To: H James Morris who wrote (29824 ) 12/14/1998 10:59:00 AM From: Glenn D. Rudolph Respond to of 164685
E-commerce stuck in U.S. Ron Higgins SPECIAL TO THE EXAMINER Dec. 13, 1998 ©1998 San Francisco Examiner URL: newslinx.com This holiday season will ring in a virtual worldwide shopping spree in the burgeoning Internet economy. Unfortunately, on-line consumers outside of the United States might feel as though they are shopping from a distant galaxy as sluggish response times give the impression of being light years away from the hub of the on-line commerce universe: the United States. The Internet's inefficient design causes an on-line consumer in Argentina buying a gift on a Web site in neighboring Brazil to be routed back through several U.S. chokepoints before going to Brazil. Because of the U.S. detour, that consumer in Argentina could wait at least 300 percent longer than he would if a direct route were available to Brazil. That scenario is replicated worldwide because the transoceanic fiber-optic telecommunications lines linking the United States to Europe, Asia and Latin America favor the U.S. traffic flow, thus penalizing on-line consumers in other countries. Due to the U.S.-centric history of the Internet, much of the world's Internet traffic is inefficiently routed back here. The Internet was originally funded in the late 1960s by the U.S. Department of Defense to survive a nuclear holocaust, not to serve as a global new-millennium bazaar. Besides causing delays for new on-line consumers, the U.S-centric Net crimps enhancements to shopping. For example, streaming video (the ability to achieve TV-quality video on a PC) can be used to demonstrate a sled or food processor to a prospective online customer, but the large size of streaming video files can easily clog a telecommunications line. The recent Discovery space shuttle flight with Sen. John Glenn inadvertently tested the Internet for streaming video. After the launch, video clips of the launch were posted on many news Web sites. However, the rush of users trying to view those clips triggered near meltdowns across the Net. Innovations such as streaming video are catalysts for enriching on-line shopping (especially compared to mail-order). So far, though, on-line consumers are plodding along with what works and are willing to tolerate delays as they enjoy the convenience of Internet shopping. Several experts recently predicted a holiday spike in Internet sales. Jupiter Communications forecast that U.S. on-line shopping will reach $2.3 billion this holiday season, more than double the $1.1 billion in 1997. In a Visa U.S.A.-sponsored survey of 1,012 adult PC users, 46 percent said they expect to shop on-line this fall (and talk about convenience: 60 percent admitted to shopping in their pajamas). Another survey by Dell Computer and Louis Harris revealed that 43 percent of Americans who use PCs plan to shop on the Internet this holiday season, a 330 percent increase over last year. A digital tsunami is building from outside the country as well. The Gartner Group estimated that as of October, 55 percent of Internet users lived in the United States, but by 2000 that figure will decline to 40 percent. European Internet commerce is expected to generate almost $26 billion by 2001, compared to $349 million in 1996, according to International Data Corp. IDC also reported that 75 percent of the largest 1,000 Asian companies have established a presence on the World Wide Web, up from 57 percent in October 1997. The shadow of the Grinch looms large for on-line shoppers, though. Eventually, the carriers that manage international telecommunications lines will refurbish their business models from the age of the three-minute phone call to the age of electronic commerce, in which Internet connections can last for hours in unpredictable patterns. Some innovators have already taken the reins by providing fast-track access to the electronic-commerce industry, which is eager to deliver an optimal on-line experience. Funding for additional fiber-optic communications lines, once the province of regulated telecommunications carriers, is rapidly shifting to savvy entrepreneurs unfettered by monopolistic policies and cultures. In turn, private networks are being quickly built to bypass the congestion of the U.S. public Internet. Today the Internet remains an industrial-age solution to an information-age problem. For the on-line holiday shopping season of 1998 and beyond, though, the digital economy will demand an information-age solution to an information- age problem. ©1998 San Francisco Examiner Page B 5