The "Bandwidth Problem" is not a technical problem! But it is about the turf wars among the telco's, cable providers and possible wireless satellite providers.
This was my conclusion summarizing the various issues in the convergence theme area in my postings some weeks back.
Excerpts:
Alex Gruzen, Compaq Computer Corp.'s director for Internet services, said connecting to the Internet is now the primary reason that consumers buy computers. The problem for PC makers, though, is that the speeds at which most home users link to the Internet from home have not kept up with increases in processing power achievable by the computers themselves. That means that users who already have a powerful computer often have no compelling reason to buy a new, more powerful one.
"The deployment of broadband networks means you get multimedia applications over the Internet," said Joseph Tasker, vice president for government affairs for Compaq, the No. 1 maker of personal computers. "And computers and networks go together."
Details from the New York Times web page: December 7, 1998
PC Makers and Bells in Joint Petition to U.S. on Networks
By SETH SCHIESEL
Hoping to offer high-speed Internet access to more consumers, the biggest personal computer company and local telephone companies plan to petition the FCC Monday to relax regulations
that they say are impeding network modernization. Compaq Computer and Gateway, together with Microsoft and Intel, plan to join with the Bell local phone companies and GTE to announce their allied effort Monday morning in Washington, according to executives involved in the group.
The communications and technology powerhouses intend to urge the Federal Communications Commission to waive many of the rules requiring the local phone giants to give would-be competitors access to all parts of their networks. They also plan to ask for exemptions from the rules barring the Bell companies from the long-distance business, so they can offer wide-ranging data services.
The group contends that releasing the companies from such regulations will give them the financial incentive to invest the billions of dollars required to deliver corporate-caliber Internet access to residential consumers at reasonable prices.
"We in the computer industry think we stand in the shoes of the consumers here because we both want broadband deployment and competition," Peter Pitsch, a former FCC official who is now communications policy director for Intel Corp., said in a telephone interview. "Broadband" is the industry term for high-speed communications services that can include text, images and even audio and video information.
The group intends Monday to present the FCC with a statement of 10 principles that the companies say will promote the development of advanced data systems for consumers. It also means to begin lobbying members of Congress who have influence over communications policy.
"If adopted, these principles would both promote competition and strengthen the incentives of the incumbent local telephone companies to promote broadband," Pitsch said.
Under rules the FCC created in response to the Telecommunications Act of 1996, the local phone incumbents are required to sell access to different parts of their networks to competitors. But the computer-communications alliance wants the commission to let the phone companies reserve their advanced Internet communications equipment for their own use. The Bells have long said that the requirement to sell access to their systems reduces their incentives to invest in and build advanced data networks in the first place -- a point of view that the computer giants have come to embrace.
"We don't want to undercut the incentives of the incumbent companies," Pitsch said. "Everyone is pretty much starting from ground zero when it comes to these data services, and if they take the risk, they ought to get the reward."
In a nod to competition, the group does intend to propose that the local phone incumbents readily make space available in their network-switching centers for competitors to install their own equipment and that the incumbents be required to resell access to the actual copper wires that run to homes.
By proposing that the Bells be allowed into the long-distance market for data services, the alliance will be seeking to at least partly lift a long-distance ban that has been in place since the breakup of the old AT&T Bell system in 1984.
Nearly three years ago, the Telecommunications Act opened a path for the Bells to enter the
long-distance arena. But Congress stipulated that each Bell company would first need to convince the FCC it had sufficiently opened its network to competitors -- a test that no Bell has passed.
The law, however, also directed the FCC to look into ways of encouraging the development of more high-speed data options for consumers. And for all of the hype that surrounded the passage of the Telecommunications Act, most American consumers have no more options for high-speed links to cyberspace than they did before 1996.
As a result, the FCC is under mounting political pressure to encourage the mass-market availability of high-speed data systems. So while the commission's chairman, William Kennard, is unlikely to embrace the proposals wholeheartedly, he is also very likely to be less hostile to them than his predecessor, Reed Hundt, would have been. Hundt was seen in the communications industry as an implacable foe of the Bells.
In allying with the local phone carriers, the computer behemoths are making their first significant foray into the political jungle that is the world of telecommunications regulation. The proposals are almost certain to draw harsh condemnation from the Bells' archrivals, the long-distance companies, led by AT&T and MCI Worldcom Inc.
Still, the formation of the alliance is a vivid sign of how the computer industry has come to rely on the communications industry to provide the Internet links that are driving the PC business. It is a relationship that is almost certain to grow closer and more complicated in the coming years, as Internet connections and computers become perhaps as common as telephone dial tones.
"This is the first time that the telephone industry has gotten together with the computer industry and said, 'Look, the capability of the public network is really not keeping pace with consumer needs for bandwidth, given the way the Internet is growing,"' said Robert Blau, BellSouth Corp.'s vice president for executive and regulatory affairs.
Alex Gruzen, Compaq Computer Corp.'s director for Internet services, said connecting to the Internet is now the primary reason that consumers buy computers. The problem for PC makers,
though, is that the speeds at which most home users link to the Internet from home have not kept up with increases in processing power achievable by the computers themselves. That means that users who already have a powerful computer often have no compelling reason to buy a new, more powerful one.
"The deployment of broadband networks means you get multimedia applications over the Internet," said Joseph Tasker, vice president for government affairs for Compaq, the No. 1 maker of personal computers. "And computers and networks go together."
The concept of letting local phone companies avoid reselling access to their data systems has gained currency at the No. 1 maker of data networking equipment, Cisco Systems Inc. Although Cisco is apparently not a member of the new coalition, John Chambers, Cisco's chief
executive, said in an interview last week that the resale requirements were standing in the way of the phone companies' offering high-speed data services to consumers. "If you build this infrastructure and you immediately have to sell it to someone else," he said, "the build-out is not going to take place."
Ed Perry
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