Gary & thread
From today's LA Times
Barry
====================================
latimes.com
Sunday, August 2, 1998
JAMES FLANIGAN
Bandwidth It's Called, and It Means Change
By JAMES FLANIGAN
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.
|
