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Good morning, everyone. I want to thank you for inviting me here, and allowing your local telephone man to share this morning with you. I got a letter from the Executive Director of the Center for Extreme Ultraviolet Astrophysics, who wrote me and said, "Here are three questions." And, for the last two weeks I've been studying to answer these three essay questions. I'm going to try to answer the questions that Roger Malina gave me, from two standpoints. It may not be apparent, but we, NYNEX, own significant intellectual property. We are fair game, for all of those who like to manipulate within the boundaries of our information and databases. But we also have an obligation, and a responsibility, and a service that we provide to all of you in terms of how we handle the intellectual property that is carried over our network. I'll try to offer you just a couple of perspectives on that. And what may be surprising to Frank Bennack is that I do agree with his fundamental premise about all of this. And I'll tell you that, at the end of the talk.
The first question, of course, is how have we dealt with intellectual property in the past. Without going over all of the history of the telecommunications industry, it's really pretty simple. We operated it in a very simple technology mode: basic analog transmission, restrictive, regulated monopoly. We were the single carrier of information and content in communications, in the environments that we operate in. Our tariffs were very restrictive and limited. So that the copyright laws, and everything else that is associated with the protection of that information, pretty much held us relatively harmless from liability -- and, it protected the customer, as well. There were also lots of regulations and structures in place, to prohibit the cross-mixing of information. So broadcasters, and publishers, and telephone companies, and cable companies all had separate rules that governed the content they owned. We, ourselves, owned a lot of intellectual property; things like customer information, and billing databases. We also had extraordinary amounts of technical information, in terms of training, and patents, and copyrights, and trademarks, and things of that nature -- hundreds and hundreds and hundreds of algorithms, associated with running networks -- all very valuable information. And of course, our most well known intellectual property were our yellow pages and the white pages; a very simple aggregation of lots of information that everybody saw.
Our biggest area of focus, in all of that, really centered on two things: how we secured it, on behalf of the customers that we served; and how we retained and maintained the privacy of that information for those who used it. A simple thing like calling an operator, and trying to get an unlisted number, is something that we have prided ourselves on. For over 110 years, we made sure that we did a pretty good job protecting that. But that is a simple example of the kind of focus that we had, on assuring the privacy of information. In today's world, we have had to bring new skills into our business. We now have a new title creeping into our company, called vice president of fraud; and vice president of hacker security; and vice president of cloning. And so we have lots more people who are beginning to learn what it means to continue that focus on security and privacy in an age when we are seeing radical changes in technology.
The second question is "what are these new technologies?" and you all pretty much know that. You heard lots about that from the first panel. But just to put some of that in a little bit different perspective, what with the digital processing, and fiber optics, all of the multimedia explosion, and the convergence of computer technologies and communication networks, basically, our phone system stands as a local area network. We have a phone that has ubiquitous capability to talk; that is, in effect, the perfect, ubiquitous, local area network. Now, however, you add a device, called a computer, and put that on that network, and have connections within the building, connections to a campus next door, connections around the city, or around the region. You now start to create enormous power, in your ability to communicate different types of information, both in analog and in digital form, and the ability to extract and reproduce information.
What basically happened in this transformation is that transmission became easier. We approached the 1990's, having conquered one of the last frontiers here. We think of the '70s and '80s, experiencing the evolution and the maturity of the computer technology. And then we saw the ability to switch very large scale, integrated circuits so we could handle large volumes of information. And we are seeing all those circuits continue to multiply, in both their scale as well as the reduction in their cost.
We now have come into the 1990's, and we have solved the problem of how to carry all this information from point A to point B. It's called fiber optics. There truly was a bottleneck, in terms of the ability to reproduce the information, and transmit it. With that barrier cleared, today we have extraordinary changes in what has happened, and in the capability of the technology. Now, not only can you produce CD-ROMs, with perfect resolution, but you can copy that across town. You can also, as it was pointed out earlier, recreate that information, and change it, ever so slightly, if you so desire. And then you have a transformed document. What is taking place is not much different from the architect who comes up with a one-of-a-kind design, and then someone changes it a little bit, and it's no longer a one-of-a-kind. But, does the first architect get any credit for the second's design? And that can go on and on and on. After a while, you kind of lose track of what is happening. And so we have watched the entire technology explosion create almost no boundaries, with respect to what one can do technically.
There are some other things that are happening, and I'll call it the "Internet culture." What we have is a process that has created a borderless, unpoliced, public access to information, anytime, anywhere. Basically, there are almost no rules associated with what one can do. But it is part of the culture. You go into any college campus, and copying disks and tapes goes on all the time. So there is a culture associated with these computer networks, and Internet, that is generating a very different expectation about all of this.
Privacy is getting more difficult. From our standpoint, in the technology business, and in the service business, we spend more and more time and financial resources trying to figure out how to protect the security of your information and to protect your privacy. We go to extraordinary lengths to create things like PIN numbers, and codes, and emblems, and encryption, and time stamping -- you name it. But it never stops those creative bursts of energy, that boast, "Well, fine, we will just find other ways of copying the newly stamped and newly emblemed information, and recreating it again."
That leads me to my last question relating to problems and opportunities in this new "Internet culture." This is a very interesting question to all of you, because, depending on which side of the fence you are, one can view this as a big problem, or as a big opportunity. But there is a constant in this process: technology will continue to move ahead. There is no question that we will see larger and larger volumes of information that will be transmitted, not only within the computer (just open the back, and see the magic in there), but also now you will be able to see that magic being transmitted in huge volumes by little strands of fiberglass spanning vast distances. We are watching markets in the world open up, so now we are seeing an expansion of customers; not just the same people, but a lot more people.
We are also watching the entire legal and regulatory structures change. And they, too, are evolving. From our standpoint, the way we see this electronic revolution occurring is that the technology and its capabilities came first. It began to drive customers and people to do things with that technology. And now the regulatory and legal structures are trying to catch up to it, and rationalize it, in some form. The chances are that they will get some of it right, and most of it wrong, as we go forward. And I agree with Frank that, when all is said and done, what we need to do is find a way to bootstrap onto what people want. Not what we think the law or commercial interest might want.
There is one legal decision, from our standpoint at NYNEX, which is quite interesting to us. It's called the Feist Decision, and I thought, knowing that we had several attorneys on the panel, I would mention a legal decision that they might consider later on. The Feist Decision involved a small telephone company called the Rural Telephone Company, which published a white pages directory. They published those white pages in a confined geographic area that served their customers. Feist was a publishing company, much like Frank's might be, which decided to produce a larger geographic area white pages. What Feist did was to find a way to take the white pages of Rural, the little company, change a few things, add a few things, but for the most part, reproduce everything in that Rural Telephone Company's white pages and produce a new white pages listing.
Rural took Feist to court, and said, "you can't do that, that's a copyright infringement." The case went through all the courts and finally went to the Supreme Court. And, the Supreme Court kind of said, "wait a second," the compilation of facts, which just involves white pages lists of names, really carries with it no "sweat of the brow equity," as it was called in the case.
In effect, they said there is no creativity involved in making lists of information. And so we now have started on the proverbial electronic slippery slope. Because we are now seeing the same kinds of things occurring, in our yellow pages and in every database that we have; and, I suspect, in every CD-ROM, and in every library. What is this distinction? How are we going to carry forth the definitions of who is the owner, who is the author, and what is or is not acceptable?
What we have seen, at least in our own industry, is the beginning of a serious problem: almost anything that we transmit over our network will not be protectable as easily as we would like. And as we move ahead we not only will transmit information, but we will have service that will capture information. For example, to hold it for a time release. People will collect in a server, and then transmit it at a later point in the evening, or tomorrow, whenever. And so what we are finding is an extraordinary change in the paradigm, under which we operate. We will continue to do all of the technological things that one might expect, such as encryption, and PIN's, and codes, and time stamping, and all of the kinds of things that enable individuals to find ways of protecting their information. What we do find, however, is that it is probably a losing battle.
We also encourage lots of contractual relationships. I was heartened to hear Frank Bennack talk about what the publisher views as his or her right with respect to the information. I say, let the courts establish that law and take the distribution systems, like us, out of the picture. And we can move forward on that basis.
To conclude, one thing that a company like NYNEX seeks to do is not necessarily to try to protect its intellectual property in traditional ways, like yellow and white pages, but try to recreate those businesses, as they might be, in the next century. What we find is, if we can't find a new way of adding value, and providing information to the public, in different and more innovative ways, we will lose that protection over time, and we have absolutely no shot at keeping any of the value in that.
A second thing that we are looking for is to continue to help others find ways for you all to protect the privacy and the security of your information. And, I suspect that will not be through technological solutions. That will have to be through public policy, and whatever other laws and regulations are finally adapted and adopted in this country. We have truly entered a revolution in which the customer rules. There is no question that the public and the customer absolutely have turned everything that we have been talking about in our industry completely on its head, in terms of looking at what might be doable, and might be administrable in the next century.
Thank you.
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