Google, Telstra and the world’s biggest telecommunications companies are facing an economic crisis.
In the past decade, these firms have become a multi-billion dollar conglomerate.
And yet, the three giants are doing very little to address the challenges posed by their market power.
In fact, they have become the major beneficiaries of a system of global trade arrangements that is in its infancy.
But they have little to show for it.
Keystone Technologies, the biggest of the three telecommunications giants, is the biggest beneficiary of the Trans-Pacific Partnership (TPP), a trade deal that the United States, Australia and 12 other nations signed in July this year.
In the deal, a group of countries called the Asia-Pacific Economic Cooperation (APEC) has set up the Transatlantic Trade and Investment Partnership (TTIP) that will be ratified by Congress in November.
It is the most significant economic development in the Pacific region for decades.
The agreement would allow the US, Canada, Mexico and Japan to negotiate bilateral trade deals with each other.
It would also set up trade relations with more than 200 countries across the Pacific.
The US, Australia, Canada and Japan have signed up to more than 80 per cent of the trade deals in the region.
Yet, they still face major problems.
They are all part of the TPP, which has not been ratified by any countries in the Asia Pacific region.
They face major hurdles to trade deals and the introduction of new technologies.
Keystones chief executive officer, Stephen Hirschfeld, is well aware of the problems.
“This is an extremely complicated trade relationship, where the parties are very sensitive about who has access to whom,” he told The Australian Financial Review in a recent interview.
But, he said that he has no interest in trying to make it easier for the big three.
“We have the best of both worlds.
We can trade with each of the other countries and the economies of the Pacific Rim.
We also have access to our own technology, and we have access in our own markets,” he said.
But for all of its advantages, the TPP is still far from being a model for future trade deals.
Keystonet technologies, a technology firm, recently won the $10.5 million contract to build the Keystone network, a $3 billion project to connect US cities with foreign cities.
This will be the second major telecommunications project in the US under the TPP.
But the $11.7 billion project is only the beginning of what the Trans Pacific Partnership will involve.
Hirschfield said that the TPP will give the three major telecoms companies access to other technologies, including IP (Internet Protocol) standards, mobile network technologies, cloud services and internet-enabled applications.
In this way, the pact is likely to expand the reach of the big four, allowing them to offer their services more cheaply to more countries.
Hirschfeld said that while the TPP was “good for the United Kingdom, we need to think about how we are going to be a better partner in the future”.
“There are still many challenges that remain to be solved.
There are still a lot of challenges that will still be in the TPP that we are not yet in a position to solve,” he added.
He said that Keystone was already looking to partner with the likes of Verizon and AT&T.
But, he stressed that the company has no intention of doing so for the foreseeable future.
“We are not interested in doing business with the companies that are in the Transpacific Partnership, and there are some of them we have never worked with before,” he explained.
Hirshfeld said the company is also open to other IP standards, such as the Open Internet Protocol (OIP) and Open Mobile Protocol (OMP).
“We would be interested to work with them in the next couple of years.
We are actively looking at IP and OMP standards and we look forward to working with those,” he stated.
However, the Keystone deal is only part of what is yet to be agreed in the trade deal.
Other TPP countries have been negotiating on a wide range of issues including patent protection, intellectual property rights, investment, intellectual-property rules and digital standards.
For example, the proposed TPP agreement would see the US move towards adopting a patent system that would give it the power to block a competitor’s product.
This could lead to a huge drop in internet speed, as companies would need to spend billions of dollars on research and development to develop new and innovative products.
Hirshfield said he is aware of such a scenario and that the US should not adopt such a system.
“I am not against patent law or patent reform, but I am against the system that we have in place that is based on the patent system.
It is not in our interests to have this system in place,” he noted.
So what can the world do about this?
Hirschfield has been lobbying hard for a patent reform package