Robert W Campbell - Soviet And Post-Soviet Telecommunications: An Industry Under Reform

An Industry Under Reform

Robert W. Campbell

First published 1995 by Westview Press, Inc.

Published 2019 by Routledge
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ISBN 13: 978-0-367-28813-6 (hbk)

THE TELECOMMUNICATIONS SECTOR constitutes a vital infrastructure for a modern society. It is part of the working mechanism of a decentralized, flexible, and dynamic market economy. It also serves as the foundation for a pluralistic political system with a government accountable to the public. The crucial role of communications is increased by synergistic interaction between globalization of economic processes and the continuing technical revolution in information processing and communication. One of the most revealing indicators of the inability of the old Soviet system to attain its goal of matching the performance of the advanced market economies was its neglect of telecommunications. The sector was always treated as an orphan, devalued because, in line with a peculiar Marxian notion, it was not considered part of "material production" and was starved of attention and resources.

If the reforms in the former USSR and the other economies that emulated its political and economic system are ever to succeed, there will have to be a revolution in telecommunications. Telecommunications is the bedrock technology for handling information transfers. Its importance is much enhanced, of course, by the advent of the computer, with the rapidly growing need for the capacity to exchange information among computers. Indeed, in the emerging information age the distinction between computers and telecommunications is disappearing. The hopes of the reforming socialist societies for entering the information age will depend as much on raising the capacity and improving the technical level of the telecommunications sector as on mastering the computer.

Western students of the Soviet system, mirroring Soviet priorities, devoted little attention in the past to the telecommunications sector. No general systematic study of it exists in the Western literature on the Soviet economy. But even limited acquaintance with telecommunications as it existed in the prereform period and the experience of foreigners as they begin a more intimate interaction with those societies make it clear that the inherited system is totally inadequate for a society that has aspirations to be an industrial superpower. In the middle of the 1990s, the telecommunications sector in the successor states of the former Soviet Union is technologically backward, has too little capacity to meet the telecommunications needs of a modern society, and is too thin to tie the society and the economy together.

This condition has grown out of a long history of neglect and will not be quickly overcome. But during the Gorbachev years, the inadequacies of the telecoms network came to be well understood and acknowledged. Soviet planners during those years established ambitious goals for expanding and modernizing the sector's technical base. As reform has quickened in the post-Soviet period, reform of this sector has attracted increasing attention. In the general reform of the economic system being attempted throughout the former Soviet Union, telecommunications is to be both an instrument and a beneficiary of reform. Progress toward the institutions and norms of a modern societymarket-based pricing, openness to the world economy, more dynamic R&D and innovation, an appropriate mix of autonomy and cooperation among the former Soviet republics, a reasonable balance between civilian and military prioritieswill both require and stimulate telecoms reform.

But improving telecommunications will also depend on reforming the policy and administrative frameworks for managing the telecommunications sector itself. In the traditional Soviet system, telecommunications was organized in the classic mold of a government-operated post-telephone-telegraph monopoly (often described as the PTT), with a unified administration under a USSR Ministry of Communications. As the rest of the economic environment changes, so should the policy approach to the telecommunications sector. There are many alternative models around the world for managing a society's telecommunications sector, with great variety in such dimensions as the degree of privatization, the amount of monopoly that is maintained, openness to the outside world, the extent of regulation, and the forms and instruments of regulation. Worldwide, the most recent trend has been toward more privatization, less regulation, and more reliance on competition as the method of control. Growth in the scale of traffic, increasing product heterogeneity, and rapid technical change have undermined the old idea that telecommunications was a classic natural monopoly. This trend will inevitably affect telecommunications policies and systems throughout the former communist world as well. The reform of telecommunications is well under way in a number of the former socialist countries, though the shift started later and has thus far been less thoroughgoing in the successor states of the USSR than in Eastern Europe.

The aim of this book is to describe and interpret the telecommunications system and telecommunications policy in the former USSR against the background of current world experience and to evaluate progress toward a more effective structure in the era of reform. The central idea is to relate the performance of the sector to the organizational and regulatory variables that affect that performance. Since the system is in transition at this point, it seems indispensable to look at the past, present, and future. Given the longevity of the telecommunications plant and the ingrained habits of the vast bureaucracy that administers it, the legacies of the past will not soon be overcome. In the future the environment will be different, but the general context of the economic mechanism in which telecommunications is to operate is still quite unpredictable and many issues of telecoms policy are still to be resolved. What can be done at the present time is to develop a more complete background study that will enable us to understand the baseline from which the reformers are starting, to assess progress so far and to evaluate some of the alternatives the telecoms authorities are contemplating.

is a general overview of the sector, describing its organization, size, network structure, some aspects of its technology, the quality of service offered, and so on. Since the sector has been undergoing rapid change, it is difficult to pick a precise date for this baseline snapshot, but in general I want to describe telecoms as it existed in the second half of the 1980s in the country that was still the USSR. The USSR Ministry of Communications was a very large organization managing a huge physical system, with a long history and a great deal of behavioral and technical inertia built into it. We must have this heritage in mind for some perspective on its condition today and its ingrained characteristics. Many of the issues laid out in the overview of the past are taken up in more detail in subsequent chapters.