In 1998 the world was only a few years into the widespread commercializiation of the Internet, and the Internet bubble was only beginning to form. Now, after it has burst, we still have a "TV" model of Internet service for most customers - no servers, limited ports, all kinds of restrictions on what, still, should be a nework where every node is potentially a server.
Telirati Newsletter #31: Who will pave my information super-driveway?
I live at the end of a nine-hundred foot long dirt driveway through the woods of rural Massachusetts. My local CO is not a 5ESS nor a DMS100. It is an earlier model, and Bell Atlantic is moving no faster than Nynex was in upgrading. No chance for ISDN here. My cable company, which had been a sleepy little outfit that purposely made itself hard to find in the phone directory, was recently bought by Paul Allen, and has now vowed high-speed Internet service on an HFC network by next year. But that might be by the end of the next calendar year. I am on the fringe area of a radio-outbound telephone-return ISP, and the equipment costs too much. Who will pave my information super-driveway?
The two main contenders are cable-based services and digital subscriber loop (DSL). The phone companies and the cable companies are realizing that the Internet matters, a lot. Some very intelligent people, not to mention the investment bankers raising the money for these build-outs, are backing one side or the other in this race. It is worth taking a look at why either side might win or lose.
This isn’t to discuss the state of the race, rather to lay out some of the ways in which these new Internet access providers will succeed or fail. I will set out the criteria in the form of questions:
Stingy, or generous? This is likely to be a key question in the acceptance of Internet connection technology. Customers don’t know, except in the broadest terms, that streaming video is several orders of magnitude more bits than the largest document they would ever care to read. Customers do know they don’t like nasty surprises on their bills. This is why I don’t use satellite Internet service. The rate plan is too complicated, and who wants to count bits? Currently cable ISPs discourage multiple computers on a single connection, they throttle bandwidth, and in other ways build up bad karma among early adopters that tell the rest of us what things will be like. Initial DSL trials are overpriced and artificially under-perform. This is meant to protect T-1 revenues. Forget it.
What about the track record? Here, telcos are in a hole. ISDN was bollixed up by telco inability to absorb a new product into their service procedures. ISDN was just enough more-difficult to install that the service training mechanisms telcos have in place could not carry the burden. The result was a shortage of technicians able to install ISDN. Cable companies do not have comparable comprehensive disasters on their record in absorbing new set-top box technology.
Open, or closed? Do you have to buy, or rent the equipment from the provider? Is it standardized and licensed so that third party suppliers can play? Here the telcos have an advantage. They have now gotten used to customer-owned equipment, and if they can suppress greed for just this one decision, they will benefit. Open set top boxes probably scare cable companies. Open systems will have more choices: USB or Ethernet? Built-in router and address translation, or vanilla bridging? Choice, along with channel power, will help decide the winner.
Service with a smile, or a scowl? Telcos and cable companies are in a race for the bottom here. I had to do some serious detective work to find out who my local cable company is. No listing in any local phone directory! Nynex (now part of Bell Atlantic) was legendary as the place where Soviet bureaucrat and management efficiency lived on. Who will be smart enough to change or work with a partner that can deliver real service?
Do they get telephony, or not? How could telcos not get telephony? Easy: they could try to change for IP telephony separately from the rest of Internet service, or force customers to use their gateways. Cable companies will have to resist some of the same temptations. Some of the pioneers in cable Internet have already invested in their own carrier class switches. Will they force customers to use their non-IP telephony over cable, or to use their gateways? Or will ISPs tempt customers into the fold with integrated unified messaging and other Internet-based services for telephony? Who will understand that offering separate voice mail and e-mail (and possibly separate fax services) is a losing idea?
With this many variables of the competitive equation still unconstrained by experience, it is impossible to say who will win. Personally, I hope wireless technology is able to add a competitive dimension that is certain to be to everyone’s benefit.
Apart from my selfish interests, Internet numbers remain quite exciting. A tenfold increase in Internet subscribers and a twenty-fold increase in speed will make new economies and new product classes possible. The stepwise speed increases in the U.S. and Europe presage worldwide penetration. Much has been written about the Internet’s impact of society, but we have not seen a fraction of what will soon come. India, for example, has only 50,000 Internet subscribers in a country of a billion people. Once that fraction, in India, China, the Arab world, and Africa reach the same ratio as existed between literate people and the population as a whole when printed books became widely available, interesting social changes will probably take place. Computers prices overlap televisions substantially. Windows CE-based systems, and other lightweight OSs, will bring Internet access devices into parity with television in cost. These global numbers leave open several generations of access technology to sweep over various regions of the world and provide the connections that will put Web access in every tea room, and the private homes of the middle class, in the developing world. At that point the border-less nature of information flow in the Internet will have a profound influence.
Copyright 1998 Zigurd Mednieks.