(c) 1994 VNU Business Publications Limited
The 'information highway' has taken on a life of its own world-wide ever since Al Gore coined the phrase - but how much is real and how much remains a vision? Monica Horten reveals the facts.
The information superhighway has attained almost mythical status in today's techno-driven society. Some of the powers attributed to this beast are that it will boost future economic growth and generate jobs; it will provide an infrastructure on which businesses can sell anywhere in the world at low cost.
But while industry is preparing for the arrival of the superhighway by spending on development and construction, politicians are more wary of the highway's formidable powers. With the notable exception of the US, politicians are suspicious of extending too warm a welcome to the superhighway. The consequences of their continued lethargy could result in Europe having a poorer business environment than our active competitors across the Atlantic.
The leading proponent of the concept in the US is vice president Al Gore, who, in a white paper, entitled The National Information Infrastructure: Agenda for Action, spells out a plan for the creation of a US-wide national information infrastructure or NII: 'a seamless web of communications networks, computers, databases and consumer electronics that will put vast amounts of information at users' fingertips.' Gore argues that the NII should not be just for businesses and the privileged, but must be available to all Americans. Thus it will provide educational and consumer services as well as generate jobs and help US companies become more competitive internationally.
The Gore concept may have now gained credence world-wide, but it has also become rather confused. The phrase 'information highway' was originally coined by Gore during the 1992 US election campaign. Since then it has been aggrandised to a super-highway. And encompasses everything from video-on-demand to a souped-up corporate data network.
In the latest US jargon, the 'pipes' are becoming confused with the 'stuff' - the pipes being the physical infrastructure, and the stuff being the applications. The backbone of the information highway infrastructure is, in essence, a high bandwidth or broadband trunk network, to provide high-volume data transmission both nationally and internationally. The infrastructure will not be a single entity but rather a series of interconnected networks.
The speed of the main trunk data traffic is projected to be two gigabits per second, and from it, tentacles - consisting of local loops and private business networks - will reach out to provide access to businesses and homes.
The essential components of the infrastructure are fibre-optic cable, with switches and the transmission equipment which is capable of providing the necessary bandwidth: SDH or synchronous digital hierarchy transmission, combined with asynchronous transfer mode, high bandwidth, data switching. Massively parallel computers will be harnessed to the infrastructure to provide a means of supplying services - BT is using an mpp computer from Ncube as part of its video-on-demand trials.
While the technology is not deemed to be an obstacle to the construction of the highway, clarity of political, economic and regulatory strategy is proving to be the major sticking point in Europe in particular.
Europe is responding slowly to the US lead. The European Commission has set out its views in a white paper, entitled Growth, competitiveness, employment, the challenges and ways forward into the 21st century. The paper says that Europe must improve competitiveness on a global level by increasing its use of information and telecommunications technologies. The two key proposals are a pan-European infrastructure for the free flow of information, stressing access to databases and video-on-demand services and a plan for the implementation of trans-European information networks.
Unfortunately, the Commission does not have Gore's vision or his colourful language, and the proposals have slipped by almost unnoticed. Furthermore, according to Jonathan Rickford, BT's director of corporate strategy, 'the applications it is talking about are quite orthodox'. He points out that it omits to mention what the new broadband technologies could do for European industry.
Mainland Europe continues to be held back by the existing fragmented infrastructures of the different nation states. National telephone companies operate independently of each other, and some have been slow to upgrade their networks to modern technologies. The EC's move last year to deregulate telecommunications in all European Union countries by 1998 is spurring some investment. However, this is more likely to be the result of fear of new rivals - such as BT or the US phone companies - moving in after 1998, than any plan for a new information infrastructure.
I n Rickford's view, 1998 is 'hopelessly late' for the commencement of a transnational infrastructure. He also points out that the Gore plan is based on a regulatory environment of open competition, without losing the universal service concept: 'Europe is not even at first base,' he says.
In the UK we have potentially the best regulatory environment in all of Europe for building an information highway. The UK's telecommunications industry, deregulated since 1984, is well positioned to take the next step to more sophisticated networks, without the hang-ups of restrictive legislation which exist in other European Union countries. Malcolm Matson, the chairman of National Telecable and a director of City of London Telecommunications (Colt), says: 'I believe if we were the first in Europe to get it right, the economic benefits would be sensational.' But despite these advantages, the political vision of the US initiative is lacking here, according to Matson.
Rickford is more cautious, but nevertheless comments that the Government has 'other commitments' which rank higher on its political agenda. But he is equally concerned to see a debate on the subject: 'We should be discussing whether we need to create an infrastructure of the type Gore is discussing and if so, how.' One problem in formulating a coherent political strategy is that there is no single government department in charge of co-ordinating the development of the information infrastructure. A multitude of departments and agencies are involved in regulatory and policy issues. For instance, the DTI manages information technology and has a junior minister responsible for trade and technology, but conversely the department of National Heritage is in charge of broadcasting and films.
Add to this the Office of Telecommunications (Oftel) in its regulatory role which is independent of ministerial control. There are others who could pitch in too, such as the Home Office and the Department of Environment for starters. As a result of the old vertical structure of government departments, they have a natural tendency not to talk to each other.
The political interest in the subject has been minimal. A House of Commons select committee is to hold a discussion on the subject, but no date is scheduled. The Liberal Democrats' spokesman for technology, Nigel Jones, has recently put forward a discussion document, but it has not yet come onto the agenda of the Pitcom (Parliamentary IT) committee.
On the regulatory front, the issue has revived a long-running and bitter dispute between BT and Oftel. BT says it must be permitted to carry broadcast entertainment services in order to be able to compete in the new environment - its new competitors, the cable companies, are permitted to carry both telephony and broadcast enter-tainment on their lines.
Rickford argues that this is the only way BT can recoup the huge investment in the building of the new higher-capacity telephone network. Oftel has so far refused permission, in order to give the cable television companies a chance to get their businesses running.
The Telecommunications Users Association is also concerned about new competitors who are creaming off the broadband business in the high-density areas. Vivienne Peters, TUA chief executive, says: 'If we leave it to Mercury and the other new competitors, we will be lucky to get 50% of the country covered. And why should only half of the country get multi-media?' In the US, Gore is providing the leadership and the vision. 'In an era of global markets and competition, the technologies which create, manipulate and manage and use information are of strategic importance to the United States. Those technologies will help US businesses to remain competitive and create challenging, high-paying jobs. They will also fuel economic growth ...,' he states in the white paper.
The federal government is providing only a fraction of the cost of building up the highway - a sum of around $12bn. Gore's plan depends heavily on encouraging private sector investment, as well as an intent to ensure that the concept of universal service, as currently applies to the telephone networks, will continue to apply in the new environment.
And on the political front, Gore is not getting it all his own way. Consumer groups such as the American Association of Retired Persons (Aarp) are vociferous in expressing their concerns that the NII will become an elitist network, in spite of Gore's goodwill. They point out that Gore speaks of single mothers in Harlem becoming better educated via the NII, yet most single mothers in deprived areas cannot even afford a telephone.
There's an emerging parallel debate within the European Union about whether network operators should be obliged to provide the new information highway services universally. In a deregulated environment, where operators are privately-owned, they don't want to subsidise the laying of broadband networks in rural communities.
If most of the fin ance is to come from the private sector, then these arguments need to be resolved urgently. In the US, alliances have formed between telephone companies and cable television operators, in order to find the billions of dollars required for investment. The Regional Bell Operating Companies alone (RBOCS) plan to spend $20bn between them. The available money will then go towards upgrading their existing phone networks to bring fibre-optic lines to the kerbside and coaxial cabling into the home.
Cox Cable and Southwestern Bell have committed $4.9bn in assets to a joint venture for developing broadband communications systems. They plan to use the extra capacity offered by the cable television systems to develop new telephone services. US West paid $2.5bn for a stake in Time Warner's cable business, and plans to invest $1bn to convert Time Warner cable systems into advanced communications networks.
Ameritech will also invest $4.4bn in the next 15 years to convert its telephone network for video transmission. The largest venture planned - the merger of Bell Atlantic and Tele-Communications Inc (TCI) - has failed, however. Even so, Bell Atlantic still plans to have a broadband fibre network to reach more than one million homes by 1995, and 8.5 million homes by 2000.
Computer companies are also playing their part in this development, investing in the supercomputers to run broadband network servers. Sultan Zia, manager of the video interactive services group at Digital Equipment's Boston headquarters, says: 'We see huge opportunities in terms of revenue, because we see a need for computing that is unparalleled in the past.'
Silicon Graphics is another contender for this market, as is Oracle, which recently announced its Media Server.
Once these dilemmas have been resolved and a commercially viable infrastructure is in place to serve the whole nation, confusion over sending the 'stuff' will have to be resolved. At present, a company wanting to send multimedia down the pipe would, in theory, have to obtain permission from multiple copyright owners. For instance, a supplier who wants to store information and entertainment on CD-ROM may need approval on copyright, performing rights, publishing rights, graphic rights.
Mark Sherwood-Edwards from the entertainment specialist law firm Simon Olswang and Co, says: 'The old agreements do not address the issues of today. A "film" may be licensed for cinema but what about video release, video-on-demand, pay-per-view or CD?' Electronic Copyright Management Systems are being developed which will tag information on databases so that it can only be accessed by those for whom copyright permission has been obtained.
Nigel Backwith, partner in charge of the telecommunications industry group at Andersen Consulting, says that the key question is how to make the networks profitable. 'What will be the killer applications that give a return on the investment?' he asks. At present, the only candidate is video-on-demand, which is why it is so over-hyped. Most other suggestions are woolly and revolve around home banking and home shopping. Only when answers to the key question start emerging will information superhighways begin to roll out.
THE UK: LAYING THE FOUNDATIONS
In the UK, we have several options for building an information highway infrastructure. Cable firms are laying down networks for television and telephony. At first sight, they appear to be in the best position, but there are some clear drawbacks.
Cable television networks run on high-bandwidth coaxial cable and are only designed to take one-way, point-to-multi-point, non-interactive traffic. Telephone networks run along the same ducts - which is how they achieve economy - but use separate cable.
While most claim to be laying fibre-optic networks, the fibre only goes to the head-end, which is typically located within a few hundred metres of the home. It does not actually feed into the home, which is connected using ordinary copper telephone wires. To lay fibre to the home is expensive, and most will admit that at present it is uneconomic. Some cable firms do lay fibre into business premises which order more than 20 lines, but cable franchisees have a long way to go before cables pass all homes in their franchise zones, and few go to rural areas.
British Telecom is testing the Oracle Media Server together with technology which, in theory, will deliver broadband services down a copper telephone wire. But it is restricted in the services it offers. New competitors, such as Fibreway and Energis could provide long-distance pipes, but lack the local connections. Malcolm Matson, a director of City of London Telecommunications (Colt), wants to test dark fibre networks running through metropolitan areas. Dark fibre provides infinite bandwidth, and would become like an electronic shopping mall, where information providers rent space to sell their wares.
David Brunnen, of Abfi Marketing Management, who specialises in marketing telecom services, sees the beginnings of an information highway in SuperJanet. SuperJanet is an upgrade, installed last year, to the Joint Academic Network (Janet) which links universities and research institutions throughout Britain. But it needs to open up to commercial customers, which it traditionally has not wanted to do.