Broadband - The Dawning of a New Era

Part of the Post-Mortem series
By Sean Chercover

Broadband was the topic of last year's NAB. Bold predictions were made, and by now we were all supposed to be reaping the rewards of high bandwidth. But the last twelve months witnessed vicious carnage on Wall Street, and now nobody seems to know what to expect from this emerging technology.

At the NAB Super Session "Broadband - The Dawning of a New Era in Communications" John Sidgmore promised to address the hard questions about what went wrong, and to offer a road map to success in this bruised-but-not-beaten industry.

Out of the ashes…

When John Sidgmore talks, E.F. Hutton listens. As Vice Chairman of WorldCom, Sidgmore is in a position to separate the hype from the truth. Besides his own impressive credentials, he lunches with Vint Cerf. And you can't beat that.

As Sidgmore takes the stage, the room is electric. He dives right into the hard stuff.

"Two years ago, it seemed like every idea that somebody came up with was going to work," Sidgmore says with a rueful smile. "Now it seems like hardly any ideas are going to work. And you know damn-well that two years ago we were wrong, and we're wrong today."

Sidgmore acknowledges that the bloodshed is not yet over. Countless dotcoms have collapsed and been de-listed, with more on the way. "We're in the toughest financing market in, perhaps, the last 15 or 20 years," he adds. "But the fact of the matter is the center core of the Internet revolution is still very sound, very valid and will carry on."

Sidgmore illustrates this with a chart that shows the total market capitalization for all Internet stocks over the last five years. He points out that, despite last year's decline, the total market cap is still four times what it was in 1998.

"The Internet growth is going to continue," Sidgmore assures us, "but not everyone is going to survive." He warns that success will only come to companies that can prove their business plan is solid and leads to profitability. But he insists that the Internet is still the greatest growth opportunity, and will be for many years.

"It took radio 38 years to develop 50 million users, but it took the Internet five years…and from 1994 to 2000, the infrastructure of the Internet grew at 1000% per year," he says. "There's never been a technology in history whose infrastructure grew at 1000% per year."

Members of the audience relax visibly, buoyed by Sidgmore's enthusiasm.

"To me, there are only two interesting themes in communications over the last few years," declares Sidgmore. "One is wireless and the other is the Internet. Together, they form an incredible opportunity to build new revolutions, new applications and new services that will really change the world over the next few years."

Looking Into the future

When most people think of broadband, they think of streaming video over the Internet to personal computers. Sidgmore agrees that streaming video will create demand for broadband services and help make broadband commercially viable in the short term, but his vision goes way beyond entertainment applications.

"Every car manufacturer that we know about in the United States and Europe are installing wireless IP interfaces in their cars," announces Sidgmore. "They want to monitor everything you do in your car; they want to call you when you need to come in for service, so they can make money faster."

"It raises lots of issues about privacy and so forth," he says with a dismissive wave of his hand, "but that's what they're all doing."

This is an example of immediate application for the magic combination of wireless and broadband. But within a few years, Sidgmore explains, applications will be developed that will truly change our lives.

"The Internet is still way too difficult to use, for most people…but that's about to change," predicts Sidgmore. "The biggest thing that's going to change about the Internet and technology is voice browsers…there's going to be a huge revolution here, and it's right on the horizon."

Brave new world

Sidgmore's vision consists of a device, about the size of a PDA, which you will carry at all times. The device will have built-in voice recognition software. Running in the background will be an "always on" Internet voice browser. You will talk to your device all the time, keeping it informed of your activities and plans throughout the day.

"The voice browser will be very intelligent and will know everything about you, because you told it everything about you," says Sidgmore. "So, your voice browser knows the route you take to the airport. It knows that you're going to Chicago today from Las Vegas. It knows that a truck overturned on the road ahead. So your voice browser can call you and say, 'look, there's an accident ahead, so get off two exits early. You might make it, but I doubt you will, so I've already called ahead and got you a flight an hour later and I also called your appointment in Chicago and he's fine to meet you two hours later.'"

The audience is completely enthralled, and Sidgmore can't resist another example.

"Suppose you've told your device all about your stock portfolio, so your browser knows you own a lot of Amazon.com stock. Well, it's early in the morning and your browser knows that Jeff Bezos, the CEO, just wrapped his car around a tree and killed himself. Now, depending on your view of Jeff Bezos, you may want to buy more stock, or you may want to sell."

The audience gets a good chuckle out of Jeff Bezos hypothetically wrapping his car around a tree and killing himself. Sidgmore says that, as long as you have shared your opinion of Bezos with your "device," your browser will know what to do and act accordingly.

"It could know your credit card balances…it could know, if you're in a store buying a stereo, that down the street they're selling the same stereo for half price, and it could call you."

This automatic, instant messaging, always on, HAL 9000 Robo-Nanny is, Sidgmore insists, just around the corner. He seems happy about that, as does the audience. He makes no mention of the risks of storing that much personal and private information on a Web server, where some teenaged sociopath-hacker-geek can access it. And he seems completely oblivious to the possibility that Big Brother might take an interest in those files.

Sidgmore then asks the audience to envision a Web site called IsYourHouseOnFire.com.

"If your house was on fire, you would probably want to know that, right? Yes. But you're not going to sign onto a Web site every five minutes and say, 'is my house on fire?' With this new technology, however, there will be a sensor in your house and your voice browser will call you immediately and let you know and ask for instructions."

One wonders what instructions there could possibly be, other than call the fire department. And fire alarms which do that exist today. I'm not clear why slowing down the process by having my burning house call me to ask for instructions is a benefit. But the audience seems pleased, and Sidgmore is a smarter man than I, so I should probably keep my mouth shut.

Practical applications

Sidgmore now turns to commercial applications for broadband that can be exploited and monetized in the short term.

"First, we have to understand the huge potential for growth," he says. "There's a myth that practically everyone's connected to the Internet. The fact is, hardly anybody is connected." He cites a Goldman Sachs study: Only 26% of Americans log onto the Internet more than four times a month. This compares with 15% in Britain, 8% in Germany and a whopping 70% in Finland.

A slide comes up on the screen:

Keys to the Promise of Broadband
· Multimedia
· Video Conferencing
· Telecommuting
· Distance Learning
· Telemedicine

"With broadband, we now have the ability to finally exploit these visionary applications that people have been talking about for 20 or 30 years," says Sidgmore. But he cautions that they will come online over the next 6-10 years.

E-commerce is a more immediate application, despite the disasters of the last year, says Sidgmore. He predicts the Web will account for 65% of all orders by the year 2004. It now accounts for less than 5%. "It's just a matter of fact that it's cheaper and more efficient to sell, process orders and service customers over the Internet."

Sidgmore is a smarter man than I, and I know I should keep my mouth shut...but 2004 is only three years away. If 65% of all orders are made online in 2004, I'll eat these words...literally. Sixty-five percent of all orders? At this point, I can't help thinking that Sidgmore sounds like a man hawking snake-oil.

Another 'sure thing', according to Sidgmore, is B2B exchanges, which increase efficiencies to a degree that cannot be matched by any other medium. "But you have to remember, it's not magic…all of the traditional things still have to be done. The Internet just makes all of these things more efficient."

Media Convergence

Sidgmore is followed by Ashley Highfield. As the president of the New Media division of the BBC, Highfield isn't interested in changing the way you live your entire life. His goal is media convergence, and he presents the prototype of the BBC's broadband portal, which will launch at the end of this year.

The audience stares at the large screen as Highfield taps away on the keyboard of his laptop. "What we've found at the BBC is that you can no longer just commission a series. You have to commission a project that includes all media," he says.

Computer-animated dinosaurs roam the screen as Highfield explains. "In today's market, you need multiple distribution channels for multiple revenue streams, and we've decided to address that in this second season of Walking With Dinosaurs."

Walking With Dinosaurs, a computer-animated documentary series that explores the lives of long-extinct creatures, was a runaway hit for the BBC last year. But it was very expensive to produce and was not ultimately profitable. To answer this problem, the second season will consist of:

· "Walking With Dinosaurs" documentary series
· "The Making of…" documentary special
· "The Science Behind…" documentary special
· "Walking With Dinosaurs" Web site
· Online, interactive "Walking With Dinosaurs" video game
· Television Game Show
· Traditional Merchandising

After watching the series, viewers may be tempted to play the game online, explains Highfield. The game's graphics are derived from the animations created for the television series, another way to re-purpose content, spreading costs and establishing another revenue stream.

"Those who win the game can post their game online, where people can watch the games unfold and vote on their favorites," says Highfield. "In the end, we will pick the five people who got the most votes and invite them to participate in a Walking With Dinosaurs game show on television."

As Highfield talks, animated dinosaurs fight to the death on the giant screen.

The audience is thrilled. Everybody at NAB talks about convergence, but Ashley Highfield actually demonstrates the promise of converged media, in the here and now.

Be here now

The commercial applications for broadband range from B2B services, to media convergence, to cars that spy on their owners. There are many ways to exploit this technology and there is still much uncertainty about how to develop viable business models within the broadband space.

But one thing is certain - broadband can no longer be ignored. For good or ill, it will change our lives...someday.

Sean Chercover sean@chercover.com is a freelance writer and non-linear editor. He doesn't trust the HAL 9000.

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