There'll Be A Heaven For Couch Potatoes, By And ByPeter Coy
It's 2003, and the bright promises of a decade ago have come true: You really can watch Rush Limbaugh 24 hours a day, study slime mold in words and pictures, and even buy a shiny new couch, all without getting up from your old couch. Better yet, for the first time you have a choice of local phone companies. Interactivity is your life, and you're happy to pay a hefty monthly bill for it.
Sound good? Stop and think for a minute about what's going to make all this possible. Building the information highway across America will be a feat of engineering as massive as constructing the railroads after the Civil War or the interstate highways after World War II. The groundwork is being laid now, in the form of transactions such as the proposed $12 billion acquisition by Bell Atlantic Corp. of Tele-Communications Inc.
CLICK, CLICK. To understand how important this deal will be, consider the complex technology that will underlie video on demand, which is expected to be a main revenue-generator of the new networks. The idea is that you can watch anything in the video library, anytime. Your computerized television--call it a telecomputer--lets you scroll through a menu of programs, click on your choice, and send an order up the line.
That's where things get hairy. In one scenario that's being studied, a robot-like jukebox pulls the correct digital videotape from a library and empties the contents onto a magnetic platter, which resembles the hard-disk drive in a personal computer. From there, the video is sent in bursts to silicon memory chips. It then streams off those chips and is directed through a high-capacity switch to fiber-optic lines that extend to a box in your neighborhood. The box takes the light pulses from the fibers and converts them into electromagnetic pulses, which go over a coaxial cable to the box atop your set, and then to the screen.
Got that? The sequence may seem byzantine, but it has been designed to keep costs as low as possible while satisfying couch potatoes' craving for instant satisfaction. For example, most programs would be archived on digital tape because it's a cheaper medium than magnetic platters. At the other end of the chain, the system saves money by having everyone in the neighborhood share a single fiber-optic line. The coaxial cables in the final stretch to your home are the familiar wires that plug into the back of your set-top box today.
All this helps explain why cable and phone companies are so attracted to each other. Cable companies' coaxial lines have enormous carrying capacity--not as much as optical fibers, but far more than copper phone wires. On the other hand, phone companies are masters of the other parts of the business: switching signals down the right fiber pipelines, maintaining high reliability, and measuring customers' usage so detailed bills can be sent. To date, limited pay-per-view revenue is the cable industry's only experience with on-line transactions. By contrast, notes Patrick E. White, assistant vice-president at Bellcore, the Bells' research arm, "transactions [phone calls] represent the entire telephone business today."
So it's a natural fit. Bell Atlantic plans to bring its expertise to bear on TCI properties that lie outside Bell Atlantic's service area. It will bolster the TCI fiber and coaxial network with phone and video switches, plus lots of video server systems, which consist of the above-mentioned platters and chips (illustration). Details of the systems--such as whether the home communication unit is served by coaxial or fiber and whether it's inside or outside the house--will depend on economics. Local phone service may or may not be provided. "The exact architecture is not a religious matter with us," says John W. Seazholtz, Bell Atlantic's vice-president for network technologies.
NEW THREAT. Back home, Bell Atlantic must guard its flanks from counterattacks by other companies that have their own highway visions and ally themselves with local cable companies. Southwestern Bell Corp. threatens to do exactly that through its $650 million purchase of two Washington (D.C.) area cable systems. Bell Atlantic plans to sell all TCI cable properties in its service area to stave off antitrust charges. Instead, it is experimenting with other concepts: squeezing video signals onto plain phone wires by using digital compression techniques, adding fibers so fewer homes must share one, or even building a high-capacity network to be shared with the local, independent cable operator--as in Morris County, N.J.
Clearly, there's no single correct way to build the ramps to the information highway. It will take a lot of engineering smarts to customize networks to meet local needs at affordable prices. But the architects, such as Bell Atlantic and TCI, are starting now--in a big way. Couch potatoes need only lie and wait.
To continue reading this article you must be a Bloomberg Professional Service Subscriber.
If you believe that you may have received this message in error please let us know.