‘Info-structure’ next key to economic growth, expert says

People used to say that a nation needs infrastructure for its economy to grow. But today, according to a former head of a Canadian telecommunications equipment company, it is “info-structure” that plays a key role in a country’s economic development.

“Those countries which are leading the world in economic development are the ones that have strong information networks. … It is extraordinarily important to all countries, including Japan,” Edmund Fitzgerald, former chairman and CEO of Northern Telecom Ltd. (Nortel), said in an interview with The Japan Times.

Nortel is one of the few foreign companies that succeeded in penetrating Japan’s telecommunications market in the 1980s. The company supplies telecommunications products and services, and its major rivals are companies such as Motorola Inc. and Lucent Technologies Inc.

Fitzgerald received the Order of the Rising Sun, Gold and Silver Star, from the Japanese government earlier this week for devoting much of his energies to introducing Nortel digital switching systems and related technology to Japan’s telecommunications market. In 1982, as head of Nortel — already the world’s largest supplier of digital switching systems — Fitzgerald met Hisashi Shinto, then president of Nippon Telegram and Telephone Corp., and succeeded in selling NTT small digital switching systems, called DMS-10, each with a capacity for 10,000 lines. “Japan had a need for a smaller switch to serve the rural areas,” he said, adding that Japan at that time had only a bigger, more costly switch with a capacity for 100,000 lines. The first Nortel switches went into service in 1988. Since then, the company has sold over 1,500 DMS-10 switches to NTT.

Although U.S. companies like AT&T Corp. and Motorola teamed up with the U.S. government to argue that the Japanese market is not as open as it should be, “Northern Telecom is not part of that chorus,” said Fitzgerald, who, from 1984 to 1988, served as chairman of the U.S. Committee for Economic Development, an independent, nonpartisan research organization of 250 business and education leaders. “If we have something that is of value to customers and if we present it correctly and (make it work) for the customers, we would get a fair share of the market,” he said. “You’ve got to remember (that) when you are going to penetrate somebody else’s market, you’ve got to bring more to the market than what is already there,” he said.

Fitzgerald pointed out that Japan needs two or three seamless long-distance telecom companies that can offer both domestic and international lines in the same network in order to compete on the world market. “Then, those networks will be able to join up with these big world networks that are being formed,” Fitzgerald said, adding that the world’s telecommunications giants are already grouping into three global telecommunications alliances.

Now, as deregulation is under way in Japan, telecommunications equipment companies like Nortel expect tremendous business opportunities in the market. The former chairman of Nortel said deregulation will boost competition in the industry, and this will drive service charges down. “As the prices go down, the usage of the network is going to go up, so the capacity of the network has to go up.”

Most important to surviving competition is to be quick in offering services and to provide new solutions before others do, he said. “The guy that’s going to win is the guy with high corporate velocity,” he said. “That is going to be more true as your regulations are backed off further. Regulations tend to protect people who don’t move as fast as others.”