Venture Failure and the Timing of Telecommunications Reform
Chapter 3: Unregulation and the Death of Distance
1 As described in the previous chapter, in the second half of the 1990s, the internet represented a global window of opportunity for new ventures and other small ﬁrms. For the cost of setting up an internet site, a small ﬁrm could instantaneously achieve a worldwide presence and sell products or services to customers or businesses. Distance-insensitivity was unique at the time, because it stood in strong contrast to the pricing regime associated with basic telecommunication services, in which transnational connections were both distance-sensitive and costly.2 Drawing on a diverse set of literature, including practitioner thinking, economics and sociology, the previous chapter described the formation of two diﬀerent types of globally connected data networks. One type were the private networks of industrial multinationals and their data-sharing partner companies. These networks served to coordinate worldwide business processes. They replaced the company-only networks of the past. The second type was an emerging, transnational consumer network; the country-only online services of the past were left behind. Both types of networks shared some common characteristics including embracing internet technologies as a worldwide standard. The most innovative internet start-ups dedicated themselves to connecting the two to create seamless business webs (Tapscott et al., 2000). But the business and consumer networks described here shared a further characteristic, which was not discussed in Chapter 2: they were both run over leased lines. By doing so, they bypassed the regulation regimes of basic telecommunication services. This impacted on the pricing of both, and allowed them to be...
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