All the headlines about the digital, interactive, 500-channel, multi-megamedia blow-your-socks-off future are pure hype. Yes, all the wild Wall Street, through-the-roof, Crazy Eddie, cornucopia, shout-it-out-loud promo jobs are pure greed. It's all a joke.
It's now official. I'm announcing the beginning of convergence backlash. There will be no convergence. There will be no 500-channel future. There will be no US$3 trillion mother of all industries. There will be no virtual sex. There will be no infobahn. None of it - at least not the way you've been reading about it.
Sure the technologies are real. Digital compression and digi-tal phone lines are real. Those 100-MIPS micros are real. Multimedia and high-speed networks are real. In fact, the technology is so real that it's almost obvious. Unfortunately, the businesses to exploit these technologies are anything but obvious.
Why all the hype and the greed? Everyone wants to look smart. But no one knows what to do with these new technologies. And nowhere has the hype and greed been greater than in the long-running cable television versus telephone company miniseries. This prime-time docudrama has been breathtaking. Who will win? Who has the best position/funding/technology/hairdo? Forecasts of doom and triumph ricochet off press releases, conference programs, analyst reports.
Why has cable versus telecom become the center ring in the convergence circus? Mostly because cable and telecoms are regulated monopolies yearning to be free. The government tells them what they can and can't do. Government tells them what rates they can charge. Government tells them what businesses they can own. Government tells them with whom they can associate. Naturally, they don't like this at all.
Along comes Convergence and Digital Everything, and the cable and telecom folks step right up to take advantage. They tell the regulators: The technology wants to be free. It will save the nation, the economy, and the free world. After twelve years of anti-regulation Reaganautics - actually Bush was a re-regulator - and with the country's first digital president now in the White House, the timing couldn't have been better. Suddenly the technology vote matters.
It is strongly in the interest of both cable and telephone companies to exaggerate their plans for interactive systems deployment. After all, they are constantly asking for regulatory relief. Moreover, it is strongly in both their interests to exaggerate the competitive threat posed by the other guy. Local telephone access no longer will be a monopoly if the cable company starts delivering dial tone. And re-regulated cable would like nothing better than to get the FCC off its back by pointing to the bone-crunching threat of video dial tone.
And, since we're not dealing with dummies, everyone involved has probably figured out the business realities. Neither cross-competitive threat is really much to worry about.
You see, the cable television system is not particularly well-suited to carry switched voice. The return path is costly, where it exists, and there is no switching capacity. Reliability is rotten and current telephone equipment is incompatible.
And forget about the much ballyhooed wireless phone alternative Personal Communications Services (PCS). The cable network is just not a good place to locate radio cells. The poles are too low and don't even go to the right places - for example, alongside the interstate. No, cable television is not a good substitute infrastructure for telephone service.
The idea of putting entertainment video out over the telecom plant is even more of a stretch. Fiber rebuilds are costly and won't deliver a reasonable service substitute unless they go right into your living room. Unless it's a broadband, multichannel pipe that supports many television sets and other devices, it just won't be able to compete with today's cable, let alone the cable TV system of ten years from now. And all the attempts to put multiple compressed video streams on copper have met with well-deserved skepticism.
In short, it won't work. All networks aren't created equal. Bandwidth must be configured to be useful, and the switched topology of voice telephony is fundamentally different from the broadband/broadcast character of cable television. These systems have developed and continue to evolve to address very different business needs. They will not converge. There is neither the business nor the technical basis for them to converge.
But wait a minute. There is more here than posturing and press releases. What's driving the actual investments? If these guys are so smart, why are they spending the big bucks?
Take a look at where the real money is being spent. It's not on residential rebuilds. It's not on Silicon Graphics super-video-servers. The real money is being spent on real markets. Business-to-business communications is at the top of the list. Network computing is at the top of the list.
High-speed digital links over fiber optics to interconnect LANs and support videoconferencing and aggregate voice-data traffic is a real business today. The telecoms are very serious about this business. They want to dominate this business in their own territory and play a big role in others. The US West investment in Time Warner is entirely earmarked for this use of the Full Service Network. The Bell Atlantic interest in TCI has everything to do with TCI's investment in Teleport. The independent suppliers in this business are known as competitive access providers (CAPs) and the telecoms plan to use cable to CAP each other.
There really is a man behind the curtain, Dorothy. Pay no attention to the convergence pyrotechnics. There's a lot at stake, and it just might be your digital future.
