pace
Antony Barnett
It’s 2010. You’re travelling through a remote part of the world. You have a phone with you – one of the latest generation mobiles, complete with a screen and Internet connection – the phone that you use at home and at work.
It rings. It’s your estate agent. He has found the dream house you’ve spent 12 months looking for. In seconds he is sending video footage to your screen via a satellite. You love the house. You e-mail your bank and solicitor to get things moving and decide to cut short your trip.
You call your travel agents and get them to change flights and book a hotel. They send a photo of the accommodation plus a map of how to get there. On the train to the hotel, you switch your phone to TV and catch up on the live premiership football match between league leaders Kaiser Cheifs and Mamelodi Sundowns.
And you don’t worry about the cost: the calls are charged at local rate because they are channelled through the Internet.
Like it or not, this world of cheap, any time, anywhere telecommunications is on its way. This week, leading telecoms companies such as Nokia, Motorola, Ericsson and NEC will open the Yokosuka Research Park, 50km south of Tokyo, specifically to develop the kind of advanced technology outlined above.
Look at Wall Street’s backing for the $30- billion record-breaking takeover bid made by WorldCom for the telecoms group MCI, which seems to have snuffed out British Telecom’s (BT) offer.
Few outside the United States had heard of WorldCom before the news broke, and indeed five years ago it barely existed. This is a young upstart that now is the largest Internet access provider in the world and the fourth-largest long-distance operator in the United States. And as if WorldCom’s counterbid weren’t bad enough for BT, news came last week of a technological breakthrough that threatens its precious hold on the British residential market.
Nortel of Canada and United Utilities announced they had found a way to send undistorted Internet signals and computer data along electricity power lines at speeds 30 times greater than today’s high- speed modems. They promise cheap Internet access, plus the potential of telephone calls and video clips two years down the road.
It is hard not to feel sorry for BT. Of the former state-owned monoliths, it has tried hardest to reinvent itself as a young, hungry company.
But events have made it look slow to react to the fast-changing world of radio waves and satellites. Ian Vance, Nortel Europe’s chief telecoms scientist, is himself astonished at the speed of change.
Asked for a vision of telecommunications in five years’ time, he says: “I can’t. I simply do not know. It’s changing so fast, it is totally unfeasible to think three years hence, let alone five.” Nortel is also behind the “fixed wireless” technology that has allowed Cambridge-based Ionica to offer residential telephone services in competition with BT and the cable companies without the huge expense of digging up roads and laying down wires.
It is these technological developments, together with the liberalisation of the global telecoms industry, that have led to a new breed of nimble and aggressive companies grabbing chunks of the $700- billion-a-year market. These new entrants are run by entrepreneurs backed by whizz- bang technology, low costs and minimal bureaucracy.
The typical new telecoms company is also hot – very hot – on marketing and packaging. Instead of inventing a product and then asking the marketing department to sell it – as so often the likes of BT do – these new entrants think about what the consumer wants first and then develop the technology.
But perhaps the greatest threat to the traditional telecoms company comes from the Internet. In the past, handsome profits were made by overcharging on international calls. Technological developments and market liberalisation have forced prices down to about $1 for a one-minute international telephone call at peak rates. But this is still far higher than what is available on the Internet, where all calls are charged at a local rate.
Technologies are now available for sending high-quality voice messages over the Internet. You won’t even need a PC in your house, just a phone connected to a “smart” box on the wall.
It’s not just voice, but fax as well. Fax transmissions account for nearly a third of the $62-billion market for international telephone calls. WorldCom, for instance, offers an international fax service over the Internet, which cuts the cost between New York and London from about 30c a page to 16c to 19c.
So where do the computer giants fit in? It’s no surprise that companies such as Microsoft have already started to invest in telecoms. Last week it announced a deal with German giant Deutsche Telekom. It has already put $1-million into Comcast, a US cable company. And it won’t stop there.
The likes of Bill Gates will not, of course, be satisfied with having to rely on someone else’s wires. In 1990 he and Craig McCaw, the US mobile phone pioneer, launched a $9,6-billion joint venture called Teledesic. This involves using a few hundred satellites 1400km above the Earth’s surface to create an “Internet in space” by 2002. Eventually this should allow cheap, high-speed, wire-free communication between any two points, no matter how remote. The WorldCom bid for MCI was just the first lap of the race for telecommunication supremacy, with competitors barely off their starting blocks. By the time the finishing line is in sight, observers predict the upheaval will have had an impact on society as great as the industrial revolution and that the companies on the winners’ rostrum may be as unknown to us now as the technologies that put them there.