THE NEW BUSINESS CYCLE COMES ROUND AGAIN
Your article provides valuable information about the significant role that technology plays in the business cycle today ("The new business cycle," Cover Story, Mar. 31). But the analysis of the dangers of technology seems to be a bit lacking. To the extent that information technology increases corporations' productivity and competitiveness, the companies that choose not to invest during a downturn would be vulnerable to companies with strong capital positions that did choose to invest in information technology. Thus, even in down times, companies will be pressured to maintain their technological investment--or risk losing market share to competitors who do.
The article certainly was thought-provoking and could become reality. On the other hand, comparing information technology to the railroads is something of a stretch. For the railroads, the time to market and the heavy capital outlays were much different from the short cycle-response time of the present technology sector. Also, technology's richness comes more from the delivery of "soft" goods rather than hard goods.
Information technology leverages human capital by expanding creativity and facilitating the sharing of knowledge. Witness the explosion which no one even dreamed of four years ago! The global business environment has hardly been touched by the full impact of technology. Even in deteriorating economic times, business will continue to use technology to lift productivity and compete globally.
Dudley P. Cooke
Executive Insight Group
Bryn Mawr, Pa.
Your article states that the cyclical behavior of high technology may affect business investments. High technology serves a variety of growth businesses--from computers, networks, communications, software, and electronics to automotive, industrial, medical, defense, and appliances. High technology has an impact on every segment of the gross national product--from consumers, business, and government to inventories and exports.
American companies dominate many markets internationally, including computers, software, networking, communications, and processors. Increasingly, these high-tech businesses are dependent on upgrades, maintenance, and service of mission-critical systems, not on new product sales. This diversity reduces cyclicality.
Diversity leads to reduced amplitude and frequency of cycles. The market rewards lower risk.
President & CEO
Cupertino, Calif.Return to top
WHY PHONE COMPETITION IS STILL ON HOLD
Robert Kuttner doesn't understand who really is to blame for delaying competition in telecommunications ("Don't let the Baby Bells stall competition," Economic Viewpoint, Mar. 31). BellSouth Corp. and the other regional Bell companies pushed for the Telecommunications Act of 1996. We pushed for reform when the long-distance lobby was sending fake telegrams to Capitol Hill urging officials to vote against it. We believed that opening the telecom marketplace to competition would benefit customers. We want to get into the long-distance business and compete and package products and services like any other competitor. We believe it's worth opening our market to competition and losing some of our best customers in order to be able to compete against the long-distance oligopoly.
Beyond pushing for legislation, we have worked to open our network and to develop and implement massive new computer systems so that competitors can connect and use our network to compete with us. But throughout this process we have faced the same tactics from AT&T, MCI Communications, and Sprint that Kuttner accuses the old AT&T of using. Clearly, the long-distance companies are simply trying to delay competition. They have refused to negotiate in the spirit the legislation called for. BellSouth will continue to fight for competition and to press for open markets, including opening the long-distance business to true competition.
There are serious gaps between the Telecommunications Act and actions taken by the Federal Communications Commission. To suggest that the local phone industry should stand meekly by while a federal agency circumvents Congress and puts in place a process that ghettoizes the world's best phone system--all so AT&T and MCI Communications can serve only selected customers--is preposterous. GTE Corp. will continue pushing for the Act to be implemented as Congress intended, not as the FCC and the long-distance companies would like.
Geoffrey C. Gould
WashingtonReturn to top