Broadband Video, maybe sooner than you think.
Cube don't fail me now......
usnews.com
WHY BIG PIPES ROCK
The next big thing on the Internet:
Broadband Video
BY RUSS MITCHELL
Uh-oh.
That pretty much sums up Excite Chief Executive
George Bell's reaction in November when he heard
the news that America Online would buy Web
pioneer Netscape Communications. "I came home
to my wife and said, 'I have to rethink everything I
know about Excite,' " Bell recalls.
Big questions, like, how could Excite, one of the
leading Internet portals, hope to compete in the
shadow of giants–AOL-Netscape, Disney, Yahoo!,
Microsoft? It probably couldn't, not by itself. That
would force Bell to sell at some point. And with
Internet stock values in goofyland, why not sell
now? So sell he did, offering up the Web portal site
for about $7 billion, from which he personally will
pocket stock worth about $29 million.
The fact that Excite was on the block was no real
surprise. What did raise eyebrows was the buyer:
@Home, a high-speed cable modem service that
brings broadband data channels known as "big
pipes" to the homes of Internet users. Because
@Home so far has attracted only 330,000
customers, the purchase price makes sense only if
the big-pipes business is poised for spectacular
growth. Bell, who will stay on to run Excite, is
counting on it–not just enough growth to make
@Home a big success, but enough "to change the
entire industry."
No small thing. Change the industry? Many of his
colleagues and competitors believe that the
assertion is not entirely crazy. In fact, some
industry executives are more effusive than Bell. Big
pipes will "change the world," says Steve
Guggenheimer, who runs Microsoft's digital TV
group. Big pipes will "rock the world," says WebTV
CEO Steve Perlman. Others are more low key.
Robert Davis, CEO at Web portal Lycos, says the
high-speed lines at a minimum will attract "an
important base of new consumers" to the World
Wide Web.
If their predictions come true, it will be because
consumers flock to the high-quality, interactive
video services that broadband pipes make possible.
The text-based Web will continue to grow, but it is
audio and video that will attract the masses and
keep them hooked, the theory goes. "A lot of
people have grown up with video as the way they
get information. To them, every other medium is
boring," says Frank Gens, market researcher at
IDC.
To a lot of industry watchers, it sounds like
promises, promises. For years, consumers have
been told that interactive video would revolutionize
their TVs and computers, but each attempt to
introduce the technology bombed. For example, the
interactive television experiments of the early 1990s
featured a handful of unpopular programs and
services delivered over expensive proprietary
systems. Interactive shopping, banking, and news
are popular now, but back then they were crude and
clunky; customers rejected the concept in droves.
All that, however, was before the popularity of the
Web, which has become a part of 23 million
American households. The Web is a competitive
hurly-burly operating on a relatively cheap,
universally accessible medium (the Internet). It
boasts services and programming provided not only
by big media and information companies but by
thousands of small start-ups and even consumers
themselves. Those consumers are showing an
increasing eagerness for audio and visual
content–ranging from vacation photos sent via
E-mail to music videos on MTV.com–even though
the video is jerky, the music can be scratchy, and
downloading anything often seems to take forever.
Big pipes promise to solve all that. Right now, most
residential users tap into the Web through skinny
pipes better known as telephone lines, which
channel data at a maximum rate of 56,000 bits a
second. That's a trickle compared with the
bandwidth of the big pipes, which can push through
data up to 200 times faster.
Bandwidth measures how much data can pass
through a channel. A fire hose, for instance, has a
lot more water-carrying "bandwidth" than a drinking
straw. The cable system that runs into the home
has tremendous bandwidth. So do satellite-TV
signals. The phone companies now are even able to
turn skinny copper phone lines into big-bandwidth
pipes using a technology called DSL.
They like to watch. What's the upshot? Grandma
could download a video of Scotty's new puppy from
the Smith family home page in seconds. A book
buyer could make a video call to a customer service
agent at Amazon.com over his computer. A karate
brown belt could call up some instructional video
clips to improve her moves. A traveler could hear
about a tornado back home and quickly take a look
at the damage from footage stored at the local TV
station's Web site.
New forms of entertainment and advertising will be
created as a result of big bandwidth, on both
computers and TV. This spring, customers of
Echostar satellite will be able to use WebTV to
"pause" live sports broadcasts and resume viewing
later at the touch of a button.
Every big media, information, and computer
company is drooling at the opportunities. They're all
taking broadband services more seriously now that
AT&T is buying cable giant TCI with the intention of
offering phone service and Internet access over its
cable lines (using @Home, it so happens, which is
39 percent owned by TCI). And the regional Bell
companies, feeling the heat, are beginning to roll
out DSL services, too.
The big question is whether the masses will pay
$40 to $60 a month for the big pipes. While cable
modem service is available to 13 million American
households right now, only about 5 percent have
signed up. But Howard Anderson, head of the
Yankee Group market research firm, thinks
penetration rates will climb to 25 percent as cable
companies upgrade their systems for interactive
broadband. Within three years, his firm predicts,
more than 50 percent of the population will have
access to broadband, and more than 7 million
households will be using big pipes.
Meantime, companies are starting to take
advantage of the estimated 14 million people who
already have access to a high-speed connection at
work. NBC and CNET's Snap will introduce a
high-speed version of the portal, code-named
Cyclone, which will feature audio and video content
for the Dilbert set. CNET CEO Halsey Minor says
he hates to admit it, but there's a big market for
entertainment in the workplace. "I'm sure most of
the people who watched Bill Clinton's deposition on
the Web watched it at work, not at home," he says. |
