The Great Infrastructure Debate

Second Conference

September 26-27, 1994

Boston, MA

Background

Thirty planners, policy makers, and thinkers from a diverse group of organizations came together for two days to participate in a Future Mapping conference on the evolution of the US information superhighway. The Great Infrastructure Debate is a semi-annual co-discovery process organized by Northeast Consulting Resources, Inc. (NCRI) on a by-invitation-only basis. The conference is structured as an interactive scenario building process that identifies possible outcomes and the events needed to make those outcomes happen. This paper summarizes the results of the second conference in this series, which was held in Boston on September 26 and 27, 1994.

The group assembled for this conference included representatives from carriers, computer vendors, network equipment manufacturers, a venture capital firm, a major research lab, consultants, a non-profit foundation, publishing industry associations, a university, a government agency, an intellectual property law firm, a major catalog retailer, and a major credit card company. The materials used to structure the conference were developed by NCRI based on our work with numerous clients on a variety of planning and strategy issues engendered by the development of the information superhighway. The results of the first conference held on March 7 and 8, 1994 were used to refine the materials for this second conference, just as the results from the September conference will be used when planning the third conference on January 30 and 31, 1995. These results are not a forecast, nor should they be taken as some kind of absolute truth. They are a reflection of the collective opinions and current logic of a fairly well informed group of senior and middle level managers from organizations involved with the early evolution of the information superhighway.

Summary

This second conference produced a strong consensus view that the early evolution of the information superhighway would be driven primarily by the rapid rise of electronic commerce. New, diverse forms of electronic, business-to-business interaction would be the first large-scale, commercially relevant manifestation of the growth of an information superhighway in the US. The Internet will quickly foster new electronic markets and will offer many businesses the ability to reach existing and new customers in innovative ways that will be much less expensive than current forms of distribution and marketing. Although some of these electronically-accessed customers will be consumers, the business market, not the home market, is expected to be the major driver of the infobahn in the 1990s. The potential to dramatically lower the cost of doing business and reach important new customers using the narrowband networking services that already exist will provide the money and the motivation to get the information superhighway moving. Given that momentum, it will then expand into a full range of consumer-oriented and broadband applications in the next decade.

Key events to monitor and/or influence in the development of this scenario include telecom industry reform, increased competition on network services (especially in the local loop), agreement on Internet security and content metering standards, continued health and growth of the Internet, early growth and proliferation of business-oriented information and electronic commerce services, rise of product advertising on the Internet, substitution of electronic commerce for traditional forms of sales, marketing and distribution, emergence of innovative and intuitive information highway software interfaces, and dominance of the PC rather than TV settop boxes as the primary home vehicle for new information highway services.

These conclusions are, in our opinion, very significant. Most of the discussion about the information superhighway has been about consumer-oriented services such as video on demand, digital cash, and home shopping. These services will happen, but according to the analysis at this meeting, they are not the early drivers. The home market will be nascent for some time but the business market will expand very quickly. NCRI, itself, is taking cognizance of this hypothesis and focusing many of its activities and development next year around electronic commerce and its implications for business strategy.

Conventional Wisdom

In the first part of the Future Mapping process, the participants are divided into five groups of six people each and asked to vote on the likelihood of each of 155 possible events that might happen in a 1995 - 2000 timeframe. Each team must come to a position (highly likely - greater than 80% probable, highly unlikely - less than 20% probably, or uncertain - between 20% and 80% probable) on each event based on the opinions and knowledge of the team members. When all the teams have completed their voting, a position is established for the entire group. In general, if there is a lot of disagreement in a team or among teams, the event vote is recorded as uncertain. Those events which are recorded as highly likely in the opinion of the entire group must have been voted so by at least four out of five teams.

The results of the conventional wisdom exercise for this conference reflected a strong convergence of views. Forty-five (45) events were highly likely and one (1) highly unlikely. The main themes of the highly likely/unlikely events were: The business market is more universal than the home market, which will include only the affluent for some time. Access to the office will be more important than access to public on-line services for most consumers. A wide variety of business information services will take off, however. Network delivery systems will evolve slowly from asymmetric (i.e., significant bandwidth differences in each direction) to symmetric (i.e., equal bandwidth sending and receiving) configurations and technologies. Electronic mail, wireless, and other narrowband services will grow the fastest at first. New information services will not have a big enough market to be profitable if they require use of broadband communications and high-end PCs. Security, privacy, and copyright protection are critical issues that need technical solutions. There will be a wide variety of delivery systems and services in the early years of the info highway, no one approach will dominate at first. Most non-rural homes will be passed by three or more competing networks by 1999. The telecom industry will restructure dramatically, wiping out current Regional Bell Operating Company (RBOC) boundaries by the turn of the century. The Internet will continue to grow and drive important standards for the information superhighway. It will slow the growth of the consumer on-line services, but eventually diminish to a set of agreements on standards and services used by all kinds of service providers.

These views were further reinforced by the voting on the five scenarios that the groups were given to defend in the second part of the conference.

The Scenarios

This section summarizes the five scenario presentations that were made on the second day of the conference. Each team was given an endstate description of the information superhighway in the year 2000 and asked to develop a scenario that leads to that outcome. In the Future Mapping process, a scenario is a list of events that leads to an endstate. The events used are primarily the same 155 used in the conventional wisdom exercise, although the teams are encouraged to write new events that are needed by the logic of their scenarios. Each team then puts together a twenty minute presentation that summarizes what, in their opinion, the key points of the endstate are, and the critical events that must happen or be prevented from happening in order for this outcome to occur.

Scenario A: The Giant Sequoias

The first team described an endstate in which a few big, dominant companies or alliance groups use strong brands to create customer loyalty and simplify purchasing decisions. They used the metaphor of the large sequoia trees that grow up tall, shading the forest floor and limiting the growth of competitors. They envisioned the rise of a few brand supra-entities that were larger than the sum of the many constituent companies and/or services of which they are comprised. They likened this to a great department store chain like Macy's that offers many different products, but that has a clear brand value of its own. The brand entities would use a variety of alliances, cross-ownership agreements, and outright acquisitions and mergers to assemble the competencies, coverage and content they needed.

The importance of branding in the development of new info highway services is that it simplifies purchasing for consumers, who will be unable to sort through the wide variety of providers and service offerings that will be coming to them over the next five years due to the rapid pace of deregulation and the intensely competitive market developing in the US. The brand giants will also attract and hold onto customers through their emphasis on customer care services and some number of custom services. The team expected that each household would generally go with only a single brand, much as today each household goes with a single long distance telephone carrier. It is clear, therefore, that many services and new forms of electronic content will be available from multiple brand entities, since the content providers will want to reach the largest audience possible. The brands win through customer relationships, not through unique content, for the most part. Ubiquity is another key advantage that the large brands will leverage, especially for business travelers, to whom national services will be increasingly attractive. The rural user gets left out of this during the next five years, however.

The brand supra-entities would develop unique user interfaces and middleware to create brand identity and offer unique value. They would develop suites of services, similar to the basic (flat rate) and extended (pay per service or view) packages available on CATV today. In the basic services, the business model will call for the brand entity to get most of the revenue, while in the premium services model, the content provider will get a much larger portion of the revenue. The brand entity will also get advertising revenue, primarily in connection with basic services.

The scenario painted by the team called for the emergence of a major, global inter-exchange carrier that provides its customers with one-stop shopping and significant simplification. From there the carrier does a major deal with a big cable company in 1995 and starts offering new kinds of packaged info highway services by 1996. At this point, the RBOCs also get into the act and do deals with CATV companies. By 1997, the wireless wars have settled out and there are only three wireless giants in the US. Wireless is a key access method to the highway. By 1998, the brand giants are pretty well formed and include CATV, telephone, wireless, and new services. The brand name is already clearly driving buying decisions and is seen to improve profitability, forcing more players into consolidating around the best brands in the 1999 time frame.

Scenario B: Integrated Chaos Explosion

The second team described an endstate in which there is great deal of innovative technology constantly emerging and there a lot of churn. Like a 4th of July fireworks display, it is an explosive, colorful, exciting time, but one that is tense and not particularly comfortable. As a result, intermediaries, packagers, integrators and agents of all sorts are winners, as are venture capitalists. Competition is fierce and there are a lot of new players. The environment is characterized by a market economy which is loosely regulated. There are a lot of alliances, but they are ephemeral and changing. Big companies, including the telcos and those who continue to hold onto old infrastructure and technologies, have difficulty relative to smaller innovators and entrepreneurs who wholeheartedly embrace the new info highway paradigms. Companies that win are those that can minimize need for capital, while those who are still operating in capital intensive ways are going to lose.

The key events that this team saw as important were those that opposed consolidation and government regulation, lowered barriers to entry and reduced capital costs. They envisioned a much greater diversity of service providers, with overlapping domains. In effect, there will be several information superhighways, many of which will exploit fiber optics to deliver true broadband services. There will be many sources of content and many new applications. The diversity of the environment means that people will generally have a number of different addresses and phone numbers, making establishment of good directory services very important. Security technology will also be critical, especially to get financial transactions going over these networks. They will see an increase in info highway hype around the time of '96 elections, as well.

Continued, dramatic improvements in price/performance of computing and communications technologies are one of major drivers of this scenario, as the new technologies rapidly displace older ones. Costs of these new services keep going down, insuring that they are affordable to a larger customer base. Low-cost, powerful PCs are a key technology, which will be the primary vehicle for service delivery in the home, due to their flexibility and general purpose nature. Home shopping, access to information, advertising, and office information access will be important early applications, not video on demand.

Scenario C: The Social Planners

The third team presented a scenario for the information superhighway driven by social needs and human capital development. This scenario is about social planning, not about ROI, but also not about government regulation. The evolution of the information superhighway will involve a balance of social and market factors to insure that the needs of education and labor force development are met; so that information literacy and the capability for life long learning increase dramatically in this country, with significant positive impacts on economic development and improvement in social conditions for all. They saw a need to involve public policy in this process because normal market forces alone won't lead to the attainment of longer-term social goals and inclusion of all segments of the population. The government must participate in infrastructure investment to order to include the rural population (12.5M people), the non-profit sector (10% of GNP), the public sector (which employs up to 50M people) and an at-risk population, such as those with literacy problems and the handicapped (as many as 80M people).

This team saw in the information superhighway a potential for societal transformation. In the short-term, this would mean some slowing of development due to the need for universal service and inclusion of special segments of the population. This would pay back in the mid-term, however, with a better educated and larger market for the commercial service providers, as well as a stronger economy due to a more competitive workforce, capable of continuous re-skilling and re-learning. Due to the emphasis on inclusion, this team favored use of technologies that work with existing POTS infrastructure and new applications that engage whole population sets, even such things as distributed, interactive, multiplayer games. There will be a whole new range of community and citizen engagement applications. The Internet will foster a major populist, grass roots movement in America that will become politically important and powerful. One hundred and fifty cities are putting up community networks and databases with things like mortgage rejection rates by neighborhood, etc. These new technologies will even make it into the ghetto though public institutions like libraries and schools, as well as important community institutions like churches. More politicians will take up these issues in addition to Vice President Gore and Senator Kerry of Nebraska.

The government will influence the development of the info highway through its spending and through programs similar to the old Rural Electrification program. There will be some kind of universal service tax, as well as an indirect cost due to additional constraints on service providers that will show up as higher costs that will be passed on to the consumer. The non-profit sector will be getting heavily involved in the development of these new services and their application to the public welfare. There will be more work done under the Americans with Disabilities Act to open up info highway services to various kinds of challenged populations. The development of these new networks and information services will be a fundamental driver of new economic strength, much as the original interstate highway system was.

Scenario D: King Content

The fourth team presented a scenario in which content creators and packagers would derive most of the value from the development of the information superhighway and would be the primary drivers of its adoption by consumers, while transport and distribution will be a high volume commodity. There will be a rich set of multimedia entertainment (e.g., games, programming, VR, video on demand), shopping (with electronic payment) and information services (e.g., education, traffic news and flight status). Interactivity will be the key new characteristic of these services. These new services will be targeted at a wide variety of micro segments. In effect, the network will be a place where consumers segment themselves, creating an ever-expanding set of interest groups. There will be various kinds of content; some perishable and real-time, others long lasting and repurchasable. The home market will be the biggest and most important one, although there will be many business information services. The business user will be treated as an individual, rather than an institution, in marketing of these services. The Internet, due to its large population, will be an important early distribution channel. Advertising will decline, but will still be needed to fund basic subscription services. Product and service providers will use the network to provide information to consumers through electronic catalogs and new electronic versions of the yellow pages.

Key enablers for this scenario are technologies and processes to enforce copyrights so content creators can get paid for their work. Metering and usage recording technologies will standardize and commercialize to meet this need, although not all services will be paid for on a usage basis. There will need to be settop box standards to create a uniform delivery vehicle for the content creators. Security technologies such as digital signatures will also be important for some kinds of value-added services such as shopping. Increased competition on the telecom market will encourage this scenario since it will increase competition in delivery systems. Other enablers are new forms of software that increase ease of use of the network such as voice control and intelligent agents. By the end of the decade HDTV will start to be adopted.

This team painted a scenario in which there is early churn and lots of players trying out new concepts and services. This leads to a middle period in which packagers consolidate and are most influential. By the turn of the century, the content creators themselves have become most powerful. A variety of social issues will be engendered by these developments. Pornography and other content regulation issues on the network are really no different than in other media and will be handled through traditional policies. Protecting privacy will emerge a major issue. Government will go on-line and there will be voting via the network by '98. Gambling on the network will be legalized. Educational needs will be met through these developments as schools use metering technology to do custom publishing of textbooks on a routine basis.

Scenario E: Electronic Commerce

The fifth team presented a scenario in which the first five years of the development of the information superhighway is fueled by the rapid adoption of new forms of electronic commerce. The network will provide businesses with access to new markets and decrease their costs to reach those markets, thus increasing margin. These new forms of buying, selling, advertising and distributing will be based largely on existing transport services, they don't require deployment of a new broadband infrastructure, thus enabling their rapid growth. Business will be the driver of network expansion, although the consumer market will be a growing part of this movement. Effective use of the information superhighway will confer competitive advantage to early adopters, but by the end of the decade it will be a competitive necessity for all businesses.

Today, 35% of a typical businesses costs are in sales, marketing and distribution. Over the network this can be reduced to under 8% and this is where the money comes to develop the information superhighway. As electronic commerce is adopted, industry value chains will restructure, eliminating many intermediaries and creating new kinds of infrastructure (such as public warehouses) as information flow (prices, availability, features, etc.) is separated from the physical transport of goods. Savings from electronic commerce will go partially to buyers in the form of lower prices, partially to suppliers in the form of higher profits, and partially to the service operators who will see tremendous growth. A big part of this revolution will be new approaches to marketing and sales, unlike earlier EDI efforts which were really about the backroom functions of payments and ordering.

The key enablers for this scenario are new forms of security technology that insure that the services can be trusted, as well as new kinds of middleware that create intuitive user interfaces. New service providers that provide the forum for electronic commerce will arise, as will new software companies to create the middleware and expert system automation. There will be a frenzy of entrepreneurial activity over the next five years as many new entrants go after the myriad communities of interest growing up on the network. New directories and listing services, enhanced yellow pages and on-line brokers, will arise. Smaller manufacturers and service providers will flourish in this environment as there is much greater "shelf space" in cyberspace and low cost reach to microsegmented markets. Lots of big companies and the government itself may be threatened by these developments, but the free market should propel it forward into the next century when more advanced forms of a broadband superhighway will finally start to emerge.

Composite Scenarios

At the beginning of the conference and after the five scenario presentations, the participants were asked to rank each endstate in terms of its likelihood and desirability. There was a clear and strong consensus in both votes: Scenario E on electronic commerce was ranked number one in both likelihood and desirable. In the second vote, it received very close to the maximum possible score with only one participant not ranking it first in likelihood. In our experience, this kind of consensus is unprecedented for such a diverse group on such a complex topic. We take this result as highly significant and recommend that all organizations increase their level of involvement in the growth of electronic commerce to maintain their competitiveness and reap the benefits early.

The following table gives the final ranking results. The first number for a team gives the rank (1 though 5). The second percentage number gives the percent of the maximum possible score (i.e., if every participant ranked that endstate number one). This is a measure of how close different scenarios were in the ranking (e.g., Scenarios D and A are very closely ranked in terms of attainability).

Scenario Attainability/Desirability

A

Attainability 2, Desirability 4

Attainability 52% Desirability 42%
B

Attainability 4, Desirability 5

Attainability 42%, Desirability 22%
C

Attainability 5, Desirability 3

Attainability 14%, Desirability 52%
D

Attainability 3, Desirability 2

Attainability 50%, Desirability 59%
E

Attainability 1, Desirability 1

Attainability 93%, Desirability 75%

Scenarios D (Content) was also ranked fairly highly (second in desirability) but considered to be further out in time than 2000. Scenario C (Social Needs) was ranked fairly desirable but was not seen as attainable. Scenario A (Brands) was seen as attainable but not very desirable. The main message, however, was the strong consensus around Scenario E (Electronic Commerce).

As a final exercise, the teams considered ways of combining the five scenarios into an evolutionary sequence. All saw electronic commerce as an early catalyst. Most teams predicted that it would create the explosion that led later to the many new content businesses of Scenario D and the social benefits described in Scenario C. Most teams saw little evidence of the B Scenario developing. The branding of Scenario A was an overlay on the basic scenario and a packaging strategy that would cause some consolidation as information highway services mature in the next decade. One team saw the A and D Scenarios as highly intertwined with branding being associated primarily with content packaging. Once again, there was a high degree of convergence of ideas on how these scenarios would play out over time. Common and Critical Events On comparison of the event selections that the five teams produced, we found eleven events that were needed in four out of five or all five scenarios. These common events describe a set of issues that all stakeholders in the information superhighway should be addressing today. They are: Early availability of good user agent software to increase usability and productivity. Connection of all major on-line services to the Internet, making it the access point to the largest and most diverse market of network service consumers. Proliferation and adoption of a wide variety of new business information services. New copyright laws to allow for network transmission of copyrighted documents. Continuing expansion of the Internet and evolution of its administration in a way that allows continued growth (collapse of the Internet was seen as an inhibitor by most teams). Rapid agreement on, and adoption of, Internet security standards for privacy and authentication. Development of info highway service packagers to provide customers with one stop shopping. Substitution of network-based information and services for direct mail advertising. Development of electronic directory systems that are widely used. Continuation of the flat rate billing paradigm of the Internet into the broadband era. Slow evolution toward ubiquitous bandwidth symmetry.

In addition, teams were asked at the end to nominate the four events they thought were most critical to the development of the common scenario. Many of these events were already in the common list above. Additional ones chosen were: Middleware available that allows for seamless integration of multiple services. Commercialization and widespread adoption of object metering technology for information content. Development of industrial strength Internet services. Development of multiple delivery channels to the home market such that there are at least three information highway networks running past 70% of residences by the end of the decade. Privacy becomes a competitive issue in consumer markets forcing more commercialization of security technologies. Continuing upgrade of the local loop to support new services. Continued development of video and image compression technologies to give longer life to existing narrowband delivery systems. Service providers outsource many functions to lower costs and speed entry of new players. PC becomes a standard vehicle for home use of information highway services. Microsoft fails to win a significant share of new information highway markets, insuring competition and a continuing entrepreneurial environment. Telecom industry reform is accomplished and increases competition in network services. Consumer use of electronic commerce increases steadily.

About Future Mapping

NCRI has been developing its Future Mapping process for over six years through application to a wide variety of strategic planning problems. Future Mapping is a process for exploring the dynamics of an industry or organizational situation and prioritizing the opportunities for influencing the development of desirable outcomes. It is a scenario technique that stresses both a holistic understanding of the problem space as well as a consideration of the detailed events that must happen and actions that must be taken to implement a given scenario. It has been applied to problems of competitive strategy, organizational renewal, and product/service development in businesses, internal support functions, non-profit organizations, and government agencies of many sizes. It is structured around an interactive workshop format that takes between one and three days and can include between 12 and 35 participants. Typical projects take four months to complete, including interviewing, materials preparation and review, the workshop, analysis, and final report.

About Northeast Consulting Resources, Inc.

Northeast Consulting Resources, Inc. (NCRI) is a Boston-based consulting firm focused on the intersection of strategic planning and information technology (IT). We assist clients in a variety industries with corporate and business unit strategic planning, as well as planning for effective use of information technology and its integration into business strategy. Our information technology work is taken to a deep level of technical expertise and we are often engaged to help firms in the computer, communications, and information services industries with strategic planning, product strategy, and marketing strategy. We assist IT service delivery organizations within an enterprise with the development of architectures for information systems, distributed computing, and advanced networking. Our consultants are widely published and are recognized as leaders in scenario planning, network-based applications for the information industries, broadband networking, advanced carrier services, and network and system management. Our work stresses a participatory approach that promotes the development of consensus around difficult planning issues and accelerates decision making and follow through.

This article, along with other relative information about NCRI, is available on the Internet via the World Wide Web (WWW). Connect to URL: HTTP://www.ncri.com, ~web/doc.

The Full Text of the Endstates

Brand Driven 2000 A

Industry Structure: In all areas of the country, customers can choose from among multiple sellers of branded communications services. Just as national airlines provide a brand under which many regional carriers fly, so do the leading communications companies provide highly visible banners under which many network operators supply service. Each major brand group offers a broad range of carrier and information content services. While some independents still exist (operating in specific geographic or service delivery niches), most smaller players are partially owned by members of a major brand group. Each brand group consists of a strong vertically integrated alliance led by carriers and information content providers. Brand groups are motivated by cross-ownership and competitive advantage built on integrated network and content offerings that can be brought to market quickly. The basis of competition was set by the alliances created in the mid-90s. Business users and consumers hungry for next generation services embraced consortiums capable of delivering end-to-end service quickly and economically. The brand groups have negotiated sufficient interoperability agreements so that basic traffic is transparent between networks. Inter-group interoperability for high value-added services remains intentionally incomplete. The major alliances compete by offering different service mixes and rich interoperability within each brand group While all brand groups compete in major markets, they differ in their emphasis. For example, some have particular strengths in home entertainment while others emphasize global services or multimedia services for business.
Infrastructure: The infrastructure of a specific brand group is highly optimized to support the communities of interest and content types within that alliance. Equipment suppliers work closely with the carriers and the content providers to develop specialty capabilities. Multiple layers of transmission facilities (narrowband, wireless, direct satellite, broadband, cable TV, etc.) exist within each brand group, each being used for specific types of applications and services. The big-I internet no longer exists as such. Users buy connectivity to each brand group's internet. The brand groups jointly fund operations that handle routing arbitration, directory-of-directories, standards evolution, and address assignments. They also fund inter-alliance traffic exchange points. Distributed computing is object-oriented and optimized within each alliance for the most prevalent data types. Within campuses, multiple types of LANs flourish, each optimized to support a particular community of users and set of applications. Campuses are connected via the alliance broadband network that supports wide area distributed computing systems.
Home: Information and entertainment appliances for the home have largely converged in terms of technology. However, different brands and product configurations are sold through different channels to target market segments. Transaction-based services to the home have become large businesses. Interactive shopping, banking, information, and entertainment services are very popular. Interactive virtual reality games attract kids and adults alike.
Office: Like residences, businesses tend to purchase all their services, including voice, data, video, and specialized information services from a single brand group. While a few large information providers distribute through multiple alliances, the particular content and interfaces are alliance-specific. Some brand groups offer tools and systems that can find and integrate information from different sources as a way to differentiate themselves in the business market. In some alliances, subscribers are able to press the "tell me more" button on their information appliances to retrieve more detailed historical, financial, and news information.

Technology Driven 2000 B

Industry Structure: Short life cycles for inexpensive, powerful computing devices and rapidly declining connectivity costs are key drivers of change. Lower barriers to entry, eroding economies of scale, and IT-enabled microsegmentation of markets created a highly fragmented and competitive communications market. Traditional carriers, alternate wireline carriers, satellite operators, PCN, cellular, DBS, cable TV, paging services, and private networks all seek a piece of the pie. The only way to win is to out-smart, out-tech, out-market and plain out-run the competition. Competition is fiercest in the largest 50 markets. New technologies allow for economically viable operations on a much smaller scale than ever before possible. Anyone financially capable of staring a service may do so. New carriers use flexible billing systems, state-of-the-art customer care systems, and close monitoring of market data to compete against carriers with more static infrastructure. The large franchises required in the regulated era have given way to focused metro, regional, and interest-group services. To keep up with lower cost competitors, the traditional carriers lowered prices and suffered financial difficulties. They responded by consolidating operations and selling off unprofitable franchises. Some traditional carriers have retreated to wholesale roles in their old service areas while they compete as aggressive new entrants outside their regions. Seeing market-based competition as the fast route to low cost, widely available advanced services, regulators aggressively pushed deregulation, especially in competitive markets. The major focus of attention in the regulatory community is on privacy and security.
Infrastructure: The technological diversity of the computing and communications infrastructure continues to increase rapidly. The very latest technologies exist side by side with legacy networks and systems. Any-to-any and anywhere-from-anywhere remain the desired visions, but they have yet to be widely achieved. Only basic voice and data traffic can be transmitted between most competitors. Standards activities lag rapid technical and market changes by years. The market sees large numbers of new targeted services and integrated vertical solutions each year. To maintain network stability for government, research, and education activities, the federal government continues to fund an Internet backbone for these purposes. The largest part of the Internet supports commercial activities and is comparatively unstable. A large number of service providers offer Internet connectivity. Some specialize in connectivity using specific technologies, such as wireless, and a few are full-service connectivity providers offering a wide range of wireline and wireless bandwidths and transport protocols.
Home: For users it is very much a case of buyer beware. Cheap, powerful, computing and telecommunications technologies based on incompatible hardware and software are widely used. People may have two or three palmtop and laptop devices, each providing access to two or three different information services. Inexpensive hand-held computers connected to information sources via wireless networks have made "just-in-time" in-formation, education, and entertainment a reality for nomadic users. Different sets of entertainment and information services are provided by competing carriers in the same neighborhood. Some homes subscribe to more than one service.
Office: Large business users rely on third parties to sort through options and create integrated solutions that actually work. Small users prefer packaged solutions. Customer service is the name of the game. Both business and residential customers expect targeted, customizable, service features. Business users have widely embraced the client-server model of computing at the work group and campus level. Computer-based training is a universal presence in public education, and "just-in-time" information and computer-based job training have been widely employed in industry, particularly on the shop floor.

Social Needs Driven 2000 C

Industry Structure: The Information Superhighway turned out to be as much of a social revolution as anything else. Driven by governmental pressure for improved national competitiveness, better access to government information and social services, and environmental goals, the federal government in cooperation with most states has enacted regulations to: (1) mandate a new standard of universal telecommunications service and (2) ensure a level playing field for all service providers. A balance has been struck in the universal service debate to guarantee the lowest common denominator voice and data dial-tone for residences and broadband support for government, schools, and libraries. Mobile services and residential entertainment services are a major revenue source for universal service taxes, but neither is included in universal service guarantees. The basis of competition includes management of the policy environment and an ability to offer sufficient high-end, unregulated services to subsidize mandated capabilities. Because of their core competency in policy management, the LECs have thrived. Limited IXC entry into local loop competition has had mixed results, since they found it difficult to compete with established providers of video services and realized only modest returns from basic voice and data services.
Infrastructure: Technology evolution has been somewhat slowed by the requirements to provide full interoperability across basic voice and data services. Several generations of legacy devices and protocols are maintained in order to comply with mandated universal access. Narrowband, broadband, and wireless facilities co-exist as network operators are required to support interoperability across the infrastructure. However, the infrastructure overall has come a long way and broadband is taking a dominant position. Distributed applications-many incorporating multimedia capabilities-are widely deployed within large and small businesses. Schools and government have access to a full suite of Internet and video-on-demand capabilities. Rising demand for telecommuting support coupled with new entertainment services is pulling broadband into more than 70% of U.S. homes. Standards efforts undertaken by government- fostered cross-industry task forces have created truly transparent, interoperable, addressing schemes, transmission formats, and directory protocols. The shift to a universal personal communications ID is underway as the new generation wireless services take off.
Home: At home, standards-based settop devices and other information appliances are sold by a variety of mass market outlets. They are truly plug-and-play devices. School curriculums from kindergarten to college have been revised to accommodate distance learning and interactive tutoring in the home. Schools receive substantial universal service and national competitiveness grants to support the introduction of new technology. Adult education courses designed to get older consumers up to speed on electronic service access are filled to overflow. Low income households qualify for universal service subsidies.
Office: Electronic commerce is taking hold. The federal government and many state governments are requiring all their suppliers and contractors to use electronic business exchanges and multimedia wherever appropriate. Electronic markets in the commercial world are doing well. Government functions at all levels are moving the delivery of services to automated service kiosks. Social service delivery levels are up and costs are down. The major government networks (first military, intelligence, energy, and research, and later commerce, labor, justice, and others) are all going broadband and interactive. To encourage use of electronic government services, strong privacy legislation is strictly enforced. Many businesses are using the new broadband infrastructure to support wide area distributed computing and multimedia applications.

Content Driven 2000 D

Industry Structure: The content industries, both home and business related, have become more powerful than the network operators. The content industry stretches from giant media companies to numerous smaller boutique production houses, niche information gatherers, and repackagers. Packaging content for target micro market segments is the basis of competition. The big content brokers/packagers/distributors, who have the skills to manage content creation talent AND the ability to identify, sell, and distribute to microsegmented markets, are the real power holders. Besides the big entertainment packagers and distributors, numerous Independent Information Vendors (IIVs) target services to specific market segments, such as traffic reports to truckers and flight status reports to business travelers. Furthermore, most carriers have been forced by the content packagers (the programmers) to operate as if they were as common carriers, providing easy customer access to almost any content. The service operators' main problem continues to be in filling up the available bandwidth with content that consumers will pay for; this only adds to the power of the companies that locked up creative talent early. Information providers have aligned themselves with entertainment production houses in order to leverage their production skills in creating multimedia information products and services.
Infrastructure: Entertainment services largely paid for the build-out of the broadband infrastructure. Consumers have been on such a high tech bandwagon that the financial model of the whole industry is shifting. It used to be that businesses subsidized residential rates. Now residential customers are the primary force behind building the infrastructure that business has wanted for so long. In some cases, the service is slower to come to downtown business districts but competitive service providers ensure it won't take too long. Basic voice and narrowband service costs very little to build or operate on top of the entertainment-based systems. Standards for data and graphic formats and conversions were driven by the content providers who saw these as a critical path issue. Directories and finding tools accessed through the settop and desktop allow users to locate programming and information of interest to them. The government no longer funds the Internet, purchasing services in the open market instead. The internetwork of networks is now one of several pathways to information in multimedia format available to homes via the cable and phone systems. Internet standards are driven by industry working groups, not the government.
Home: Consumers have found the new settop equipment both affordable and easy to use and have rapidly embraced the new technologies. More than half of U.S. households have purchased interactive, switched, video-on-demand. Almost no content is tied to a single, exclusive distribution network. Homes typically subscribe to one of several network connection services, then choose from among several content packages and program bundles. Besides entertainment, key applications are interactive virtual reality games for both children and adults, interactive and multimedia catalog shopping services, video gambling, and multiperson electronic bridge and poker.
Office: Voice and video are integrated with desktop information appliances. Desktop video conferencing and multimedia e-mail are major office applications. Business users locate information and on-line services using the same tools developed for navigating through the entertainment space. Information from internal and external sources in multimedia format is seamlessly integrated on the desktop. Business to business electronic commerce is becoming commonplace.

Business Driven 2000 E

Industry Structure: The commercial extension of what used to be called the Internet has grown rapidly and represents a major market. Digital commerce has become pervasive primarily due to its demonstrably lower cost of operation. The deep penetration of Internet services into the business market, and to a lesser extent the home market, has allowed it to develop into a major channel of distribution. Nearly 85% of American businesses are now active participants as buyers and/or sellers in the various electronic markets on the net. Secure transactions are conducted across the net and numerous companies offer on-line ordering from multimedia catalogs. The net is commonly used for secure cash transfers. The bilateral EDI agreements of the early 90s have been extended into inter-company business process integration projects. The bases of competition among access and transport providers include rich interconnectivity: the ability to get anywhere from anywhere. Catalog service providers compete on the basis of ease of use and the breadth/depth of wares offered. Market services operators compete on the basis of high volume, low cost per transaction, and trust in security procedures. The net is secure and ubiquitous, but looks different depending on where you sit. The Internet is a channel on most consumers' interactive video-on-demand system, while video is just another Mosaic data type available to business users. The transport market is divided between the cable and phone companies who compete on the breath of services bundled in monthly fees at various price points.
Infrastructure: Powerful encryption-based security and metering technologies are key enablers of digital commerce. Integrated into entertainment and information services, metering technologies control a whole range of "pay-per-play" services; end-user machines or servers keep track of use and report back across the network to numerous billing and financial clearinghouse services. Flat fee and subscription services are also popular and supported by the metered payment systems. Banks, brokerages, insurance companies, and mutual funds provide consumer financial services over the net.

Banks, credit card processors, telcos and others compete for the transaction processing business. To quell fears regarding privacy, ASCAP/BMI-like reporting organizations aggregate individual consumer and business usage of information, provide reports to rights holders, and authorize payment of royalties. Anonymous digital cash transactions are growing and controversial; some fear the rise of an underground cybereconomy outside the purview of the IRS, while others stress privacy issues and promote digital cash systems directly analogous to physical cash.

Home: Interactive entertainment, shopping, banking, and information services are very popular among consumers. Numerous paper catalog companies ally themselves with TV and information repackagers to offer video and multimedia home shopping. Televisions and PCs are acknowledged to be different kinds of interfaces to the net, placed in different rooms in the home and used for different purposes. Interactive virtual reality games attract kids and adults alike. The music CD is threatened by distribution of music over the net to home DAT machines with meters. Many upscale homes have their own 10 mbs Ethernet networks.
Office: Electronic market participation is crucial to many companies that reach a microsegmented customer base most efficiently by using the net. Another round of business reengineering is well underway to significantly improve productivity through intercompany process integration. Leveraging secure networks and applications, companies are sharing information and applications across the public network with suppliers, partners, and customers.

Virtual School	Middle of Nowhere	Brad Cox