Setting the Course for the New Digital Economy

The Elements of the New Digital Economy

• Content and Services• Growth of content and service consumption is outpacing growth of durable

goods consumption• Comprehensiveness, convenience, and efficiency of e-commerce overwhelms

other methods

• Communications• Infrastructures and services that connect people to each other and connect

people to information and media are converging.• Broadband connections for stationary use and wireless connections for mobile

use will dominate.

• Delivery Platforms• A variety of devices personalized for individual needs in multiple environments

are emerging• They span many industries (PC / IT, consumer electronics, communications) and

media

A Day in the Life of the Digital Revolutionin the Future

• People move freely from one environment to another

• They use whatever devices are most convenient at the time

• They automatically connect using the best network available at the time based on their personal profile

• They have access to the same personalized services automatically scaled to the device and connection they are using

• They have one service provider that manages and optimizes their service and account based on their unique needs and resources.

Social and Economic ImpactBeing Connected Changes …

• How People Communicate: on-line (mail, chat, IP Phone)– Over 60 Million US Internet users (220 Worldwide)– Over a Trillion email messages sent per year – PDA growth > 45% and smartphones >98% ‘97-’01

• How people consume: on-line (e-commerce)– $226B in personal Internet e-commerce transactions in 2000, $1.3T projected for 2003

(does not include business transactions)

• How people learn: on-line (distance learning)– 89% Schools connected to the Internet– 33 Universities offering distance / on-line degree programs

• How people work: on-line (mobility, telecommuting)– Over half of small businesses are on the Internet– By 2001 25% of all workers will be mobile– More than 50M US workers (108M worldwide) spend > 50% of time outside of regular

offices

COMPLEX SET OF PARTNERSHIPS REQUIRED TO

DELIVER THE DIGITAL CONSUMER EXPERIENCE

Levels of Integration and Coordination Are Necessarily Increasing

End-UserDevices

Local Loop

Network Backbone

Access Navigation/

PortalContent/

Applications

• Disney• BMG• Electronic

Arts• Dow

Jones• E*Trade

• Yahoo• Infoseek• MSN• Snap• AOL.com

• AT&T• MCI/

Worldcom• Sprint• Qwest• IXC

• RBOCs• Cable MSOs• Satellite• Cellular

players

Policy plays a key role in governing the relationships between these players

Policy plays a key role in governing the relationships between these players

•Movies•Banking

•Music•Shopping

•Information•Games

•e-mail

• Earthlink• Mindspring• AOL• gateway.net• compuserve

• Gateway• IBM• 3com• Nintendo

Key Elements of the New Economy• Deliver common, personalized content and services

• Across multiple networks• Across multiple devices / products

• Provide aggregation and simplification of complex communication and service systems

• Protect personal and proprietary information

• Protect intellectual property and trade names

• Provide authentication and secure transactions

• Filter unwanted information and intrusions

• Provide a consistent and predictable treatment of regulation and taxation

Role of Government in the New Digital Economy

• Remove Barriers• “Monopoly” powers that limit access and support for consumers

» Communications network access» User environment restrictions

• Access to international systems and markets

• Provide a simple, consistent and predictable framework of regulation and taxation

• Support industry needs for protection of property and identity

• Promote industry “self regulation” to avoid impractical or costly technical or business practice requirements

• Provide incentives versus mandates • Partner with industry versus “parental control”

Role of Industry in the New Digital Economy

• Remove barriers• Simplify the complex systems and transactions for consumers• Provide means for privacy and security to consumers• Provide means for protection of intellectual property

• Enable personalized communications and services• Provide competitive communications and service infrastructure• Provide competitive personalized products and services

• Promote a competitive, market-driven environment• Make the resolution of these issues competitive

requirements rather than regulatory

or legislative requirements

New Rules of the Road Needed

• U.S Economy has undergone profound structural

transformation as impact of IT revolution has begun

to hit home.

• Redefining rules of entrepreneur ship and competition,

and creating an increasingly global marketplace for a

myriad of new goods and services.

• Yet while economic reality is fundamentally changing, our

public policy framework remains rooted in the past.

• Mismatch between public policy and economic reality is not

sustainable.

• Now that the New Digital Economy has emerged, we must

build a new consensus around a new framework for

government and public policy.