The World to Come: Value and Price of Globalization
(How Technology and Globalization are Changing Economics, Politics and Society)
It's a great pleasure to be here with such a distinguished audience of national and international leaders of business and government.
Being in Washington reminds me of the tourist who took a cab through the city. As he passed the National Archives Building, he saw the inscription, "The Past is Prologue."
The tourist asked the driver what it meant, and the driver said, "It means … you ain't seen nothing yet."
Today, my topic is how information technology - especially the Internet -- is shaping our future. We've seen amazing things. But I assure you … we ain't seen nothing yet.
But delivering the Internet's full promise to every person on the planet will take hard work. Government and industry around the world must work together on policies that encourage the Internet's progress.
I believe Texas Instruments has a unique perspective on the future. We have nearly 50 percent of the world market for digital signal processors, or DSPs, and we're the world's number one provider of analog chips.
I know some of you will hear the words "digital signal processor and analog chips" and take that as your cue for a nice nap. But I encourage you to bear with me, because DSP and analog are the foundational semiconductor technologies of the Internet Age. They are driving new generations of portable devices that will put the Internet in your pocket.
From that perspective, then, I'll briefly discuss technology, which will set the stage to consider three truths about the Internet Age. I'll close with a look at public policies that can expand the Internet's benefits.
As I said, DSP and analog technologies will drive the Internet Age. DSP chips operate in real time, which makes them different from the chips you find in personal computers.
For example, when you step on your car's brakes, the last thing you want to see is a little hour glass pop up on your dash while a microprocessor considers the best way to stop. In contrast, many of you have cars with DSP chips that instantly adapt to road conditions while applying the brakes.
The same necessity for real-time signal processing applies to voice and video communications - and anything that must be transmitted the way it happens in real life.
As we've developed these fundamental technologies, we have seen three truths emerging about the Internet Age.
First: Broadband communications are exploding -- both the capacity for high-speed communications and the availability of broadband are booming. Second: Broadband subscribers are using this bandwidth in increasingly personal ways. And third: The Internet is changing everything, and yet, the more things change, the more they stay the same.
Let's look at these truths in detail.
Number one: There's a boom in bandwidth at all levels -- internationally, nationally and locally. On a global basis, at least 52 major undersea communications cables are in operation or under construction. That's in addition to an expanding global network of satellite communications. The firm TeleGeography estimates that between 1999 and 2001 transoceanic telecom capacity will increase more than 500 percent.
At the national level, companies in many countries are building new national networks. In the U.S., Level 3, Qwest and GTE are all building coast-to-coast fiber networks to compete with the existing networks of AT&T, MCI and Sprint.
Total aggregate bandwidth of all US wireline networks was 1 trillion bits per second at the end of 1996, but it will rise to 100 terabits by 2003.
And these networks can dramatically increase their capacity simply by changing the electronics at either end. In a demonstration last week, Alcatel took an existing network connection between two cities in Germany and transmitted information at 40 gigabits per second. At that speed, you could ship the entire contents of Encyclopedia Britannica in less than a quarter second.
Locally, phone companies are busy extending high-speed services. SBC will invest roughly $6 billion to make broadband DSL - or Digital Subscriber Line -- available to 80 percent of their customers. That's the most aggressive announcement to date, but one study predicts that 70 percent of all US homes will have DSL access by 2004.
Cable TV companies are an alternate route. That's why AT&T invested $100 billion to $150 billion - depending on how the market feels today -- to buy major U.S. cable operators. Now, they're investing billions more to upgrade these facilities to handle voice and data.
In addition, there's a profusion of local, national and international wireless networks.
The huge increase in network capacity is driven by customer demand. In the US, 70 percent of all adults now use a computer and 80 percent of those people go online. In the first quarter of 2000, an additional 5 million Americans went online. Worldwide, 375 million people have Internet access today, growing to 500 million over the next two years.
Most of these people still use dial-up connections, but as broadband becomes available, people are signing up. DSL subscribers in the US will jump from 300,000 at the end of 1999 to more than 10 million by 2004. An additional 10 million homes will have high-speed cable modems by the year 2002.
That's a lot of raw numbers, so let's move to truth number two - that people are personalizing their use of bandwidth.
A primary reason people go online is to communicate with friends, family and business associates. A recent study showed that the number of e-mail boxes worldwide increased 80 percent last year, to nearly 570 million.
Beyond e-mail, people also want to connect to information. The fastest growing segments of online users are baby boomers and senior citizens who are drawn by web sites about health, lifestyle, and business.
I want to go into more detail about personalized bandwidth, but let's do that in the context of truth number three.
The Internet is changing everything. Yet, like I said, the more things change, the more they stay the same. The Internet has changed many economic paradigms, but companies ultimately must make a profit or they won't survive.
The most important thing, though, is that people have not changed. We use the Internet to do things differently, but our basic desires as people are the same as always. By and large, people want health, wealth and happiness. I think internetworking is a lasting phenomenon because it helps with these fundamental desires.
On the horizon, we'll see widespread use of smart medical devices, such as insulin pumps and pacemakers that are remotely monitored and activated by medical offices. The health applications are wide-ranging, including vehicles that automatically call an ambulance when an airbag is deployed.
It's worth noting that the same DSPs that enables high-speed Internet connections are being modified to process sound and light to let deaf people hear in the not too distant future. And farther out, DSP chips will allow blind people to see. TI is developing these applications right now, working with medical researchers at Johns Hopkins and other institutions.
Aside from obvious lifestyle benefits, health applications also mean more people will be able to work, thus adding to economic productivity. Which leads us to the topic of wealth.
The world economy already has reaped tremendous benefits from information technology. In the U.S., GDP has grown an average 4 percent for several years - even as inflation rates have declined. Bob McTeer, president of the Federal Reserve Bank of Dallas, calls this "sustaining the unsustainable." But we've done it through the power of internetworking and information technology.
One supporting factor is e-commerce. In 1999, total e-commerce was valued at $151 billion. By the year 2003, it should reach nearly $2 trillion.
The efficiencies of e-commerce are changing the economy's cost structure by expanding customer bases and driving down the cost of delivering goods and services.
Of course, business alone does not lead to happiness - basic desire number three.
As the world moves to Internet time, lives can become more hectic than ever. In response, people are using the Internet to stay in touch with loved ones. And they're beginning to use the Internet as a prime source for entertainment.
This will increase as new generations of Internet appliances come to market. This includes devices such as smart wireless phones, screen phones, Internet game consoles, and web and e-mail terminals.
International Data Corp. estimates that people spent $2.4 billion on non-PC information appliances last year. That should grow to $18 billion by 2004.
One popular device already on the scene is the Internet Audio player. This is new from Sony, called the "Music Clip." It holds two hours of CD-quality music. And by the way, it uses a DSP from TI.
As we speak, the music industry is wrestling with the Internet because it lets artists distribute their own music and lets consumers compile their own music catalogs.
The Internet is also reshaping other entertainment sectors. Take publishing.
Last March, Steven King released a short story over the Internet. 500,000 copies were downloaded within just a few hours. Time magazine said King typically would have earned about $10,000 by selling the short story to a magazine. By releasing it over the Internet, King estimated he'd make $450,000.
The declining size of high-speed modems means that people will be able to download music, books, movies - whatever - using very convenient, portable devices. This is one of our latest projects - a full-fledged high-speed modem that's the size of a credit card. We're working every day to make these things even smaller to expand connections even more.
What all of this means is that power is shifting to consumers, and away from content providers.
I'll go even further. This affects more than the entertainment industry - or banking, or brokerages or car dealers. It's also shifting power away from governments and giving it to individuals. Information is power, and in the Internet Age, governments cannot control information.
On a global scale, that really is something new, and I think that's a very positive change.
The possibilities are tremendous. Yet, this time also presents some major challenges. Our goal should be to ensure that all people benefit from the Internet's capabilities.
There are three issues I would like to highlight. First is the congressional vote next week on permanent normal trade relations with China. The debate centers on two critical issues: economics and human rights. I believe the Internet bridges these points of view because it is a powerful economic engine and a force for human liberty.
When it joins the World Trade Organization, China will adopt established principles of the rule of law. This is a highly desirable change. Our government must grant permanent normal trade relations so we as a nation can be part of China's entry into the world economy and further encourage China's movement towards democracy.
Communications can accelerate this kind of process. For example, in 1440 Johannes Guttenberg invented moveable type. The subsequent spread of printed information was a catalyst for the Renaissance.
Likewise, the Internet might well be just as transforming … especially for the people of China, as they realize their potential in a flourishing economy and an increasingly free society.
The second challenge is ensuring an adequate supply of highly educated professionals with expertise in math, science and engineering to keep driving the Internet Age forward.
There is wide agreement that the U.S. faces a severe shortage of these especially skilled workers. This threatens our nation's competitiveness and technological preeminence.
The long-term solution is to improve education and attract young people into math and science. Short term, we must raise the limits on legal immigration via the H-1B visa and improvements in the green card system. This will help American companies keep expanding the economy by pushing technology forward.
The president, policymakers in both Houses of Congress and Federal Reserve Chairman Alan Greenspan have all reached the same conclusion. In testimony before Congress last year, Greenspan said, "We should be very carefully focused on the contribution which skilled people from abroad … can contribute to this country, as they have for generation after generation."
Greenspan went on to note that significantly opening immigration rolls would reduce the inflationary impact of low unemployment.
Several bills have been introduced on this issue, and I endorse the enactment of a broad bipartisan solution to this pressing challenge.
I will end with the issue of export controls. There are two elements here.
First, we must ensure that export restrictions on computing power do not inhibit the market for personal information appliances. The U.S. government limits exports via the number of MTOPS -- which stands for "millions of theoretical instructions per second" -- that they can perform. The objective is to control technology that can be used for military purposes.
But we must recognize that processing power is increasingly being embedded deep within personal devices that are dedicated to personal applications. Technology is moving fast, and regulations must keep up.
Even our terminology is becoming obsolete. Last February, TI unveiled a DSP that can process 9 billion instructions per second. Within 10 years, our DSPs will be processing 3 trillion instructions per second.
Instead of MTOPS, policymakers soon will be discussing B-TOPS and even T-TOPS as information processing moves into the billions and trillions of operations per second.
The second element here is encryption. Fortunately, regulators have realized that people demand privacy in e-commerce and their personal devices. New regulations represent a significant and long overdue shift in U.S. policy.
However, the new regulations still require technical reviews that often force companies to deal with government regulators before we can work with customers who want to use our encryption products.
Given technology's extraordinary pace of change, we must ensure that encryption regulations stay up to date. Policies must be continually reviewed so they do not become obstacles to technical advancements and U.S. competitiveness.
If we can get the right public policies in place and keep them up to date, then I believe the Internet Age will move the world forward in a positive direction. Like the tourist passing the National Archive, we ain't seen nothing yet.
If the past truly is prologue … then our future can be amazing.