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The agricul tura l age was character izedby the exchangeof basic commoditiesthrough bazaa rs, wh ile the exchange ofgoods (and Increasingly, services)through shopping mallshasdefinedtheageing Industrial age. Though we arenow well Into the Information age, westili lack a comprehensive Infrastruc-ture for Information exchange. Theestablishment of an Infrastructure forInformation transportation will naturallylead to the creat ion of a secondaryInfrastructure for Information ex-change. We label this the 'Informationmal l', which could exist In severalplaces Inthe overall telecommunicationsystem. This article Is an examinationof the needed characteristics of suchmalls, andof the public polley choiceswhich haveto be madeto bring aboutand shapethis vital lnfrastructural ele-ment.Jagdish N. Sheth is Charles H. Kel is tadtP ro fe ss or o f M arke tin g at the E mor y B usi-ness School, Emory University. Atlanta,GA 30322, USA (Tel: + 1 404 727 7603;fax: + 1 404 325 0091). Rajendr a S.S is od ia i s A s si st an t P ro fe ss or o f M a rk et in gin the School of Business Administration,Geo rge Mason Universi ty, Fa ir fax , VA22030. USA (Tel: + 1 703 993 1835; fax :+ 1 7039931809).

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Jagdish N. Sheth and Rajendra S. SisodiaRapid advances in information technology are making it possible todramatically raise productivity levels around the world. Informationtechnology can free resources in two important ways: by replacing manyphysical assets (such as inventory) with information, and by reducingthe time and effort required to conduct everyday functions (such as theuse of electronic data interchange rather than paper invoicing). Theseand numerous other advances, however, are being held back bythe lackof a comprehensive, integrated infrastructure for information transportand exchange.Computing resources have rapidly become extremely powerful andaffordable, and the telecommunicat ions industry is in the midst ofhistoric technological and regulatory change, The information industryas a whole, driven by digital electronics, is evolving into a multimedia,multi-trillion-dollar global industry. Society cannot fully benefit frominformation technology, however, unless i ts power becomes widelyavailable. Accomplishing that requires an infrastructure - the crucialbridge that enables us to cross the gulf between technology and markets.Beyond a primary infrastructure to facilitate the production, storageand movement of information, we also need a secondary exchangeinfrastructure to expedite and enhance information transactions. With-out an adequate exchange infrastructure, the information market can-not function efficiently. Transactions will be costly, slow and infrequent,and buyers and sellers will lack ready access to one another. A highlysophisticated and versatile system for managing information exchangeand facilitating information-centred transactions will be necessary tohandle the exploding volumes of such economic and socia l activitywhich will occur in the near future.Within corporations, marketing managers have been responsible forbringing about the exchange of goods and services. Their activitiesrevolve around bringing about mutually beneficial exchanges throughmechanisms such as advertising (to create awareness and interest intheir offerings), personal selling (to interactively meet the informationalneeds of end users and intermediaries), physical distribution (to providecustomers with easy access to products and support services), pricing (toensure cost recovery and maximal matching with customer valuations ofproduct benefits) and a host of other similar activities.In conducting business in well-developed markets, marketers take thepresence of an exchange infrastructure for granted. The elements ofsuch an infrastructure include a sophisticated logistical system for thedistribution of goods, a transportation system which enables customersto reach stores easily, ubiquitous telecommunication services, financial

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The information mallservices to expedite monetary exchange, the availability of well-targetedbroadcast and print media, etc. Though such an infrastructure is nowwidespread throughout much of the industrialized world, its absence inother less developed markets can derail a marketing manager's effortsto facilitate efficient and profitable exchange.

Precisely such a situation exists today with regard to the burgeoningfield of information services. The lack of an adequate infrastructure forthe efficient exchange of information services is not confined to lessdeveloped countries; it is in fact a universal problem. Most developedcountries today have advanced telephony systems for voice communica-tions, and many also have fairly extensive (and often separate) systemsfor the t ransportation of text, data and video information. However,this does not comprise an information exchange infrastructure; it onlyprovides some elements of what is really needed.At the level of primary infrastructure, a consensus is now emergingthat we need a ubiquitous, publicly switched, inexpensive multimediabroadband network providing, as an ini tial and approximate target, agigabit of communication capacity to the end user. It is our contentionin this article that at the level of secondary or exchange infrastructurewe need to create better waysfor information providers and receivers tocongregate and efficiently conduct an enormous range of transactions.Such a system would give ful l expression to the communication andtransaction visions being articulated around the world today and intothe foreseeable future.The metaphor used in this article to describe the needed informationinfrastructure is that of an 'information mall' , which shares somecharacteristics with its natural predecessors - the old bazaars of theancient trading cities and the modern shopping mall.T he e vo lu tio n o f e xc ha ng e h ub sThe exchange of goods and services has been a central concern ofsociety for countless centuries. Humans realized centuries ago thatcreating a centrally located 'hub' for such exchange was the mostefficient way to organize such commerce. As a result, ancient civiliza-tions always flourished around cit ies rather than countries - Athens,Rome, Babylonia, Mesopotamia, etc, all city-based civilizations, werethe major trading centres of their time. Each had a naturaltransportation-related advantage around which it organized an elabo-rate system to facil itate trading. In the agricul tural days the naturaladvantage was usually access to water-based transportation - rivers andsea ports. Around that, an infrastructure was developed which becamethe local exchange' - the bazaar.A similar process in the industrial age resulted in the development ofshopping malls. The key transportation infrastructural element in thisprocess was the highway system. The 'anchor' of many of the earliestshopping malls was Sears. In the 1920sGeneral Robert Wood, the CEOof Sears, decided to expand the company beyond the farmers' market bylocating all new Sears stores near major highways. This decision hadlit tle to do with market segmentation, merchandizing mix or ease ofprocurement, factors which Sears' competitors concentrated on. Woodessentially bet on the future of the automobile, and as a result Sears

'Note that the same termino logy isused in never established downtown locations. Their enormous success in thetelecommunications. suburbs nearly destroyed downtown-based retailers such as F.W. Wool-

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The information mall

"Th is point was made by Rober t Kahn inap r es e nt a ti on e n ti tl ed ' B ui ld in g i nf o rma t io nhighways', at the Business Week-s po ns ore d c on fe re nc e, In fo rm a tio n H ig h-ways: Linking America for Interactive Com-munications, New York, 11~12 September1991 (transcript ava ilab le from JournalGraph ics ). This con ference (and a suc-ceed ing one in 1992) brought together alarge num ber of vis iona rie s and polic ym ak ers to d is cu ss th e in fo rm atio n in fra -structure of the future.3A key deSign ph ilosophy cen tral to thi sprocess is 'product integri ty ', a holisticn otio n th at e nc om pa ss es fo rm , fu nc tio nand the f it be tween users and p roducts,r at he r t ha n t re at in g p ro du ct c om po ne nt sa nd a tt rib ut es o n a s ta nd -a lo ne b as is . S eeK im C lark and Takah ira Fuj imoto, 'Thepower of product integrity', Harvard Busi-ness Review, Vo l 68, No 6 , November -December 1990, pp 107~118.

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worth, S.S. Kresge (which eventual ly followed Sears' example bylaunching K-Mart) and W,T, Grant. Montgomery Ward emulatedSears' strategy, and the two together became the dominant retailers ofthe age.In this arti cle we apply analogous criteria to the development ofinformation malls: the presence of a 'natural' transportation advantage(in this case related to information transport) leading to the creation ofahub where enormous numbers of buyers and sellers can easily congre-gate and where information exchange can be centred. Such hubs havesome defining characteristics, as discussed in the next section, whichmust apply to information malls as well.The elements of an exchange infrastructureAccording to Kahn, an infrastructure must be: sharable - i t must a llow for simultaneous access by many users; ubiquitous - it needs to be where you want it, when you want it; easy to use - i tmust beintuitive and require l it tle orno tra ining to useeffectively; cost effective - i t must be egali tarian and affordable to all .2In addition, an information infrastructure must be expandable andflexible, allowing for multimode access. Any infrastructure which doesnot meet all of these criteria will fail to serve its basic purpose: tofacili tate and expand it s own usage. These yardst icks can be used toevaluate competing infrastructure initiatives.Kahn also suggests that infrastructures can be thought of as apyramid, with a foundation, standards, substructures and definition atsucceeding levels. For an information infrastructure, the foundationrefers to the hardware supporting the infrastructure: networks, compu-ters and so on. Standards refers to the protocols for interconnectingnetworks, the operating systems. Substructure refers to the organizationof the infrastructure into sections or modules, and to generic distributedsystems for manipulating objects. Definition is analogous to end-userapplications - what people use the system to do.An exchange infrastructure has five primary aspects: physical, econo-mic, technical, social and support services. Table 1 summarizes thesecharacteristics, with illustrations from each of the three types ofexchange hubs.'Physical ' refers primarily to 'atmospherics' ; for a bazaar or a mall i tincludes the sensory aspects as well as the defin it ion of safety, Mostmalls are designed so that they look different than other places ofbusiness; each one has a distinctive decor and 'feel'. Some are modernand airy; others are old-fashioned and charming, Different kinds ofmusic play in the background. Bazaars had similar elements associatedwith them; some were raucous and bawdy, while others were seriousand businesslike. Designers of future information malls will similarlyhave to have a defining theme in mind in creating the malls . Given thepower of information technology, they will have enormous freedom indeveloping these 'virtual' environments.''Economic' has to do with the financia l s tabili ty and viabil ity of thesystem and i ts participants. It al lows for the matching of buyers andsellers, ensures liquidity and serves the purpose of time intermediationbetween needs and the abili ty to pay. In ancient bazaars it included

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The in.formation mall

Attr ibutes Genera l characteris t ics Information mallTab le 1 . Cha rac t e ris ti c s of b az aa rs . s ho pp in g m al ls a nd i nf or ma ti on m al ls .

Physical Atmospherics; safety( p er so n al a s w e ll a senvironmental)Capab i li t y t odotransactionsEconomic

T ec hn ic al S ta nd ar ds ; c on si st en cyin interfaces

Social Enjoyabil i ty ; humandimensionsSup po rt Sh ared facilities an dconveniences; sharedmarketing ef forts

Bazaar Shopping mallDist inct ive s ights , smells andsounds; theft prevent ion Un iq u e d ec or , f ee l a n dpersonal it y; mal l secur ity l oo k a nd fee l; system 'charisma':i n fo rmat ion secur it y and pr iv acyB aMI '; c ommon a nd s oundcurrency ; money lenders ; pawnshops

Mu l tip le paymen t op tions ;bil ling serv ices; credit cards Automatic a nd i ns ta nt an eo us b il li ngand payments ; e lec t ron ic f undstransfer; e lectronic negot ia t ions;automaticmalchingof buyers and sellersModes o f navigat ing ; ensur inginteroperabilfty; mult imode access (audio ,v ideo , w i rele ss , w i re l ine , na rrowband ,b roadband , t e xt -based , g raph ic a l, e t c) ;multi - system compatab i li t yCha t l ines ; common in te res t g roups ;e lectronic dat ing: interact ive games;hobbyist serv icesShared in fo rmat ion -hand ling andcommun ica tion resources ; t rain ing andhelp for new users ; d ispu te re so lut ion ;e lec t ron ic housekeeping se rvic es ;advertising

Doc ks h ad t o b e a b le t oaccommodate al l boats; certifiedw e ig h ts a n d m e a su r es ; commontrading practices

Consis tency in how to enterand le ave ; mu l timode meansof t ransport to mall

Lodging and boa rd ing ; f e st i va lsfor on e o r t w on i g h ts Restaurants; event- re la tedpromot ions: sen ior ci t izens'act iv it ies ; education; moviesShared utilities;restrooms; babychanging rooms; mall concierges;lost and found; parking; daycare;ma l ladve r ti s ing andspec ia lpromotions

Common grounds; p ro te c tionf rom wea the r; d ispu teresolution

"Beyond e na bl in g m on eta ry e xc ha ng e, in -f orm at io n m alls c an e xp ed it e e xc ha ng e v iac ompu te r -a s si st e d n ego ti a ti on (which ca nresult in w in-w in agreem ents w hich a rem or e d es ir ab le fo r b ot h p ar tie s than non-o pt im al c om pro mis es ) a nd t he e le ct ro n icmatching of buyer s and sell ers. Whenmade more intel ligenl lh rough fuzzy log icand other approaches, th is can be apowerful way 10 s peed up as well as im-prove transactions ( ie ach ieve a better f itbetween buyer and seller needs).

ensuring the integrity of precious coins or other forms of currency,providing for a system of barter, and housing moneylenders and pawnshops for those who needed them. In information malls this dimensionhas some interesting possibilities. Since information transactions occurwith great rapidity, and since inventory holdings are minimal, billingand payment can be instantaneous. Automatic electronic funds transferwilleliminate the need for costly intermediation by banks or credit cardcompanies."Technical' refers primarily to standards and interoperability: uniformpractices and operating norms which permit easy access and manoeuvra-bility for different kinds of users. Once they gain familiarity with thesestandards, users should also be able to function efficiently in all parts ofthe system. For a bazaar this meant something as basic as ensuring thatit had docking facilities capable of accommodating all the various kindsof boats that would arrive there. Italso meant ensuring consistency andaccuracy in weights and measures. For information malls the analogue isthat users should be able to navigate the system at will after learning itsbasics. It means that the mallshould support access via different systemplatforms, aswell as in different media. Just ascustomers can arrive at ashopping mall using several different transportation means, customersat an information mall should be able to gain access via audio, video ortext; they should be able to connect via wireless or wireline, narrowbandor broadband. The preferred mode of connecting may be via someinexpensive future multimedia device, of which AT&Ts Videophoneand Apple's forthcoming 'personal digital assistant ' Newton are thecrude predecessors. Consumers willmost likely use at least two kinds ofdevices to connect with information malls: a portable device withlimited functionality (analogous to a portable radio) and a desktop unitwith full functionality (analogous to a hi-fi set). Such multi-accessibilityis crucial to widespread acceptance and usage, without which noinfrastructure of any kind can be viable.'Social' is an important aspect of hubs. The social dimensions ofcommerce have existed since the bazaar. Most bazaars were held on aperiodic rather than ongoing basis, and always included one- ortwo-night festivals. They had inns as well as pubs and eating establish-

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The information mallments. Shopping malls have come to replace city squares as the primarymeeting place for large segments of society, particularly the young andthe elderly. Malls are also now positioning themselves as major enter-tainment centres, offering not only movies but also plays, concerts andspecial events; the 'Mall ofthe Americas' in Minnesota isa combinationshopping mall and theme park. They are also likely to add eveningeducational and hobby-related classes. For information malls, the socialdimension may well prove to be a crucial one. Limited experience thusfar with systems such as France's Minitel (a pioneering videotextservice) suggests that an important characteris tic of such systems isallowing people to connect with other people, rather than just withcompanies or professionals. Numerous levels of such interaction evolvenaturally, many completely uncontrolled and unstructured, while othersare organized around topics of common interest (see Appendix).

'Support' is needed primarily to handle shared concerns and needs.For a shopping mall these have to do with mall marketing activ it ies,tenant services and customer and employee conveniences. In an in-formation mall service providers would share many computing andcommunications resources. They would all be interested in recruitingand familiarizing new customers with the mall. Mall management mayalso be periodically called upon to mediate disputes between 'tenants',and may enforce rules of conduct for dealing with customers.

A virtual shopping mallEvery shopping mall has anchor stores which are full-line generalists,and numerous specialty stores. The lat ter are of two types: productspecialis ts (such as Crown Books and Egghead Software) and marketspecialis ts (such as the Limited and Bcnetton). Product specialis tsemphasize deep selection wi thin a narrow range of products, and awell-trained sales staff with a high degree of product expertise. Marketspecialis ts provide a range of products specifically geared to a well-defined target market. The Limited, for example, defines i ts targetmarket as young women from affluent families who are fashion-orientedas well as modern.Similarly, in an information mall full-line generalists will offer broad-based information services, eg successors to services available today,such as CompuServe, Prodigy, Dow-Jones, etc. In the future, AT&Tand local telephone companies will probably enter this category. Thesewould probably be complemented by product specialists (such asproviders of f inancial services or exchange forums for recipes) andmarket specialists (such as versions of Sabre for travel agents, corporatetravel offices and individual consumers, and the Lexis legal informationservice for lawyers).

5Kahn, op cil, Ref 2.

The versat il it y of i nformation mal lsInformation malls will be extremely powerful and versatile. They canexhibit the typically oxymoronic characteristics of the information age,being simultaneously vir tual (you can 'see ' things that are not reallythere) and transparent (you do not see some things which are there). ' Inother words, an information mall can readily make tangible the intang-ible, while shielding the user from much that isunfamiliar or irrelevant.The structure isenormously plastic, allowing different users to interactwitb it in completely different ways.

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Figure 1 . The ve rsa t il it y o f i nf o rma t ionmalls.

The information mall~~------~8

Information malls

Bazaars

Businesses ConsumersBuyers

Another aspect of versatili ty isthe broad range of customers who canbe served by an information mall. Agricultural bazaars were primarilyorganized to facilitate business-to-business exchange. Shopping mallsprimarily have households dealing with businesses. The informationmall willbe able to accommodate all types ofvendor--customer linkages,including customer-to-customer information exchange and transactions(see Figure 1). In shopping malls these used to be known as fleamarkets. Most malls actively discouraged on-site flea markets, sincethey saw them as competing with their primary service. Flea marketswere thus relegated to individual and neighbourhood garage sales. Hadthey been allowed to exist within malls, flea markets would probablyhave increased mall traffic considerably. Today the primary means ofcustomer-to-customer information exchange is radio talk shows; in-formation is shared by individuals calling in, and others responding toprevious callers. The enormous and growing popularity of this radioformat suggests that chat lines in information malls which serve a similarfunction will be major elements in their success.While shopping malls are in no imminent danger of becomingobsolete, they will be forced to change a great deal. Many malls havealready been forced to emphasize services at the expense of goods. Theyhave also greatly increased the range of social and entertainmentsactivities, making shopping malls much more than just places to shop.The arrival of information malls will cause a further transformation;many activities now performed at shopping malls willbe more efficientlyundertaken at the information mall . An important part of an informa-tion mall's identity will, infact, be that ofa virtual shopping mall; to theextent that such virtuality can effectively substitute for 'the real thing',information malls will supplant shopping malls.Activities in an information mallInformation in the mall will be in multiple forms: data, text, voice,images and video, and various combinations. The economic potential is

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The injormation mall

Figure 2. Existing information serv ices compared to the informat ionmall.

"This p hr as e w a s c oi ne d by t h e S i ngapo reg ov ern me nt to d es cr ib e it s p hilo so ph y o fp ro vid in g a la rg e n um be r o f g ov er nm en ts er vi ce s o ve r e le ct ro ni c n et wo rk s.7Microsoft has articulated a vision of 'in-format ion at your f ingert ips' , and hasstar ted t o build a lar ge digital library inanticipation of a future broadband deliverynetwork.

382

MinitelIDEAL

(Informati-on mall)

SabreNexi sLexis

ProdigyCompu5erve

Few ManyTransactions

enormous, Without an adequate exchange infrastructure, informationservices are already a $50 billion a year industry. Figure 2 compares theinformation mall with some existing information services on two dimen-sions: the number of participants and the volume of transactions whichtake place. Most existing customer-oriented services allow relatively fewtransactions, and have a small number of part ic ipants (relat ive to thegeneral population). The largest commercial players, such as Sabre, arecharacterized by a small number of participants (airl ines and travelagents for Sabre) engaging in a very heavy volume of transactions. Onthe other hand, France's successful Minitel has a relatively large numberof participants, but a comparatively small volume of monetary transac-tions. The information mall would clearly dominate and subsume all ofthese information services.When the industry is reconstrued in the broad terms envisaged here,the potentia l revenues are huge. Information malls will truly become'one-stop non-stop' service providers.? They willbe able to handle voicemail, storing and forwarding voice messages worldwide. They will allowfor customized newspapers culled from information sources around theworld and updated on a real-time basis. They willfuel the growing trendtowards work-at-home. They will permit home consulta tions with avariety of professional service providers, from physicians to lawyers toeducators. They will permit on-demand node-to-node or one-to-manyvideoconferencing (in the USA there are at least 60 separate videocon-ferencing networks in place now for education alone, requiring anenormous, wasteful and incompatible private infrastructure).The key activities in an information mall will include the following:Information. In the USA yellow pages alone is a more than $8 billionindustry today; add to that the value of instant access to multimediaencyclopaedias, the major libraries of the world, photograph banks, theart col lections of all the major museums of the world, and so on. Theimmediacy and uncompromising quality of high-speed digital transmis-sion will truly revolutionize information availability and utilization."The Library of Congress, with its collection of 100 million items, gets ascant 2000 requests for information each day, most of them internal.



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The information mallAccess through an information mall would increase this by severalorders of magnitude.Transactions. A major purpose of the information mall will be tofacilitate electronic shopping for goods and services. Virtual shoppingmalls will permit consumers to choose the mode of shopping they aremost comfortable with. Impulsive and visually oriented shoppers arelikely to want to 'stroll' down the various aisles of a virtual supermarket(which may look exactly like their preferred store or could be customdesigned by them) and click on their desired items. Others may placestanding orders and review them periodically. Over time, the applica-tion of more virtual reality technology will permit consumers toelectronically 'tryout' numerous products from their home.Entertainment. Numerous enterta inment options will be available ondemand to consumers. These will include movies in any language, audioprogrammes and television shows from around the world. Other formsof entertainment will include interactive games (including the possibilityof playing physical raquetball with a remote opponent), fantasy games,virtual travel to exotic locations and anything else that can be dreamedup by creative service providers.Education. As discussed earlier , shopping malls are selling less mer-chandize and more services; some are planning to offer evening classes.In an information mall the perfect infrastructure will exist to radicallyalter modes of teaching and learning. Students will be able to interactwith remote human instructors through videoconferencing; they will,for instance, be able to take French lessons from an instructor in Paris.This will probably lead to the emergence of a new class of superstars-outstanding professors from universities around the world whose know-ledge and communication skil ls could easily be tapped through theinformation mall. Students will also be able to learn by interacting withcomputerized 'agents' who would guide them through various techni-ques and procedures. A great deal of distance learning already takesplace without the benefi t of such an infrastructure. When one doesbecome available, the potential is enormous.Social interaction. Shopping malls have sofar not done a very good jobof facilitating social interaction. Information services have an importantinherent social dimension which users find irresistible. Myriad possibil-ities exist as to the ways in which they wil l be used to increase socialinterchange.

8Kahn, op c it , Ref 2.

Robert Kahn has suggested that there is more money to be madethrough infrastructure than from most high-technology investmentscombined.f It is impossible to predict a priori what share of transactionseach of the above activities will account for when information malls arein place. As we have said earlier, much of what will happen will beserendipitous; more often than not, predictions are confounded by thepeculiar dynamics and economics of information-centred exchange. It issafe to say, however, that information malls will become a majoreconomic force in the future, both through information exchange andthrough facilitating the exchange of all kinds of goods and services.

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The in fo rmat i on ma l l

9Estimatesofthe costof creatinga digitalbroadbandcommunicationystem(centralto theconceptofthe informationmall)forthe USArangefrom$100 to $250 billion.W hile th is r ep re se nt s a la rg e o ut la y, con-siderthatthecostofstandardizinglectricaloutletsandplugsacrossEuropesbeingestimatedat $125 billion!urelyhesociet-a l a nd c om pe tit iv e b en ef its -o f a n in fo rm a-tio n in fra struc ture a re w orth m ore . S ee'Socketto them', Economist , 7 November1992, p 74.1Louis J. R utigliano of Am eritech hasp ro po se d a s tr on g r ole f or t he g ov er nm e nti n b r in gi ng a bo ut a b ro ad ba nd c ommun ic a-t io n i nf ra st ru ct ur e. S ee 'R e th in kin g p ub li cpolicyortheglobalinformationconomy',paperdeliveredo B us in es s W ee k confer-enee, InformationHighways:LinkingAm er ic a f or I nt er ac ti ve C ommun ic at io ns ,11-12 September1991,"AI Sikes,Chairmanof the FCC, hascommentedthat ' the user . .. or theprospective users . . . up until now havereallybeen bitplayersinthisdrama,andtha t's to o b ad ': se e 'A me rica 's s ta ke : o urn ex t f ro nt ie r' , k ey no te a dd re ss , BusinsssWeek conference,InformationHighways:LinkingAmericafor Interactivecom-munications,1-12 September1991.384

T h e i m pa ct of information mallsRecent Federal Communications Commission (FCC) decisions allowingtelephone companies greater freedom to enter the information andvideo delivery businesses should accelerate the introduction of electro-nic malls. However, it still appears that the USA is likely to lag behindother countries, since most do not have the political debates andregulatory tangle that exist here. Many countries around the world alsosee the creation of an advanced information infrastructure asa means ofleapfrogging over developed countries.The most likely candidates in the industrialized world for the earlyintroduction of an infrastructure to enable information malls are at twoextremes of planning: Japan and the UK. The best-orchestrated effortwill probably be mounted by NIT, with their clearly articulated visionof a 'visual, intelligent and personal' (VIP) network. At the otherextreme is the UK, where there will be no single company, but afree-for-all market.Though the investment required to establish them islarge, the payofffrom information malls willbe immense." An information infrastructurewill improve economic performance across all indust ries, leading toincreased international competitiveness. While business will certainlybecome more productive, we will also see significant improvements inthe quality and productivity of education and health care - twoenormous sectors of the economy whose costs have been rising rapidly.The implications of widespread working at home, shopping at home,videoconferencing and reduced demand On transportation systems willbe felt throughout society. It will virtually open the nation andeventually the world. The advent of information malls, and the resultingbroadening of the industry's markets, willstimulate the further develop-ment of the information industry, leading to an industrial bonanza overthe next quarter century .'0 .Government clearly must playa significant role. Previous infrastruc-ture milestones (such as the railroads, electrification and civil aviation)were all aided by the government . The USA now has three very largeand successful network providers: broadcast, cable and telephone.'!Rather than merely seeking compromises between positions advocatedby rival industry groups, the government must fashion a clear vision ofwhat is needed (NIT's 'VIP' vision presents an admirable model) ,and then create incentives and regulatory policy to ensure than it isrealized within the desired time frame.The US government has long supported high-bandwidth networksconnecting scientific facili ties. But those serve relatively few users(perhaps hundreds of thousands), with well-established requirements.While there are logical reasons for proceeding in this fashion, this'trickle-down' approach is simply wrong when it comes to informationtechnology deployment into the infrastructure, There are already over60 million other PC users, representing one in four homes. Theinformation infrastructure must be built for this larger market; it mustnot be unduly constricted through myopic assumptions about theamount of bandwidth 'ordinary' consumers need.

It i s possible, and even desirable, that more than one industry mayrespond to government initiatives and build an information exchangeinfrastructure, More likely, there will be strategic alliances betweenhitherto divergent players. Clearly, satelli te and mobile media offerphysical and economic advantages for many voice, video and dataTELECOMMUNICATIONS POLICY July 1993


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Figure 3. Policy impacts 01 the in-formation mal l.

12An interesting example of this is theFCC-mandated requirement of SOO-number port abi lity; to comply wit h t hisedict , the industr y had to come up wit hseveral technolog ical break throughs insw itching and speed dep loymen t o f S ig 'nal ing System 7.13Th is is also know n as the concept o f'm e gam ar ke ti ng ' .


Customers,stakeholders

Technology,standards

services, There may eventually be more than one universal publicswitched video network, and such a competitive market willspur rapidadvances in the quality and scope of services available to users.The public policy imperativeThough the information mall is needed (and for reasons of globalcompetitiveness, it is needed sooner rather than later), we have torecognize that market processes are not the only solution. The sideeffects of unfettered market processes are not always desirable. In-formation is central to the functioning of developed societies; theinformation mall will be such a powerful mechanism for informationexchange that it can lead to undesirable consequences, asdetailed in thenext section. The government clearly has an important role to play insafeguarding individual rights and mitigating potentially negative im-pacts on society. Primarily, it must address four key issues: individualand organizational privacy, information security, controlling the intru-siveness of information technologies (crucial with an 'anyt ime, any-place' technology) and assuring universal access (to prevent the creationof information 'haves' and 'have-riots").There ismuch to be gained by the government playing a more activistrole in this area. By using publ ic policy to intervene in the market, thegovernment can help remove four bottlenecks that result from anexclusive reliance on market processes (see Figure 3). Most directly, itcan use its regulatory authority to move the industry in desireddirections. It can also playa lead role in getting industry to establ ishtechnological standards, and can spur the development of key compon-ent technologies through targeted incentives. 12 Thirdly, the governmentcan playa role in public education, of individuals as well as industryplayers. This iswhat Singapore, for example, does very well, using themedia to build a consensus of public opinion around new tnttlatives.'?The government can also accelerate adoption by mandating technologyutilization as a part of all public education. Finally, government can alsoplay a role in changing the myopic mindset that seems to pervadevarious sectors of the information industry. Rather than continually

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The in fo rma ti on ma ll

14CurrentJythere is much concern aboutthe- changes wrought on small communi-ties when Wal-Mart moves in. There arenow several consulting firms whose bust-ness is based upon advising small localmerchants how to react to Wal -Mart 'sarrival.t 5Quoted by John Eger at the Bus in essWeek conference cited earlier.16As Robert Reich has suggested. theglobal economy is characterized by ex-tremely fluid movements of rawmaterials,capital and tectmological know-how; theonly elements which cannot flow freelyacross borders are people and infrastruc-ture. The latterelements are thuscrucialinattracting the former, and are the primarydrivers of a nation's competitive advan-tage.

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fighting turf battles among themselves, industry participants need torecognize that their greater good willcome from cooperating in bringingto reality a shared vision of a sophisticated information society. The keyconcept in this framework is thus convergence - if the government canhelp converge the suppliers, customers, technology, regulatory bound-aries, etc, onto a common vision, it willgreatly speed up the transition.A two-edged swordEvery new technology (or economic activity in general) has some sideeffects. The negative social consequences of the old bazaars weresignificant: trading posts, while they were great for the world as placesof exchange and commerce, usually destroyed the local native culturesurrounding them. The same was true with shopping mails; theydestroyed local businesses and caused significant economic and socialdisplacement in the surrounding area.!" The information mall may beeven more damaging, because it is far more versatile ('anytime,anyplace ') than any commercial or socia l insti tut ion before it. It willbring about the truly global village, and in the process native identitiesmay be sacrificed, at least to a degree. Information mall s wil l alsodirectly and tangibly affect the well-being of shopping malls , to theextent that transactions are taken over, and to the extent that somesocial needs can be met by the information mall. Retailing accounts for$3 tri ll ion out of the $6 tri ll ion US economy, and the information mallwill definitely shrink and reshape it . Developed countries, whereretailing is a greater component of GNP than upstream activities, willbemore affected. Significant economic and social displacement will takeplace, even more than that induced by the advent of shopping malls .As detailed in the Appendix, a virtual community experiment such asHabitat, even with its crude technology (slow speed and poor graphics),proved to be a power ful and immersive medium. In the future, withHDTV and photorealist ic virtual reality, such fantasy communitiescould become all too real. While society at large must wrestle with thebroader freedom-of-expression and freedom-of-congregation aspects ofthe information mall, its sheer power (and the increasingly indistiguish-able line between the virtual and the real) call for, at the very minimum,a degree of self-regulation. Services such as Prodigy and others alreadyhave such guidelines. The information mall could borrow guidelinesfrom the publishing industry, and the communications industry (somerules regarding the public airwaves are strictly enforced by the FCC). Inthe end, public policy and market processes must come together; bothare equally important in this case.Accelerating the inevitableArthur C. Clarke, the well-known author and futurist, has observed thatwere it not for the telegraph and the rail roads (which provided thecommunication and distribution infrastructure for the industrial age),there probably would not be a United States of America . 15 It iswidelyrecognized today that a nation's competitive advantage derives in largemeasure from the quality of its infrastructure.!" increasingly, the'electronic infrastructure ' is becoming even more important than thephysical infrastructure.This reality has been recognized by several countries. For instance,



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1 7 R aj en dr a S . S is od ia , ' Si ng ap o re i nv e st si n t h e n a ti o n- c or p or a ti on ', H ar va rd B u si -n e s s R e vi ew , V ol 7 , N o 3, M ay -J un e 1 99 2,pp 40-50.18Some have described this as ' pa v in g t h ecowpaths' , F or a g oo d o ve rv ie w o f w or kp ro c es s r e- en gi ne e ri ng . s e e M ic ha e l H am-mer , 'Reeng ineer ing work:don ' tau tomate ,obliterate', Harva rd Bus i ne ss Revi ew, Vo l68, No 4, July-August 1990, pp 104-112.

The information mallJapan has committed itself to spending $250 bil lion Over the next 20years to rewire the nation, and projects that 30% of its GNP willcomefrom services made possible by that broadband network by 2015.Singapore has embarked on an ambitious initiative to create an 'intelli-gent island ' through extensive networking and the development of aUbiquitous broadband communications system. The country has clearlyarticulated a vision of a fully networked society in which informationtechnology will be deployed to the fullest extent in a highly planned,orchestrated effort to maximize its societal and competitive impact. 17Clearly, while infrastructure may appear to be a somewhat mundanematter, it is anything but that in today's world. Even as countries moveto repair their crumbling physical infrastructures they must focus on theurgent need to formulate a public policy that willresult in the creation ofan advanced electronic infrastructure. This is too crucial an issue to beleft purely to market processes; governmental leadership is essential insetting priorities and providing incentives to ensure that developmentproceeds in the right direction and at the needed pace.In the USA economists and other researchers have noted for yearsthat the enormous investments that companies have made in informa-tion technology (now accounting for over 50% of capital spending) havefailed to yield any significant improvements in white-collar productivity.Robert Solow, an economics Nobel laureate from MIT, has dubbed thisthe 'Productivity Paradox' . On closer analysi s, one f inds that theaggregate numbers are somewhat misleading; the reali ty is that somecompanies have achieved dramatic results, while others have seen noimprovements at all. The former have achieved their success by doingtwo things: first , they have ' reengineered' many of their businessprocesses to take advantage of available information technologies,rather than simply using the technology to automate exist ing ways ofdoing business.P A second and related way in which companies haveleveraged their information technology investments is to invest evenmore in infrastructure-like facil ities. Any new technology can behamstrung by the unavailability of an adequate and suitable infrastruc-ture. For instance, some companies have established high-capacityprivate communication networks. Others have installed VSAT satelliteson rooftops to facilitate communication.The costs of creating infrastructure are enormous, and usually cannotbe borne by any single company on the basis of its own internalrequirements. Nor can a single company afford to maintain and upgradean infrastructure once it is built. Infrastructure costs cannot be loadedonto transaction costs without significantly depressing the demand.Some companies create a limi ted infrast ructure for their own usebecause none exists, and the market is wil ling to pay for the highermargin because of a lack of choice (ie they are a monopoly provider) ;this is a very expensive solution that very few companies can even affordto contemplate.Companies that create such an infrastructure eventually begin to selli ts use to others. In the industrial age, industries such as minerals andmining created the basic infrastructure of the railroads, which soonbecame the transportation mode of choice for freight as well aspassengers. American Airlines' Sabre reservation system started out asa means for travel agents to make bookings on American Airlinesflights, but has grown to include all airlines, hotels, car rental companiesand so on.

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1"Ihls d ile mm a is d es crib ed in d eta il b yKahn,op cit, Re f 2.

In the physical world this is analogous to a manufacturer not onlysetting up retail stores to display and sell its products, but also roads totransport people and products to that store, a bank to handle financingarrangements, a communication system, and soon. Most companies, ofcourse, lack the resources (as well as the vision) to be able to createtheir own infrastructure. As a result they are only able to extract afraction of the value that is inherent in their information resources.Any economic system isconstrained by its weakest links; consequent-lythe linking of multitudes of islands of information technology througha comprehensive information infrastructure will have a dramatic impacton raising productivity levels throughout the system. While any com-petitive advantages accruing to early-mover, 'private infrastructure'companies will vanish as a result , the aggregate impact will be a muchhigher plateau of performance throughout the economy.Bringing such a system to fruition, however, is impossible withoutcoordinated and visionary public policy actions. The telecommunica-t ions industry does not have the incentive to provide such bandwidthunless the computer industry is able to generate or receive informationat such rates; by the same token, the computer industry is wary ofdeveloping such capabilities unless facilities exist to share them overlarge distances.!"This dilemma can only be resolved through the cata lytic effects ofpublic policy. Rather than merely adjudicating between the various rivalindustries seeking to define and dominate the future infrastructure,government must play a more visionary role: that of determiningnat ional interest s and facili tat ing a coordinated movement in thatdirection. In all of this they must represent the interests oftheir ultimateconstituency - the millions of end users whose lives and livelihoods willbe affected by the presence or absence of an advanced informationexchange system.

AppendixThe Habitat experiment and its Iessons'"Habitat is a large-scale many-usergraphical virtual environment that wascreated by Lucasfilmin 1985.It wasinitiallydesignedto be an on-line en-tertainment medium in whichpeoplecould meet i n a v ir tu al environment toplay adventure games. Users, how-ever, extended the system into a full-fledgedvirtual communitywitha uni-que culture; rather than playingpre-scripted fantasy games, they focusedon creating new lifestyles and utopiansocieties. 'Avatars' (the term used todescribe the virtual figures on thescreen) could move around, pick up,manipulateandput downobjects,ges-ture andtalk (theirwordsappeared ina balloonabovethe figure).TheHabi-

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tat world was inhabited by a largenumber of objects, such as ATMs,vending machines, weapons, drugs,doors, decorative knick-knacks, magicwands,teleport booth for quicklong-distance transport, etc. As anentertainment-oriented cyberspace,Habitat provided participants theopportunityto get marriedor divorced(without real-world repercussions),start businesses (without riskingmoney), foundreligions(withoutreal-world persecution), murder others'avatars (without moral qualms), andtailor the appearance of one's ownavatar to assume a range of personalidentities(eg moviestar, dragon).Justas SIMNET enables virtual battles,

Habitat and its successors empowerusers to create art if icial societies .What people want from such societiesthat the real world cannot offer ismagic, such as the gender-alterationmachine (Change-o-matic) that wasone of the most popular devices in theHabitat world.Social scientists are discovering

more about utopias bystudyingHabi-tat and itssuccessorsthanthey didbyresearching communes, which weretoo restricted by real-worldconsidera-tions to meaningfullymirror people'svisions of ideal communities. Givingusers magical power opens up learninginwaysthat developersare just begin-ning to understand. As with anyemerging medium, at first traditionaltypes of content are ported to the newchannel; then alternative, uniqueforms of expression- like Habitat -are created to take advantage of ex-



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panded capab il it ies for communica-tion and education.In building the world, the engineers'conce it tha t a ll things could be plan-ned and then implemented accord ingto speci fica tions proved to be a fa lla-cy. As they discovered, 'Detailed cen-tral planning is impossible; don't even

t ry . .. The organ ism wil ldo whateverit damn well pleases.' The developersthought they were game designers;they ended up be ing more l ike cruisedirectors.

Habi ta t i snow known as Quantum-l ink' s Club Car ibe, and has a 'popu la-tion' of about 15 000. A technicall y

T EL EC OMMUN IC AT IO NS PO LIC Y July 1993

The information mallmore sophisticated version, called Fu-jitsu Habitat, is operational in Japan.

.oSee C. Mo rningstar and F .R. Farmer ,'The lessons of Lucasfi lm's Habitat ', in M.Benedict, ed, Cyberspace: First Space,MIT Press, Cambridge, MA, 1991, pp 273-302.

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the information mall

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