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The distance between Pittsburgh and Jakarta today does not seem different from the distance between Pittsburgh and Los Angeles, thanks to the advance of information and telecommunication technology. Internet, email, messenger, short message services (SMS), and voice over internet protocol (VOIP) are the tools that people use for communication today. The development in information technology (IT) and telecommunication technology has made those things happen. In fact, IT and telecommunication technology has been converging recently and now it is very difficult to distinguish telecommunication from IT.  The most important thing is the cost of telecommunication and information is decreasing from year to year while the capacity and the speed are increasing. In the United States, according to Federal Communication Commission (FCC), the high speed lines (200 kbps and above) has been increasing 19.9% to reach 19.9 million lines in service as of 2002. In contrary, the cost of telecommunication is getting lower and lower.  In the period of 1984 to 2001, the cost of long distance services fell from 32 cents per minute to 10 cents per minute. [1]

          Those developments have created changes in how the economy works. According to Burnham, the decreasing of telecommunication cost “is beginning to have significant impact on the scale, character and location of human economic activity.” [2] Web based services and stores, internet-enabled supply chain management and long distance services (such as call centers in India or Ireland) are the faces of the new economy. Despite some pessimism with the e-commerce after the “dotcom dooms” a couple years ago, some companies have emerged as leaders in current competition. Dell Computer and Amazon.com are just a couple examples. However, the most surprising of all is eBay. This company is the biggest online auction site in the world, which is a unique entity that born from the marriage of advance of technology and the low cost of telecommunication. Using today’s technology eBay virtually creates the biggest market in the world by connecting people around the world. This company, according to BusinessWeek, has “invented a whole new business world.” [3]

          The victory of eBay obviously is supported by the advance in technology and the low cost of telecommunication. These two factors have made more and more people connected to the internet, not only in the United States, but also around the world. The total internet users in the world, as of 2002, are 605.6 million people. Figure 1 shows the proportion of internet users in the world. [4] This is a huge market for eBay; and the best part is the number is still growing.

Figure 1:

Source: “How Many Online” (Nua Internet Services)

Currently eBay has 28  million active users which produce $20 billion this year. [5] The technology has brought this company reach many parts of the world; international activities have contributed 31% of eBay’s revenue. [6] eBay has not only successful to create the biggest virtual market in the world, but also it has initiated many trades that were not considered to be traded online. Many years ago, people predicted that only stuff like books, CD, DVD, or apparels can be traded in a virtual market. eBay has proved that people can sell anything they want, from tickets to automobile! In fact, eBay Motors now is the eBay’s biggest market at $ 5 billion per year and currently become the biggest used cars market in the United States. [7] If we compare eBay sales volume with the current e-commerce sales, we can easily see that eBay has a big portion of the market. Figure 2 shows the quarterly US e-commerce (Business to Customers) sales. [8]

Figure 2:

Source: “Retail e-Commerce Sales” (U.S. Census Bureau 22 August 2003).

Furthermore, eBay model has stimulated growth for old and new types of services. Postal and package services (UPS or USPS), Western Union and credit card merchants (Visa, Master Card, and Amex) are the examples of old business that are growing due to intense activities in online auction. PayPal (now owned by eBay) is an example of new type of business that allows people to pay and transfer money easily just likes sending an email.

          The way eBay works and grows is a model of economic globalization. Using the advance of technology and near-zero cost in communication, this company has started to reach many people around the world eliminating all barriers. The internationalization of its services has enabled people to trade almost anything. eBay uses the technology to eliminate all barriers in global trades. The eBay model fits Braga’s explanation that “the internationalization of services is at the very core of economic globalization.” [9]

          It will not be surprising if in the future high proportion in global trade will be conducted like eBay. The growing in information technology will allow people to always be connected to internet anytime, and anywhere. Mobile technology (Tablet PC, Smartphone, and Personal Digital Assistant/PDA) will be basis of the future communication where the cost can be neglected. Consequently, the chance to develop a global market which is based on Customer to Customer (C2C) will be very high. This situation will create a very huge market in the future as well as bigger competition. [10] The most important thing of all, the near-zero telecommunication cost hopefully allows more people and business (especially from developing countries) to participate in global trades that in the end will distribute prosperity more fairly.

Works Cited

Braga, Carlos A. Primo. “The Impact of The Internationalization of Sevices on Developing Country.” Finance and Development March 1996. Rpt. in Readings for Issues in Global Competition. Ed. Professor James B. Burnham. Fall 2002.

Burnham, James B. “Global Telecommunications: A Revolutionary Challenge.” Business and the Contemporary World Vol. 2-1998.  Rpt. in Readings for Issues in Global Competition. Ed. Professor James B. Burnham. Fall 2002.

Hof, Robert D. “The eBay Economy” BusinessWeek 25 August 2003.

“How Many Online?” Nua Internet Survey Accessed 4 October 2003 from < http://www.nua.com/surveys/how_many_online/index.html>.

Lashinsky, Adam. “Meg and the Machine.” Fortune 1 September 2003.

“Retail E-Commerce Sales in Second Quarter 2003 were 12.5 Billion, up 27.8 Percent from Second Quarter 2002, Census Bureau Reports.” U.S. Census Bureau. 22 August 2003. Accessed 4 October 2003 from < http://www.census.gov/mrts/www/current.html>.

“Trends in Telephone Services: Industry Analysis and Technology Division Wireline Competition Bureau.” Federal Communications Commission 7 August 2003. Accessed 4 October 2003 from <http://www.fcc.gov/Bureaus/Common_Carrier/Reports/FCC-State_Link/IAD/trend803.pdf>.