In closing, it is worth noting the perils of losing leadership in telecommunications. Because of the time lag, the nation may continue to exhibit leadership at Levels 4 and 5 (and possibly Level 3) even as it is failing to renew capability at Levels 1 and 2. Since Levels 3 through 5 are most visible to policy makers and the public, there is a potential to perceive the situation as less dire than it really is. If Levels 1 and 2 are left to atrophy, serious problems will occur at Levels 3 through 5. If that happens, then recovery will take a long time—or even prove impossible.
Computer Science and Telecommunications Board, National Research Council, Evolving the High Performance Computing and Communications Initiative to Support the Nation’s Information Infrastructure, National Academy Press, Washington, D.C., 1995.Computer Science and Telecommunications Board, National Research Council, Innovation in Information Technology, The National Academies Press, Washington, D.C., 2003.
One result of the divestiture of the Bell System, subsequent splits and spin-offs, and the entry of new types of telecommunications services providers was a much more competitive telecommunications industry. The cost—and retail price—of long-distance calls fell rapidly between 1984 (the initial divestiture) and 2004 (when carriers began offering voice over IP service broadly to consumers). Wireless telephony grew rapidly, reaching nearly 208 million accounts in the United States by the end of 2005.13 Broadband access to the Internet became widely available. Cable system operators started introducing their own local telephone services over their new digital, two-way infrastructure. Business data service prices fell steadily as well.
A consequence of increased competition at every level of the telecommunications value chain was that the industry players found themselves operating with tighter margins and lower revenues.
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