Keynote Address of
Troy A. Eid
Executive Director and Chief Operating Officer
InfoTEST International


Before the Aspen Internet Festival
Aspen, Colorado
October 4, 1996

hank you. I want to thank Guy Cook, President and CEO of SuperNET, for inviting me. No one has done more to build the Internet in our part of the world than Guy, and we all owe him a round of applause. Thanks also to Victoria Caras and the rest of the "Interfest III" team.

You may be wondering why a person who lives south of Morrison has just driven up from his office in Denver to speak to Aspen Internet Festival about . . . the development of the Internet in China. I suspect our corporate sponsors may be wondering about this as well. I'm showing my age here, but a couple of you might be old enough to remember that John Denver wrote a song way back in the 1970s that went something like, "it's a long way from LA to Denver, a long time to hang in the sky, a long way home to Starwood and Aspen, my sweet Rocky Mountain paradise." So by his reasoning, it must be a really long way from Aspen to Beijing or Shanghai or Hong Kong.

Or maybe not. It's not called the World Wide Web for nothing. The commercial globalization of the Internet means that we don't always have to "hang in the sky" to get from Aspen to the four corners of the globe and come home again. So my message tonight is simply this: As we join together to celebrate the Internet and what it can do here in Colorado, we must also remember that the scope of this mighty enterprise in which we are involved goes beyond any particular state, region or country. We are talking about the fastest-growing communications medium in human history, and the potential to eliminate distances of time and space as never before. We are also talking about the triumph of increasingly less expensive and more widely available open systems technologies, whose ability to empower individuals and institutions no longer means that we must buy our products and services from one or even a handful of corporations.In a world where at least three billion people have never even made a telephone call, let alone heard of the Internet, these developments open possibilities beyond our imagination. Wireless technology is just one example. The cost of cellular and satellite telephony has fallen dramatically over the past decade, in some cases by as much as 300 percent. At a meeting of the Organization of American States' Inter-American Telecommunications Commission last week in Washington, a senior Venezuelan official told me that an additional wireless price reduction of 100 percent, coupled by a 30 percent increase in the standard of living in the less developed world, could result in more than 80 percent of the world's population coming "on line" in the coming years. I'm not sure where he got these figures, or if they are accurate. But the larger point is that it is becoming possible to think of the Internet in truly global terms.

I don't mean to imply, however, that achieving all this will be easy. The fact is, we're meeting together this weekend in one of the most Internet-friendly places in the world, in a state that ranks among our country's leaders in Internet users per capita, and in the nation that pioneered the Internet and still dominates it to an amazing degree. As we look to the future, we must start by putting the present into proper perspective. According to the Georgia Institute of Technology, 73.4 percent of World Wide Web users live in the United States. Europe ranks a distant second with less than 11 percent of global users. Fewer than 2 percent of all Web users live in Asia, the part of the world that the Central Intelligence Agency estimates will become far and away the largest regional economy by 2025. Here in the United States, we have one Web server for every 48 citizens, compared to one Web server for every 179 Germans. The world's most populous nation, the People's Republic of China - our destination tonight - has perhaps 100 Web servers for a nation of 1.3 billion people.

As Americans, then, we have a special responsibility to encourage the Internet's development. And so we must constantly ask ourselves: How can we use these incredibly powerful and increasingly ubiquitous information technologies, popularized by the Internet, not just for our own sake, but to make the rest of the world a better place? We must always remember that information technology is just that - a tool. It is what psychologists and philosophers call "non-normative": The Internet, and all it represents, lacks any set of inherent morality or ethics. The Information Society is not necessarily an ethical or moral society.

What is truly exciting about today's information technologies is not their scientific or engineering capabilities, but rather their potential to help Americans from all walks of life work with other civilized nations and peoples to apply these technologies to raise global living standards, protect the environment, and more generally to reinforce democratic values and institutions: individual liberty and personal responsibility; free markets; peace through strength and preparedness; representative governmental institutions; and the rule of law that protects and encourages respect for basic human rights. I say "civilized" because without our leadership, our moral authority, the juvenile behavior and technological anarchy that characterizes much of today's Internet and the so-called cyberculture will pale in comparison to the very real dangers we will face if terrorists, dictators, organized criminals, and other representatives of the uncivilized world somehow manage to use these same technologies to gain the upper hand over the rest of us.

I'll have more to say about this a little later within the specific context of China. In the meantime, let me say a few words about the promise of the Internet.

You've heard the statistics before, but they are still amazing. By the end of this year, the Net is expected to have more than 50 million users worldwide - amounting to roughly one new user every 30 seconds. The number of worldwide host computers (or "servers") on the Internet may reach 200 million by the year 2000, compared with 5 million last year and just 400,000 in 1991. And the Internet now connects 100,000 separate networks, up from 48,000 at this time last year. Businesses are racing to join up. The number of commercial addresses on the Internet rose six-fold last year, and business sites on the World Wide Web are doubling every two-and-a-half months.

Yet despite the statistics, the reality is that most people, even in the leading industrial nations, aren't even aware of the Internet Revolution, let alone what it will mean to our lives.

Let me just give you a few recent examples. I'll start with Germany since in many ways it is typical of the rest of Europe. Here's an article from the Sept. 10, 1996 edition of the Christian Science Monitor, an American newspaper published in Boston, entitled,

"Germans Yawn at Internet and Other High-Tech": The Internet 'is a large and very technically developed net used by fishermen in the North Sea.' So one respondent told a questioner surveying German public knowledge of technological issues. That's the funny part. The sad part is the survey found that '40 percent of working-age Germans had never played or worked with a computer,' says Hans-Dieter Over, chairman of the young entrepreneurs' group, WJD, which commissioned the survey, presented last week in Bonn. . . . Germany is a highly developed industrial society, but its particular strengths are in the mechanical and chemical sectors - 19th-century technologies - rather than in the late-20th- century technologies of microelectronics and biotechnology. The WJD survey found that more than 27 percent of the German public did not know what the Internet was, and of those who said they did, 56 percent could not define it with any accuracy.

A second article, entitled "German Companies Blame Internet for Export Decline," appeared in The Financial Times last March 27th. It shows how popular ignorance about the Internet can become a scapegoat for a host of social ills, and is based - to say the least - on what a lawyer might politely call an attenuated link between cause and effect:

German exporters, battling against a strong currency and high labor costs, have found another cause for their declining share of international markets - the Internet. Mr. Michael Fuchs, the president of Germany's wholesale and foreign trade association, yesterday said companies were losing lucrative niche markets because the Internet made it easier to compare prices and so was increasing competition. Where once a German company would offer to supply goods abroad at a given price and be fairly sure of winning the order, it was now likely to find the potential customer quoting more competitive prices from perhaps five other suppliers and putting the German company under pressure to improve its terms. The information used by a potential customer with such devastating effect has been garnered by surfing the Internet.

These and other writers suggest that ignorance about the Internet is somehow a uniquely German phenomena. Yet this is preposterous, as demonstrated right here in the United States. For instance, the latest issue of Telecommunications magazine (Sept. 1996) contains this poll by O'Reilly & Associates, Inc.: "[T]he vast majority of small [U. S.] companies (92 percent) are not connected to the Internet and most have no plans for future Internet access. . . . " This despite the enormous potential of the Internet to save time, money and resources for all companies, including the small concerns that are the source of most of the new jobs generated in the United States.

Even many American businesses obsessed with putting up a site on the World Wide Web aren't necessarily using the technology as a tool to achieve their strategic objectives. For instance, business columnist Holman W. Jenkins, Jr., writing last Jan. 30 for the Wall Street Journal, cites the apparent success of HotWired, the Web site run by San Francisco-based Wired magazine, as an example of what he calls the Web's "less than inspiring" business performance thus far. HotWired aggressively promotes itself as one of the Web's most successful sites, boasting some 500,000 "hits" per month. A hit is simply an electronic file transfer of any kind from a Web server to a user, such as the down-loading of a home page or even the individual graphics posted on that or other pages. In fact, some Web pages may generate one hit, others dozens of hits depending on their design - making hits a virtually useless way to gauge user demand. In the case of HotWired, Jenkins notes that half of the 500,000 hits are to a single underground discussion group started anonymously by two juniorHotWired employees. Many businesses, Jenkins concludes, "are spreading around opulent sums [for Web sites] for no real purpose other than to acquire a stable of computer geeks and keep them happily employed plagiarizing the competition and figuring out what the technology is good for."

The real problem lies not with Europeans or Americans or the rest of the public. Granted, a technological revolution of any kind - particularly a global paradigm shift - takes time for people to digest. But the larger problem, in my view, is a difficulty one the part of our respective governments, and most especially on the part of private industry, which is leading and must drive this revolution - to communicate the value of the Internet in clear and compelling terms that non-Websters can understand. Once people understand in concrete terms what the Information Society will mean to their lives - how we live and work, how we learn, and the other vital issues we will explore this weekend - they will respond to our leadership. And then they will work together to take this vision off the drawing board and make it a reality.

Which brings us to China. The Chinese are no different from the rest of the world, with on big exception: They happen to live in a country where the ruling Communist government oscillates between quietly tolerating the Internet's development to actively encouraging its destruction. Indeed, some of the more ambitious government censors have even suggested the latter-day equivalent of the Great Wall. Think of it as the Great Firewall: screening China's fledgling Internet from the rest of the world, while vigorously policing its internal development.Historically, of course, the Great Wall did not achieve its object: to keep the Mongol Hordes out. Today there is even a popular restaurant in Beijing, Feng Shen, that is built on the former site of Kubla Khan's palace. Will China's Great Firewall achieve its objective? Does the historical analogy hold?This is not to suggest that China is the only part of the world suffering from Internet schizophrenia. It is simply to say that the future direction of this, the world's most populous nation, and a country whose economy may surpass ours in total economic value within the next generation, is an important test for whether the Internet can truly become the global network of networks to which so many of us aspire.

This past spring, I was privileged to chair a delegation of U.S. government and corporate leaders, the first group to visit China specifically to discuss the country's long-term development of the Internet. In all, we conducted seminars for nearly 2,000 Chinese government officials, professors and students. Fully one-quarter of these were director-level or higher. Our delegation learned that quietly but surely, the Internet is growing in China. This despite long odds: an average of one telephone line for every 20 people; laws demanding that Internet subscribers register with police; and campaigns by hard-liners against "information invasion" from the West.

China's Internet started with a connection between Beijing's Tsinghua University and Stanford University in 1994, and still depends heavily on U.S. technology and engineering. Remarkably, nearly all China's Internet traffic - to, from and within the country - must travel from China to the United States, where it is handled by computers at a NASA facility in Mountain View, California before it reaches its final destination. Thus, when a Tsinghua professor sends electronic mail to a colleague at Fudan University in Shanghai, the message is first routed from Beijing to California, and then back to China. The reason: China lacks its own "Internet Exchange Point" for message-routing, so relies on one of ours.The Internet's growth is worth encouraging for several reasons. First, it challenges the Chinese government's rigid monopoly over telecommunications services, a remnant of the 1949 Communist Revolution that threatens China's prospects for sustained economic growth. China vows to triple the country's telecommunications network to 100 million lines by 2000 - a $10 billion annual expenditure that can be achieved only through private foreign investment.U.S. companies have already made big investments in China's telecommunications equipment market. But China's monopolists still ban foreigners from owning or operating any telecommunications services. Fortunately, the Internet's exponential growth is changing this. Long waiting lists for the additional phone lines needed for Internet access in major Chinese cities are pressuring local authorities to change their ways.

On the horizon, high-speed modems will soon allow Internet access via cable television and wireless. In China, these fast-growing alternative services are increasingly provided by foreigners, despite the government's restrictions on private investment in traditional wireline services. As the Internet flourishes, alternative services will help steer China toward privatization and deregulation.

Americans have provided nearly all of China's Internet-related hardware and software, and have an enormous stake in its future development. U.S. companies dominate every sector of the global Internet industry, estimated to be worth $80 billion by 2000.

At a human level, the Internet is empowering individuals as never before and may help redefine the relationship between private citizens and China's central government. The Net provides an important window to the world for a growing number of China's elite. This point was brought home recently when a Beijing University student - the son of a State Planning Commission official - used medical advice obtained over the Internet from doctors in the United States to save a fellow student's life. And even the Internet's growth within China provides a potent, low-cost medium for like-minded people to find each other and share information.

To be sure, Chinese authorities are already censoring the Internet and are essentially imitating the so-called "Singaporean Model", where authorities in nations such as Singapore monitor the addresses of "offensive" World Wide Web servers located outside the country, then electronically block them at Singapore's Internet gateway.

Monitoring e-mail traffic is tougher. Some Chinese censors use low-tech methods. In at least one city, e-mail messages are printed out and posted at the local police station. Still, sources say China's law requiring Internet users to register with police is typically not enforced because police often demand ongoing license fees or bribes. Many Internet users avoid registration entirely.Most promising, some senior government officials privately recognize that expanding China's Internet is vital to the country's economy. Two rival Chinese ministries recently began offering the country's first commercial Internet service. Subscribership is estimated at 100,000 and is expected to grow rapidly as China adds a million new personal computers each year.

Over time, the effect of the Internet and other decentralizing information technologies on China's economy and politics could be enormously positive. Mao Tse-Tung's regime killed perhaps 50 million Chinese between 1958 and 1978, in part by tightly controlling access to information, both inside China and with the world beyond. Without question, undermining the Internet's development in China will make it easier for hard-liners to use Mao's tactics against the Chinese people. And that could have profound implications for all of us.With the expected death of Deng Xiaoping - the ruler has not been seen publicly for at least three years - China has recently entered a period of political instability not witnessed since Mao's own death. In an apparent effort to consolidate power, Communist Party leader and President Jiang Zemin has proclaimed his own school of political ideology, called spiritual civilization, which, if taken literally, is in many ways a movement away from free-market economics and international engagement and toward a return to the days of Mao. Anti-Americanism is on the rise and extends to everything from a crack-down on American cartoon characters in childrens' books to dramatically expanded censorship of U.S.-based Web sites. Exactly how all this will shake out is unclear. But without question, extremist anti-American views are gaining de facto Communist Party endorsement to an extent not seen since the late 1970s.An article on national defense recently published in China, but whose English-language version was quickly censored, is a case in point. The article is by Lt. Gen. Mi Zhenyu, vice-commandant of the Academy of Military Sciences in Beijing. As reported by the Far Eastern Economic Review, General Mi advocates a covert arms build-up against the United States. "For a relatively long time, it will be absolutely necessary that we quietly nurse our sense of vengeance," he writes. "[Yet] we must conceal our abilities and bide our time." Faced with propaganda of this kind, the Internet's ability to deliver accurate information both within China and with the outside world is more than a matter of academic interest.

In closing, the good news is the tremendous growth of these technologies, and their ability to surpass all predictions and expectations. China, and indeed the rest of the world, really aren't that far away. When we build the Internet here in Aspen, in Colorado, and throughout our nation and around the world, we are doing more than stringing wires to boxes. We are engaged in what may yet become the most powerful tool of human freedom. Our progress has defied the critics, but our real work has only just begun. Yet if we have the courage to use the Internet and all it represents for the betterment of humankind, there will be no doubt that America's best days, China's best days, and democracy's best days lie ahead. Thank you.

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