In the early 1980s ITU members recognized that advances in technology were fundamentally changing the nature of telecommunications and the very principles upon which the union was founded. These fundamental changes were behind the restructuring of the union, which was completed in 1994. An understanding of these changes is fundamental to understanding ITU's activities in the rapidly evolving world of telecommunications.
From 1900 to the 1980s telecommunication was generally understood to mean essentially the transmission of voice telephone signals. Governments and the telecommunications industry shared easily communicable goals: provide telephone service for every business and home and arrive at international technological standards that would allow telephone connections between all countries. Until the 1980s telecommunication equipment technology evolved comparatively slowly, allowing enough time for ITU's international bodies to set standards without inhibiting the progress of technology development. In the area of pricing (tariffs) there was widespread acceptance that densely populated areas would produce enough income for telephone companies to cover their expenses for providing coverage for remote, sparsely populated areas.
In the 1980s technological advances in the digitization of telephone signals, software control, component miniaturization, and sharply decreasing switching and transmission costs brought about an explosion in products and services that could now transmit not only voice, but also data, text, image, and video information. Telecommunications became less a stand-alone industry and more intimately connected with the computer industry. It could be said that the two technologies had "converged," fundamentally reshaping the way all kinds of information services could be delivered to people and businesses. Similarly, wired and "wireless" telecommunications also began to converge. Wireless systems (cellular telephones, for example) began to compete with existing networks at every level through terrestrial and satellite-based communications systems.
At the same time, the equipment supply industry was transformed by shorter innovation cycles and global marketing efforts. This drastically shortened the time available for consultation and adoption of international standards. Finally, the profitability ethic of the computer industry began to replace the universal coverage ethic of the telecommunications industry. Businesses began to demand cost-based pricing, which would reduce their costs in increasingly competitive global markets. However, the growth of cost-based pricing would effectively deny telecommunications to isolated or sparsely populated countries or regions, since they could never afford to pay enough to be as profitable as densely populated areas. In other words, the competitive environment produced "islands" of high telecommunication capability where profitable customers existed and "deserts" of low telecommunications capability where profitable returns could not be achieved.
This trend strengthened towards the end of the 1980s with the end of the cold war. An international consensus emerged that market-based economies were the most efficient way to deliver goods and services and promote economic growth. Previously, most of the world's countries had government-controlled telecommunications departments.
In the new atmosphere of deregulation and privatization, many state-owned telecommunications departments would become state-owned corporations, and perhaps eventually private corporations. Telecommunications companies in industrialized countries found their main opportunity for growth was to change from offering only domestic services to offering services region-wide or even globally, competing with the domestic services of other nations.
ITU's secretary-general, Dr. Pekka Tarjanne, told an international gathering in Tokyo in 1994 that: "Today's ITU does not fully reflect the dramatic changes that have taken place in telecommunications. The Union remains largely the preserve of dominant carriers, with little active participation by new players in the telecommunications industry or by major users. This trend strongly suggests the need for greater private sector participation by the new players in the telecommunications industry…. Howcan non-governmental players be given a greater voice in ITU decision-making processes without infringing on the sovereign rights of nations?" The future evolution of the organization and its activities will revolve around this dilemma.
The activities of the organization were defined in the 1992 constitution as: