Commerce Official on U.S.-China Information Technology Cooperation
U.S. Department of Commerce
International Trade Administration
Assistant Secretary of Commerce Nicole Y. Lamb-Hale
U.S.-China Information & Communications Technology Development
Forum
Thursday, June 7, 2012
Dallas, Texas
As prepared for delivery
Thank you, Grant, for your kind introduction. I want to start by welcoming
our Chinese guests, led today by Director General Zhang. We are so glad you
could make the trip today.
I also want to thank TIA and USITO for organizing today's event, along with
their Chinese partner, the China Academy of Telecommunications Research.
These organizations have long been valuable partners for the Department of
Commerce. USITO was formed by leading high-tech trade associations, including
TIA, in 1994 with seed funding from the Market Development Cooperator Program,
administered by my unit at the Department of Commerce. The goal of the program
is to establish partnerships between the International Trade Administration and
industry groups in order to enhance the global competitiveness of U.S.
industries. While USITO is now entirely funded by its five parent associations,
it remains a model of what the Market Development Cooperator Program was founded
to accomplish. The organization is a crucial interlocutor for both the Chinese
and U.S. governments on information and communications technology, or ICT,
issues of mutual importance. Along with its parent organizations and Chinese
counterparts, it has played an invaluable role in supporting the U.S.-China
Joint Commission on Commerce and Trade, or the JCCT.
The JCCT is the one of the primary vehicles for bilateral exchanges on
trade and commercial issues, and we are heavily dependent on industry for its
success. Today's event is part of a robust tradition of cooperative activities
organized through sector-specific JCCT working groups, such as the Information
Industry Working Group, or IIWG, which is chaired by the Department of Commerce
and the Ministry of Industry and Information Technology. Since 1994, we've used
the IIWG and its forerunners to better understand our mutual challenges and
opportunities in the ICT sector, and to promote business relationships and trade
between our companies. I'm confident today's event will contribute to these
goals.
I'm very pleased to be here speaking on the important topic of ICT
development in China and the United States, during such an exciting time for the
ICT sector in our two countries. Today's agenda has a robust line-up of
speakers who will talk about the myriad changes happening in the ICT
world. It is clear to me from my work as a trade official at the Department
of Commerce that the rapid pace of technological change, level of complexity,
and intertwined development cycles for new products and services will only
increase the importance of our cooperation on trade and ICT issues. It is also
clear that they will create new opportunities for companies and consumers in
both of our countries.
China and the United States are two of the world's most important ICT
markets, and nowhere is this fact more apparent than in the wireless
sector. Combined, there are over 1.2 billion mobile subscribers in the two
countries. Moreover, we are increasingly facing similar challenges. Only five
years ago, the world had never heard of a smart phone. Now analysts predict that
mobile Internet traffic will exceed traditional, computer-based traffic by
2015. The annual growth rate for global mobile data traffic between 2008 and
2014 is estimated to be 108 percent. It is doubling every year and it is not
expected to slow down anytime soon. In the United States, we expect that
spending on wireless data services will nearly double during the next four years
to $144 billion in 2014, up from $74 billion in 2011. This explosion in demand
for data services is driving demand for faster, smarter equipment both in the
network and in consumers' hands.
U.S. carriers were among the first to grapple with the tremendous strain on
their networks from spiraling mobile data demand. When the iPhone was
introduced on AT&T's network in 2007, data usage skyrocketed. According to
the carrier, it grew 20,000 percent in the last five years. The introduction of
game-changing smart phones and the associated services they spawned drove
investment in better networks. AT&T invested over $50 billion in
improvements to its network between 2007 and the end of 2010.
The introduction of smart phones and tablets has also created a new
industry surrounding mobile applications. A recent study commissioned by
TechNet, a non-profit network of executives from the high-technology sector,
estimates that there are approximately 311,000 jobs in the 'App Economy' in the
United States alone, and that is before you account for any spillover
effects.
With the introduction of the iPhone in China and more handset makers
debuting new smart phones and tablets there, I know Chinese carriers will be
facing similar challenges and opportunities. In fact, earlier this year, China
began exceeding the United States in the number of new Android and Apple smart
phones and tablets activated each month. By the end of 2011, China had become
the second largest mobile application economy, as measured by the number of
mobile application sessions per month, behind only the United States. This
statistic is even more remarkable when you consider that, at the beginning of
2011, China ranked 10th.
Governments undoubtedly have a role to play in addressing the challenges
created by increasing data usage by making more spectrum available for use by
the wireless industry. That's why the Obama Administration launched the 500
megahertz initiative in June 2010. Our goal is to make an additional 500
megahertz of Federal and nonfederal spectrum available over the next 10 years
for mobile and fixed wireless broadband use. However, we know that spectrum is
ultimately a finite resource that needs to be used more efficiently. Advanced
technologies like those developed by the companies in this room will ultimately
provide the solutions carriers need to offer their customers more capacity at
higher speeds.
Another emerging area of importance for China and the United States, and
indeed the entire world, is cloud computing. While cloud computing itself is
not a new technology as companies have been renting on-line capacity for a
while, its widespread deployment is drastically changing the ICT landscape.
Cloud computing has transformed the means by which a wide range of ICT (or
ICT-enabled) products and services are consumed, lowering costs and increasing
efficiencies for consumers and businesses alike. By outsourcing applications to
the cloud, companies can share computing resources and allocate those resources
more efficiently. The cloud also allows companies to make better use of a
mobile or distributed workforce and interact more efficiently with customers and
partners, while still managing their security needs.
Small companies are accessing computing resources that were once
cost-prohibitive to all but the largest corporations and governments. For
example, an Oregon-based business services firm that provides governance,
risk-management, and compliance services deployed a cloud-based customer
relationship management system with the goal of improving efficiency in its
client services. It was able to replace a high-touch model relying on
agent-client interaction with a cloud-based solution whereby the client received
service through a web-based portal into the company's cloud service. It reduced
client service interaction by 30 percent, creating savings of more than $300,000
a year, while still maintaining a renewal rate of more than 98%. In another
example, a technology equipment company in Alabama used a cloud system to
increase its sales efficiency, decreasing the amount of time required for
contract approvals from several weeks to 24 hours. It was also able to improve
engage
ment with its partners, resulting in a 4 percent increase in sales through
resellers in the first year. Cloud computing is also having positive impacts on
the broader economy. According to an International Data Corporation study
commissioned by Microsoft, cloud computing helped organizations around the world
generate more than $400 billion in revenue and 1.5 million jobs in the last year
alone.
The cloud has also facilitated new analytical and research possibilities by
enabling governments, academic institutions and businesses alike to store and
process ever increasing amounts of data, or 'big data,' as it is generally
known. As with the increase in mobile data traffic, cloud computing and big data
activities will place new demands on communications networks as computing is
moved to the cloud and becomes ever more complex.
Moreover, the business opportunities (and let's not forget trade
opportunities) presented by cloud computing are astounding. Global revenues
from cloud computing are expected to double from $68.3 billion in 2010 to $148.8
billion in 2014. Even as cloud computing is reducing costs for computers and
services at the company level, lower costs are spurring demand for new
applications and services and corresponding investment in infrastructure as a
result. Demand for these technologies will increase data transmission, usage
and storage needs, leading to investments in servers and networking equipment
for data centers, as well as higher bandwidth network connections for both
consumers of cloud services (particularly at the enterprise level) and the data
centers that host them.
I am pleased to report on our recent bilateral cooperation in this
area. We are happy to be working with China on issues related to cloud
computing in several forums. At APEC, we developed a system of voluntary cross
border privacy rules, which will create a crucial foundation for global cloud
computing. Our leaders endorsed this system in the 2011 APEC Leaders'
Declaration. The Obama Administration highlighted the APEC system as an example
of international frameworks that promote interoperability and portability while
preserving privacy protections in our Blueprint for Data Privacy, released in
February of this year. In April, the Department of Commerce and MIIT organized
a cloud computing seminar in Beijing, fulfilling a 2011 JCCT commitment. This
successful event drew over 150 participants from Chinese and U.S. industry and
government. Participants identified areas for future cooperation, such as
standards and promoting trust in the cloud computing model, that will promote the widespread adoption of cloud computing. And finally, I
understand that the delegation here today also participated in the National
Institute of Science and Technology's 5th Cloud Computing Forum and Workshop in
Washington, D.C. earlier this week. All of these events have a public and
private sector component and advance our cooperation on both policy and
technical issues supporting the deployment of cloud computing, and we are
looking forward to continued cooperation.
The rapid changes in the ICT sector have had a monumental impact in the
trade arena. Just as faster networks, better equipment and new business models
have changed the way consumers and enterprises use products and services, they
have also changed the way these products and services move around the
world. Data from the United States is demonstrative of this trend. According
to a recent presentation by the U.S. Bureau of Economic Analysis at a colloquium
hosted by the Coalition of Service Industries, the share of digitally-enabled
services in total U.S. exports increased from 45 to 61 percent between 1998 and
2010. Similarly, the share of digitally-enabled services imports grew from 34
to 56 percent. Clearly, digital trade is changing the way we do business.
Fortunately for the group gathered here today, the explosions in mobile
data, cloud computing, and digitally-enabled trade in services is inextricably
linked to demand for ICT equipment. To accommodate the surge in wireless data
traffic and large gains in Internet traffic, significant increases in
infrastructure spending will be required. For trade officials, this is a dream
come true. As with the smart phone example I discussed earlier, new technology
allows for innovative services, which in turn create demand for even better
networks and equipment, which then spur even more innovative services. The
result of this boom is a global import market for communications network and
transmission equipment that was valued at over $455 billion in 2010, with an
average annual growth rate of approximately 10 percent over the previous
decade. According to TIA, in the United States alone, we will spend $296
billion on wireless and wired network infrastructure during the next 4
years
, a 41 percent increase from the $210 billion spend during the past 4
years. The United States and China lead the world in overall telecommunications
spending (for both equipment and services), at $1 trillion and $354 billion in
2010, respectively, highlighting the huge potential for partnerships in the ICT
sector.
Finally, I am pleased to highlight the opportunities that all of the
changes in the ICT world hold for broader economic development. Like many
companies, ICT firms make important, direct contributions to their home
economies. But the ICT industry is unique in that it underpins growth and
innovation across a variety of industries. Manufacturing industries from
aerospace to consumer products are dependent on ICT to manage their production
facilities and supply chains for maximum efficiencies. ICT also enables
societies to find more effective solutions to meeting critical challenges, such
as renewable energy, smarter transportation, and improved health care. Never
has this been truer than it is today. That TIA's show here in Dallas is styled,
"Inside the Network," speaks volumes about the current state of the ICT
industry. In the coming years, more people, devices, and machines will be
connected to the network than ever before. Widespread deployment and adoption
of the most advanced technologies, regardless of where they are developed or
manufactured, are among the most critical inputs for economic growth. ICT plays
an important role in enabling innovation, improving education and productivity,
and enhancing competitiveness in all sectors.
The companies gathered at this trade show are among the most innovative in
the world. They range from small, niche manufacturers to large multinational
corporations. They are the firms that will enable the achievement of our
countries' mutual ICT goals. They are constantly innovating and developing
technologies that will result in faster networks to enable new services. These
companies will help to manage everything from smart meters on the power grid, to
the newest, data-hungry mobile applications, to big data activities in the
cloud. I encourage you all to take full advantage of the opportunity we have in
today's event to connect with these innovative companies and learn what they
have to offer at this exciting new time for the ICT industry.
Thank you.
(Distributed by the Bureau of International Information Programs, U.S.
Department of State. )
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