North American technology has long tended to exert a form of centrifugal force on markets in the rest of the planet. With the glaring exception of mobile communications (and even here the likes of Qualcomm might beg to differ), the combined output of Microsoft, Intel and Cisco has more or less shaped the industry that we see today, regardless of where in the world we are.

While these suppliers of hardware and software have prospered in a global sense, the region’s operators have become commensurately inward looking. There was a time when any global investment opportunity in telecoms would be chased by US carriers such as AT&T, MCI, Sprint and WorldCom alongside a host of regional Bells such as Ameritech, NYNEX and US West.

That scramble for overseas assets was in part down to the strict regulatory conditions facing these carriers in their domestic markets. It was also a way of employing surfeits of cash to gain insights in more liberal markets outside the US. Since constraints in the home market were lifted, most US telco international investments have been repatriated and used for an extended cycle of consolidation.

Overseas assets, especially in Europe and Latin American, have been sold off. To their credit, most US telcos have got the timing of such disposals more or less right.

Domestic consolidation still has some way to go. Pending deals between Verizon and AT&T or SBC and MCI rumble on along the regulatory road. There is still scope for fixed-mobile consolidation (or, more intuitively, de-consolidation) which is really not complete. There thus seems to be little prospect of expansionist investments by North American telcos in the near- to mid-term. For the time being, of course, US-based private equity concerns may fill the investment gap.

So is the outlook for US manufacturers and suppliers so different? They may occupy the summit of technology development right now, but can they sustain that position? Maybe not. The ‘Wintelists’ and other market-formers such as Qualcomm, Cisco and Oracle may be on the verge of acknowledging the fact that a ‘Made in USA’ sticker is not some inalienable kitemark in the world of global technology.They face serious challenges from other parts of the world (notably from China and India and far less so from Europe) and for the time being are set to invest in these rivals rather than attempting to take them on.

One especially creaky floorboard on the base of North America’s international technology hegemony is the Internet. If the domain registration function of ICANN is passed to a world body, then what is arguably the platform for US domination of emerging technologies will be removed. Since the former should happen at some stage, so will the latter.

Not a grim picture, therefore; but not a rosy or triumphalist one, either. In the end, it may come down to whether the US economy can strengthen and provide the momentum upon which sectors such as the information industry depend for confidence and growth.

Rights, wrongs and Richter scales
Techtonix scale/short term: 5/10. Inward-looking telcos drag back buoyant technology developers.
Techtonix scale/mid term: 5/10. New technology companies compensate for the decline of ‘old technology players’.
Techtonix scale/long term: 7/10. New technology companies and resurgent operating sector spur international growth.
Jim Chalmers

Tomorrow: Africa; cry the beloved continent.