Most economic experts seem to agree that the information-technology revolution will bring profound changes to the global economy, and to the Japanese economy as well. Some people still believe that the revolution and the development of multimedia communications technology are only a bubble. However, the revolutionary impact of information technology is obvious, involving not just personal computers and the Internet but the real-time, low-cost retrieval and transmission of a large amount of data by individuals as well as businesses.

Companies and government offices basically are mechanisms that receive, process and transmit data. Decision-making concerning production, transportation and purchasing operations is based on data retrieval, processing and transmission. The information-technology revolution is bound to cause basic changes to those operations. Major changes are inevitable in organizations, as well as in the industrial and socioeconomic structures based on interaction between organizations and individuals.

Postwar technological innovations have led to the development of transistors, microprocessors and computers. The combination of optical fibers and laser technology and increased use of satellites have led to the IT revolution. Technological development in the fields of hardware reached the “critical mass” at which it triggers major changes in software development, and has stirred revolutionary changes in the world.

Some experts divide national industries into the telecommunications sector and the traditional manufacturing sector, and call for a return to basic manufacturing operations. This argument is moot.

In 1999, U.S. industrial productivity grew 2.9 percent, jumping 5.5 percent in the final quarter. There is little doubt that U.S. industrial productivity is growing at an annual rate of more than 3 percent. The rise in general industrial productivity reflects not only the growth of the telecommunications sector but also the spread of the IT revolution in the U.S. economy. This trend is likely to continue in the years ahead.

To develop a new infrastructure for data retrieval, processing and transmission, it is necessary to destroy the existing system. In the past decade, the United States has pushed such “creative destruction.” U.S. Treasury Secretary Lawrence Summers had this development in mind when he said a revolution occurred in the U.S. economy in recent years.

The IT revolution is likely to spread from the U.S. to Europe and Asia, including Japan. Many experts doubt that Japan will promote U.S.-style “creative destruction,” but global market pressure is bound to cause earth-shaking changes worldwide. Unless Japanese companies change, foreign companies will take business away from them. I believe there is a good chance that Japanese companies, facing a crisis of survival, will transform themselves.

In Japan, cellular phones and electronic game machines have benefited more from the development of information technology than have PCs. The last major product to be based on information technology is likely to be a digital television. Next December, private broadcasters in Japan are scheduled to start satellite broadcasting. In 2003, conventional terrestrial broadcasts and cable-television broadcasts will be digitalized. All this will revolutionize television broadcasting and create a “big bang” for Japanese media.

The IT revolution has made it possible for Japan’s financial sector to implement its own “big bang” liberalization. The revolution is now likely to spread to television broadcasting. Networks of key stations and regional stations will be unnecessary under a digital system, and the reorganization of regional stations will be inevitable. Nonbroadcasting businesses will rush into the broadcasting market. More mergers like the one between AOL and Time-Warner and hostile takeover bids will occur.

The revolution will have a major impact on mass media, which are currently under government protection as was the banking industry in the past. The media “big bang,” phase 2 of the IT revolution, will be unstoppable. In Hong Kong, Richard Li of Pacific Century CyberWorks, the former owner of Star TV, recently bought Cable&Wireless HKT in a major corporate takeover.

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