A recent book on the history of financial speculation - compulsory reading in a period of roller coaster stock behaviour - began by quoting Sir Earnest Cassell, banker to King Edward VII, as saying:
When I was young, people called me a gambler. As the scale of my operations increased I became known as a speculator. Now I am called a banker. But I have been doing the same thing all the time. 
Those of us who have been in the industry for a while would have to turn this declaration around.
When I started out in the telecommunications industry everyone said it was a solid but rather mechanical business. Then I started being told I was in the business of computing and information technology, and everyone said it was an exciting new wave of high technology. Now when I say I am in the business of the Internet and new electronic interfaces, people label me as being part of a new wave of dubious stock speculators.
But I have been doing the same thing all the time.
What has changed is the world: world-wide change fuelled by the impact of competition, convergence, globalisation, and, now, investors and stock markets.
But our core business has not changed. Our core business is the networking of activity: the activities of facilitating people communicating, facilitating business transactions, and linking people to information. Business plans and pricing models which forget this reality will miss the mark, will get this business terribly wrong.
The challenge for us today in 1999, at the last Internet World of the decade, the century and the millenium, is to take stock of where we have got to and to think about the agenda for a new era.
As Charles de Gaulle would have put it, our leadership challenge in 1999 lies in recognising the shape of the future, and making it happen.
Stepping back from the hurly burly, and thinking about the challenges that lie ahead into the next century, I want to focus on five issues that merit our close attention. In summary, these are:
The first theme I want to develop relates to the new global demographics that will come into play.
Keniche Ohmae, the Japanese management guru, popularised the notion of a borderless world and the end of the nation state. This notion of the borderless world has really taken off as the slogan for the realities of the internationalisation of trade and commerce. It highlights the reality that many multinational companies are truly global operations with more economic power and impact than many of the nation states in which they operate. It seems natural to conclude that the Internet, powering the take-off of electronic commerce, will entrench the seamless, global reach of companies and markets.
The trouble with slogans like "the borderless world" is that they can blinker our thinking.
Just how will the Internet internationalise? At present the Internet may be a global phenomenon, but it is yet to "globalise from the few to the many", that is, to become truly international. At present the United States is the undisputed hub and powerhouse of cyberspace. A small, but growing, cadre of countries are seeing increasing online penetration and the prospect of, within the next few years, reaching that point of critical mass where network effects create mass market dynamics. Australia is one of these next-wave country markets. But the bulk of the world remains a long way from this point. Indeed, the bulk of the world's population does not have a telephone.
Will the next century be a world of MacDonalds.com? Will it be all about the globalisation of today's market leaders, the first movers; or will new firms appear to address emerging markets and create a more balanced international playing field. Will we see a new cadre of key firms within this time-zone?
As more and more country markets reach a point of critical mass in internet penetration I believe that we will need to re-examine our thinking about borderless markets.
First, from a national policy perspective, the internationalisation of trade and commerce has different implications depending on the scale and scope of domestic markets. For the United States, with a huge domestic market, the natural strategy is to globalise operations from a domestic market springboard, and this is precisely what the dot.com companies are doing. It is noteworthy that the United States is also attempting to globalise its domestic industry self-regulation arrangements.
For small markets, like Australia, internationalisation means something very different, What it means is the imperative to abolish any economic distinction between domestic and "offshore", or "export", markets in most areas of the economy. The Internet, and electronic commerce, means that more and more of the Australian economy is trade exposed, ready or not. In this online world the balance of global trade will be dictated not by negotiations at traditional international forums, but by the strength of local clusters of enterprises within country markets. Trade outcomes will be determined by the conditions for industry development within each local market.
Second, we need to recognise that borderless markets do not mean markets without boundaries. All markets have boundaries, created by the characteristics of the customer base. I suggest that the paradox of the next decade will be that, as the Internet globalises, the international marketplace will become more complex. The "marketspace" of cyberspace will start to develop boundaries, its own "natural" markets. What will be different from the old world is that political boundaries of the nation state will be less relevant than the more fundamental boundary markers of language, culture, religion, socio-economic status, and even business and community customs.
In early stage, high growth markets like the Internet, as earlier with mobile phones, firms can easily get away with ignoring the implications of market segmentation. As innovation moves from early adopters to mass markets then new forces come into play. We are getting to the point where every enterprise needs to start thinking seriously about how it defines its "target market" in the online world.
Now to my second theme that there will be winners and losers.
As the Internet and online services become mainstream, it is the harsh, cold reality that there will be winners and losers, both at a firm level and a social level. As we move beyond the first rush of enthusiasm about the obvious benefits of the new online world, serious issues about trade balances, the distribution of economic wealth, and social equity, will start to arise.
There will be winners and losers at a company level and a country level. As we move into the next decade we need to begin to recognise that cyberspace is not going to be a level playing field.
Some aspects of unequal terms of trade are already becoming evident, as a consequence of the geographic and cultural origins of the Internet. Patterns of consumption and production are highly imbalanced in all Internet second-wave country markets. At present the Internet is a United States hub with spokes linking into the rest of the world. One of the big issues now facing us is how we move to a multi-nodal world, and the question of which country markets will host the significant hubs of an online, networked world.
This issue of hubs and spokes, my third theme, helps explain why there will be winners and losers.
Recently there has been a lot of focus in Australia on creating Sydney as a major financial hub. Whether we are talking about financial services or any online application service we cannot afford to forget that any network hub depends crucially on its underlying communications infrastructure. A key aspect in the international competition to become a hub in global online commerce revolves around two issues: user aggregation and distance independence. Geography and scale dictates that Australia is not an obvious market hub. We are literally at the end of the line, a terminal point. The challenges for Australia, in an online world, involve conquering the tyranny of distance and scaling up demand through "virtual" economic markets.
Mark Twain once quipped that reports of his death were greatly exaggerated, and the same can be said of the long awaited death of distance. A couple of years ago Frances Cairncross, the influential writer with the Economist in the UK, produced her book entitled The Death of Distance. But if you live in Australia, and even worse if you have the misfortune to live in regional Australia, then cliches about opportunity in the world of the Internet being "location independent" ring very hollow indeed.
If the Federal Government's much touted strategy to create Australia as a financial hub, or if ambitions to create any sort of electronic commerce hub out of Australia, are to be realised, something has to be done to accelerate the death of distance. A fundamental pre-requisite for any Australian hubbing strategy, or aspiration, is to be literally plugged into the global network infrastructure on competitive terms. This means access to bandwidth, and this is a matter that is a key focus of the current National Bandwidth Inquiry.
Any hubbing strategy will require:
A recent OECD report observes that:
in the new electronic commerce environment, the customers and suppliers of any business are only as close as the performance of the network allows. Performance is tied to the availability and price of the underlying capacity.
Efforts by national governments to create hubs for financial services or electronic commerce services will fail unless there is a strategy to address structural bottlenecks in cross-border telecommunications infrastructure.
Some of the main features of this bandwidth market can be summarised in the following terms.
First, the traditional accounting rate system for the management of international telephony traffic - which revolved around a reciprocal "half circuit" model - has irrevocably collapsed.
Second, telecommunications trade liberalisation pursued through the WTO (and its Basic Telecommunications Agreement) has had the effect of concentrating the market for international bandwidth in the hands of a small number of large global operators, predominantly US based.
Third, the Internet and non-voice traffic has displaced public switched telephony as the bulk of backbone telecommunications traffic and a small number of US multinationals dominate the market for Internet backbone carriage.
Fourth, new investment in competitive backbone facilities is skewed to high density US and European links, with trans-Pacific and North-South investment being relatively limited.
Fifth, new Telecommunications Capacity Markets for bandwidth - spot markets - are not well developed within the Asian region, and I include Australia here.
Sixth, international traffic distribution for the Internet is based on private leased line connections that fall outside conventional settlement systems.
Lastly, US policy has required that offshore Internet traffic be exchanged at the US end, thus shifting the cost of offshore Internet access to the non-US based service providers. This also means that US based Internet Service Providers effectively have free distribution to international markets.
This last feature alone creates a structural cost imbalance in the operations of online services and electronic commerce based on telecommunications infrastructure. The distribution costs of US based producers are domestic telecommunications charges. For non-US based producers, distribution costs are a function of domestic telecommunications charges plus the costs of international links for both terminating and originating traffic.
This structural imbalance creates a severely unlevel playing field for countries trying to competition in a global market for traffic hubbing.
The features of the market for international bandwidth I have just described result in embedded distortions in international trade, because:
The challenge, therefore, for country markets seeking to implement regional or global hubbing strategies is to find a set of appropriate bandwidth arrangements:
Each of these conditions must be met. Meeting this challenge is going to be a huge hurdle for Australia, and will require some bold thinking. The bandwidth challenge is twofold. We need to solve for Australia's positioning vis-à-vis the rest of the world, and we need to solve, within Australia, the disparities between regional Australia and the Eastern seaboard. In an online world, the traditional time lags, and price penalties, in the roll-out of new infrastructure and service platforms to regional Australia will create fundamental barriers to any plans for regional economic renewal. Australia goes into the world of electronic commerce with a fundamental handicap until the death of distance is realised.
My fourth theme is that this new era is one of fundamental discontinuities. Essential reading for anyone interested in the nature of discontinuities like the Internet is Carl Christensen's seminal 1997 book, The Innovator's Dilemma: Why technology causes great firms to fail.
Electronic commerce is all about the impact of disruptive technologies. Christensen distinguishes between sustaining and disruptive technology, and I quote:
sustaining technologies improve the performance of established products, along the dimensions of performance that mainstream customers in major markets have historically valued
By contrast, disruptive technologies:
Examples of disruptive technologies include PCs versus mainframes, transistors versus vacuum tubes, new information appliances versus PCs, or Voice over the Internet versus circuit switched calls.
Christensen identifies four key characteristics of disruptive innovation, each of which seems very relevant to the Internet and its impact. These characteristics explain why mainstream, established businesses find it hard to respond to the opportunities and challenges of the Internet as a disruptive technology.
First, existing companies depend on customers and investors for resources (therefore it is difficult for them to invest adequate resources in disruptive technologies until it is too late).
Second, small - and new - markets don't solve the growth needs of large companies (and therefore tend to be neglected).
Third, markets that don't exist (or are at an early stage) can't be analysed in traditional terms (therefore there is a need to develop strategies for learning what needs to be known).
Fourth, technology supply may not equal market demand.
My last theme is that the phenomenon of the Internet stockmarket bubble will create pressures leading to the development of new valuation models.
What are we to make of the stock craze over Internet companies? There is a strong case to be made that current market behaviour and stock valuations involve factors that are not sustainable:
Emerging market dynamics point to the need for new valuation models. In response to the significant pressures to "build back" value into the current levels of capitalisation, and to establish a more credible basis for the future, I believe that we will begin to pay much more attention to factoring in new valuation parameters, including:
These factors will, in my view, create new ground rules for sector investment. Addressing these factors can also create opportunities for new entrants.
 Edward Chancellor, Devil take the Hindmost: A History of Financial Speculation, New York, 1999, p.ix.
 OECD, Building Infrastructure for Electronic Commerce: Leased Line Developments and Pricing, ICCP, Paris, 14 June 1999
 Phillipe Queau, "Unequal terms of electronic trade", Le Monde Diplomatique, May 1999; The author is the Director of the Information and Informatics Division of UNESCO.