is inevitable and hence the possible overvalorization and overpricing of these editors. 13. 20 European companies recently joined to form the European arm of an Internet research group. The group includes major telecom and computer firms, both from the public sector and private sector. It will be based at the French national computer research institute Inria. The WWW Consortium's European branch will work with the US Web Consortium on such global issues as electronic commerce. It will also work on the use of languages other than English on the Web. The French business and government establishment now shows a remarkable interest in the Web, when only last year it had dismissed the whole Internet as a version of the French Minitel. Inria has taken over some of the Web research from CERN, the nuclear research organization where the Web was created by Tim Berners-Lee in 1989; he, now at MIT, heads both the US and European research consortia. One of the concerns of the newly formed European consortium is that improvements made by such rivals as Netscape and Microsoft (both members of the US consortium) don't create separate parts of the Internet that can only be read by Microsoft or Netscape software. 14. The Internet is becoming big business. Revenues from Internet-related products and services will go from US$ 300mio. in 1995 to US$ 10bn. by 2000. About US$ 4.2bn. of that will be spent by consumers and business for access fees to get online and for the time spent there. 15. Three of the world's leading telecom operators have formed the world's third global telecom alliance: Deutsche Telekom and France Telecom, the two biggest operators in Europe, together will invest US$ 4.2bn. in the third partner, Sprint, the third largest long-distance operator in the US. The forecast is for sales of US$ 5bn by 2000. It is to be called Global One, and will offer clients a single global network reached through a single point of contact, with state of the art technology and a range of new services. It will focus on three segments of the international telecom market: worldwide voice, data and video services for corporate clients; international consumer services such as calling cards; and international transmissions and support to other internatioanl carriers. There are two other global telecom alliances: AT&T has linked up with four European operators forming Uniworld, now the world's largest global alliance, and British Telecommunications and MCI have joined to form the second largest global alliance, known as Concert. 16. Worldwide it is mostly small companies that have till now offered access to the Internet. The total number of personal computers worldwide is estimated at 57 million, and at 100 million by 1999. The largest telecom and computing companies are well-positioned to take advantage since Internet travels over the fiber optic backbone owned by the world's long-distance carriers. These are now developing Internet services for business. For instance, the share of revenues from business clients has been rising for AT&T; over half of its profits from telephone services today comes from business rather than consumers. 17. There was rapid growth in activities across all sectors in 1995. The largest deals were in the telecommunications sector, with 98 transactions worth US$ 20bn. The most active sector was software and services, with 356 deals valued at a total US$ 4.4bn. In Europe we increasingly see acquisitions of national brandname firms by foreign companies. Companies with expertise in the Internet were favored targets, as were those with expertise in ISDN (the data transmission technology). US firms acquired 11 European ISDN specialists. Two-thirds of Europe's top 20 transactions involved a buyer from abroad. 18. Perhaps oe of the first and best-known cases is that of Fed Ex, the international courier service. Fed Ex first set up a Web site in November 1994 so customers could track their packages worldwide by accessing directly Fed Ex's own package tracking database. It was an enormous success (and a lot of fun for those with time to track their packages). About 12,000 customers clicked in er day, clicking their way through Web pages to track their very own package instead of having an operator do it for them. Fed Ex saved up to US$ 2 million. Fed Ex has now also set up an intranet; today it has 60 Web sites running inside the company. 19. The numbers of sites in these intranets are sometimes quite high: e.g. at Silicon Graphics Inc., its 7,200 employees have access to 144,000 Web pages stored on 800 internal Web sites. 20. This is also a threat to software companies that produced network systems now being replaced by the far simpler device of using the web. It used to require immense amounts of complex codes and specialized programs (e.g. Lotus Development Corp.'s Notes program). The Web is far cheaper and simpler. Germany's SAP, a US$ 1.9bn software maker rose to the top of the industry with its complicated programs to override the differences among computer systems. Now the web can do much of this faster and far cheaper. Also Lotus or SAP's programs require paying programmers to customize and maintain these systems. Further using the Web reduces training costs. The Web's HTML (Hypertext markup language) standard has emerged as a standard user interface which millions of PC users have become familiar with. Because the same basic programming can be used on lots of different kinds of hardware, corporations will need fewer programmers to write and maintain software. 21. Intranets will not replace the complex business programs that have been refined over many years (e.g. in finance); further, security and confidentiality concerns may limit use of intranets, which are at this time less secure than conventional programs. But more sophisticated intranets are being developed. For instance, Silicon Graphics began using the Web internally almost as soon as we had Mosaic, the original web browser; today, almost all information at this firm is online: it makes available internally almost two dozen corporate databases that employees can traverse by clicking on hyperlinks. This feature of intranets sounds very attractive to me; I have no objections to internal democratizing in access to firm information. It's using a public good to raise a firm's profits, privately appropriated, which I find problematic. 22. The forecast is that sales of software to run intranet servers will jump to US$ 4bn in 1997, from less than half a billion in 1995. By 1998 it could be at US$ 8bn which is four times larger than the Internet server business. These figures exclude all the application packages, programming tools, and other requirements of intranets. All the big software makers (Netscape, Microsoft, Sun Microsystems, IBM, Oracle, Computer Associates) and just about all others are producing and launching intranet products. 23. For a full discussion of these issues and the pertinent literature please see Sassen 1996b. REFERENCES Druckrey, Timothy. (Forthcoming) Representation and Photography. Manchester, UK: Manchester University Press. Garcia, Linda. 1995. The Globalization of Telecommunications and Information. " Pp. 75-92 in Drake, William J. (ed)The New Information Infrastructure: Strategies for U.S. Policy. New York: Twentieth Century Fund Press. Rapp, L. 1995. "Toward French Electronic Highways. The New Legal Status of Data Transmissions in France." Pp. 231-246 in L. Rapp (ed) Telecommunications and Space Journal. Vol. 2 (Annual Edition). Rotzer, Florian. 1995. Die Telepolis: Urbanitat im digitalen Zeitalter. Mannheim: Bollmann. Sassen, Saskia. 1996a. Metropolen des Weltmarktes. Frankfurt: Campus Verlag. _____ 1996b Scherer, J. 1995. "Regulatory Reform in Germany: Privatizing and Regulating Deutsche Bundespost Telekom." Pp. 207-230 in L. Rapp (ed) op.cit. Serexhe, Bernard. 1996. Meurer, Berndt. 1994. Die Zukunft des Raumes. BIO: Saskia Sassen is Professor of Urban Planning and serves on the faculty of the School of International and Public Affairs at Columbia University, New York, USA. Two of her books have been published in German. Metropolen des Weltmarktes (Campus Verlag, 1996) and Migrantes, Fluchtlinge und Siedler (Fisher Verlag, Taschenbuch, 1996). Her most recent book is Losing Control? Sovereignty in an Age of Globalization. (The 1995 Columbia University Memorial Schoff Lectures, published by Columbia University Press, 1996). (Thanks to Nicole Meijer for typing out the text.) -- * 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