LA Times. Bandwidth It's Called, and It Means Change [No ASND reference. The masses discover bandwidth...]
latimes.com
By JAMES FLANIGAN, Sunday, August 2, 1998
If the landmark 1967 film "The Graduate" were remade today, the
word of advice young Benjamin Braddock, played by Dustin
Hoffman, would receive would be "bandwidth," not "plastics."
Bandwidth is the technical term for the capacity of communications
channels. Fiber-optic lines have far more capacity than old-fashioned
copper telephone wires; cable can deliver more channels of television than
old-fashioned broadcast networks--although all that is about to change.
The news is that communications capacity is about to become, in effect,
infinite. With the coming of digital television, the broadcast networks are
gaining the ability to deliver five to 10 times the channel capacity they now
have, which means they will be able to handle Internet traffic. Cable systems
everywhere are being upgraded to carry two-way voice, data and video on
the Internet. And new electronic processors are enabling traditional
telephone lines to offer broad-band capability for the Internet.
The race to own such bandwidth is behind the deals you've seen
recently. Last week Paul Allen, the billionaire co-founder of Microsoft,
invested $4.6 billion to acquire cable company Charter
Communications(), just three months after he entered the cable field
by purchasing Marcus Cable of Dallas.
Allen's deal mirrors AT&T's agreement last month to acquire
Tele-Communications, a leading cable firm.
* * *
Television networks--ABC, CBS, NBC, Fox, Warner Bros. and
Paramount--are wondering how best to exploit the bandwidth they have
gained along with frequencies for digital channels. Analysts suggest the
networks should seek partnerships with telecommunications companies that
know how to bill customers for data services.
What it all adds up to is an explosion of bandwidth in the coming years,
with profound implications for business in the decades ahead. Henry
Nicholas, chairman of Broadcom, an Irvine-based developer of microchips
that enable telephone and cable lines to connect to the Internet, says this
technological shift is "comparable to mainframe computers giving way to the
Intel- and Microsoft-powered desktop personal computers in the early
'80s."
The ultimate potential of increased bandwidth is that "it will bring Internet
access to 100% of U.S. households, as today they have access to
television," says Geoffrey Yang, a partner in the venture capital firm
Institutional Venture Partners() of Menlo Park, Calif. Currently,
about 18% of U.S. households have Internet access, although 45% have
computers.
But this is not a signal for individuals to run out and buy Internet stocks
or for businesses to acquire Internet companies.
It's too soon to pick winners or even to predict the direction of the
business. If the spread of bandwidth and the Internet were an athletic
contest, we'd be in the pregame show.
However, some implications for business and investors can be discerned,
mainly because they're extensions of current trends.
Greater bandwidth will remove constraints on videoconferencing and
allow people to truly collaborate in work, says Nicholas, "because the
gestures, facial expressions and tones of voice will be captured much more
clearly by improved video pictures."
The growing trend of companies using Internet connections to buy from
suppliers and sell to other businesses will increase greatly, reducing
inventories and needs for warehousing and office space.
Broadcast television traffic, even with increased bandwidth, will still be
largely one-way, Yang says. But there will be masses of it--stock prices,
news and business information and sports scores that can be personalized.
"Users might select Web sites of particular interest that would be
automatically stored" on their computer systems, Yang says.
Greater bandwidth could bring personalized television. "You'll swipe a
card through your set-top box and the programming and commercials will
be suited to your tastes. Each family member will have a personalized
program," predicts Stephen McKenna, entertainment and media sales
director for Sun Microsystems().
* * *
Advertising may well become seamless. One will see an object on a TV
show and click onto a parallel channel for price information and purchase
capability. McKenna of Sun, which develops computer languages allowing
machines to communicate, sees the home being transformed within 18
months to two years. But most analysts see home markets emerging in seven
years or more.
The impact of greater bandwidth will be felt much sooner by business.
Computer-based networks for business are already sizable. Qwest
Communications International(), a Denver-based provider
of such services, has grown to more than $700 million in revenue, with
operations in 48 states, in just two years.
As bandwidth availability expands, Yang sees the Internet's packet
networks displacing traditional telephone networks--even for voice traffic.
"Internet telephone calls are now one-tenth the cost of traditional phone calls
and soon will be one-hundredth the cost," he points out.
Such dramatic cost changes always accompany basic shifts in
technology, with effects that are unpredictable--even for people close to the
action. At a meeting of roughly 800 new-media entrepreneurs of the oddly
named LAwNMoweR Group at Paramount Studios the other night,
attendees expressed fears that opportunities for small companies to sell on
the Internet would be limited once "the Web site of WalMart.com"--as one
put it--came on the scene. Yet it's more likely that the new environment will
spur entirely different innovations.
So the effects of technology are unpredictable, but lest we fear that the
world is spinning at random, we should reflect that the idea underlying
bandwidth originated 54 years ago in the war effort. The great
mathematician Claude Shannon made the discovery that communications
frequencies could expand to hold more information--he called it "wave
division multiplexing." He may never have foreseen the spread of bandwidth
and Internet commerce.
The Internet itself originated from the Arpanet, which was developed
under a Defense Department contract in the early 1970s. The Pentagon
wanted a decentralized communication system that would be less vulnerable
to nuclear attack than centralized systems.
What it got was the decentralized communication phenomenon that, with
the almost infinite capabilities emerging now, will transform the business of
the world.
Remember the word: bandwidth.
* * *
James Flanigan can be reached by e-mail at jim.flanigan@latimes.com.
Copyright 1998 Los Angeles Times. All Rights Reserved |
