Do you believe in magic? An otherworld of incredible new technology.

The exploding power of electronic devices and digital communications is creating a magical new world. This new world is not just about improving things that we already do or making it possible to do things we wish we could. Rather, it is about doing entirely new things that we never before imagined. How is this happening? And how is it changing the expectations of consumers across industries--including rural electric cooperative members? Let's look at it several different ways.

Explosive Change in Technology Results in Powerful "Magic"

The famous science fiction author and futurist, Arthur C. Clarke observed: Any sufficiently advanced technology is indistinguishable from magic. We live in a world that even a few years ago would have been considered science fiction ... or magic.

There is steadily accelerating increase in the power of telecommunications and information technologies due to the superposition of several widely acknowledged "laws" of technology advancement:

   Moore's Law--Gordon Moore, co-founder of Intel,
   suggested in 1965 that electronics performance doubles
   every year or so at the same price. This has held true
   ever since, and is projected to continue for decades.
   His prediction has become the guiding principle for the
   delivery of ever-more powerful computer chips at
   steadily decreasing prices.

   Metcalfe's Law--Robert Metcalfe, inventor of the
   Ethernet--a standard of communication widely used
   for local area networks--observed at about the same
   time that the performance of a network increases in
   proportion to the square of the number of devices connected.

   Gilder's Law--George Gilder, controversial best selling
   technology author and former White House technology
   advisor, subsequently asserted that bandwidth
   grows at least three times as fast as computer power.
   And, in jumps and starts, this has prevailed.

   Kurzweil's Law--Ray Kurzweil, a pioneer in the
   field of optical character and speech recognition technology
   and a recognized guru on artificial intelligence,
   has explained how improvement in computing power
   in turn facilitates the design of even more powerful
   computers. This positive feedback loop of innovation
   continuously accelerates returns.

   Collier's Law--Indulge me as I suggest that all of the
   laws noted above are based upon what we already
   know and are familiar with. What about incredible new
   developments that we can't even imagine yet? Things
   that will create quantum leaps in the power and affordability
   of electronics and telecommunications? Every
   now and then, technology will leapfrog the hyperexponential
   change already occurring as a result of the
   four laws described above.

Magic Powers Will Improve Lives

The exponential increase in the capabilities of electronics devices and networks is being matched by accelerating adoption in the market. Consider how long it took for each of the following technologies and applications to attract 50 million users:

Figure 1 Technology Adoption Rates

                                                              Years to
                                                               Reach
                                                             50 Million
Technology/Application Introduced                              Users

Electricity                                                      50
Telephone                                                        50
Radio                                                            38
Personal computers                                               16
Televisions                                                      13
Cell phones                                                      11
Sony Walkmans (original portable personal                        10
  stereo player)
Video cassette recorders                                         10
Digital cameras                                                  9
eBay (online shopping and auction website)                       6
DVD players (device for playing digital video disks)             5
iPods (market leading brand of portable media player)            5
Internet (worldwide system of interconnected                     4
  computer networks)
iTunes (an online site to download music files                   3
  for iPods)
AOL chat (online site where people can communicate with         2.5
  each other in real time via text and voice)
Skype (a service that allows voice and video                     2
  communications over the Internet)
Napster (online source of downloadable music)                   1.5
MySpace (a social networking website with an interactive         1
  network of blogs)

The adoption rate for many technologies (e.g., electricity, telephone, radio, TV, cell phones, Internet) was limited by the slow build out of the necessary infrastructure. Once the infrastructure was in place, however, the adoption rate of new applications increased at a much more rapid pace. It is now possible to contemplate new software or content applications being adopted almost instantaneously ... by the 2 billion people in the world with cell phones ... by the 1 billion people in the world connected to the Internet ... by 175 million people in the world who already use Skype ... by 75 million people in the world who already have an iPod.

Magic Surpasses Space and Time

The spread of digital connectivity around the world along with ever cheaper and more powerful fixed and mobile communications appliances, are eliminating the barriers of distance and time zones around the world. Thomas Friedman explains this phenomenon in his recent book, The World is Flat: A Brief History of the 21st Century. He asserts that a series of "levelers created a flat world: a global, web-enabled platform for multiple forms of sharing knowledge and work, irrespective of time, distance, geography and increasingly, language." Consider some examples of this flat world:

* Ubiquitous, inexpensive, uncensored telecommunications which toppled the Berlin wall and shredded the iron curtain continues to breach national, ethnic, and religious barriers.

* For the first time in history, in Desert Storm, a foreign war was broadcast live on TV in the U.S.

* World of Warcraft--a massively multi-player, online role playing game has 7 million players worldwide.

* Thousands of people in India, Pakistan, and other less developed countries are providing real time customer service and technical support services for U.S. consumers during U.S. business hours. What time is it in Bangalore? It's whatever time it is where you are calling from.

* 95% of Skype's 170 million registered users are outside the U.S. [Skype is an online application that allows users to make voice and video "telephone" calls via the Internet to anyone else using Skype, anywhere in the world. Like "instant messaging", users can chat with not just one person at a time, but with dozens in a group call.]

* The U.S. is not the world leader in either broadband penetration or delivered bandwidth. In fact, it is not even in the top ten. Iceland leads, with South Korea at number two, each with more than 25 households out of 100 having broadband Internet and 100 Mbps delivered to many households and businesses.

* There are more than 2 billion cell phone subscribers out of 6.5 billion people in the world. The U.S. has less than 10% of these.

* The fourth most prevalent language on the Internet? Persian! Netizens refer to this as weblogistan.

Thanks to the magic of electronics and telecommunications, we can be virtually anyplace in the world at anytime without physically traveling there. What's next? Time travel?

Multiple, Mobile, and Magic Wands

The people who are connected to this otherworld, this new world without distance and time zones, are increasingly going to want more. Consumer expectations rise to new levels with advances in technology. The "3 Ms" of magic are fast becoming standards:

   Many points of digital
   connectivity--The computer
   age began in the
   1960s with one "mainframe"
   computer being
   used by a lot of people.
   By the 1980s, each person
   had their own "desktop" computer. Home use of computers
   was on the rise. Today, each of us has several
   computers ... laptop, cell phone, PDA, MP3 player,
   GPS, television, gaming device, digital camera ... and
   they all depend upon digital connectivity to be fully
   useable. We transfer pictures from our cameras to our
   friends, our PC or even our television. We download
   music and videos to our iPods via our computer. Our
   Blackberries serve as phone, e-mail box, and personal
   organizer.

Mobility--People move around and they want to carry their magic with them. Digital connectivity cannot be fixed in one location or time zone. It must be mobile. This is more than just ubiquitous connectivity, it is connectivity in motion ... wandering about the house or office, traveling in trains, planes, and automobiles, jogging in the park, or even during a virtual trip through the World of Warcraft.

More bandwidth--George Gilder was right. The increasing power of electronics and networks to accommodate more data and functions at greater speeds requires more and more bandwidth. Only broadband will suffice. This is not broadband as defined by the FCC ... 250 kbps or greater ... but broadband as defined by the power of magic ... many, many megabits of capacity. The transfer of many megabits of information (data, voice, video) requires many megabits per second of bandwidth and many megabits of storage capacity.

Unleashing the Power of the Magic

The magic is not the wand, but what the wizard can do with it. The virtual world is just like the real world. It's about sight, sound, sensations. It is about conversations, experiences, and relationships. Content is king ... information, communications, commerce, entertainment are the ultimate applications for the electronic devices that are proliferating in accelerating numbers around the globe. All this content is digital and all the digital information is being communicated via the world wide web.

With the ever increasing functionality of electronic devices, content becomes ever more malleable ... not limited to schedule, location, or even format. Everything can be time shifted (record it on the TiVo) and place shifted (watch it on the airplane or in your car). Everything can be device shifted ... TV, PC, DVR, laptop, PDA, iPod, PSP. And all content can be modified ... amended, addended, abridged, mixed, mashed up, tagged, commented, filtered, and ranked.

In this context, every person becomes a source of content, not just a consumer. With handheld mobile digital data, sound, image, video, location recorders and direct real time connection to everyone else in the flat world, the preponderance of content will not be that which is produced by a few legacy programmers and studios, but everything that is produced by everyone. Consider what is being uploaded to the following sites today:

www.wikipedia.com--Everyone can contribute to the online encyclopedia.

www.pandora.com--Everyone can create and share their own radio stations.

www.youtube.com--Everyone can distribute their own movie.

www.blurb.com--Everyone can publish their own book.

www.yelp.com--Everyone can create and share their own Michelin (travel) Guide.

http://justcuriou.us--Anyone can ask a question and anyone can answer it.

www.digg.com--Everyone can filter and rank the news.

Through weblogs ('blogs') everyone's voice becomes available to the entire flat world. And everyone can become anybody that they want to be in online communities and games--with virtual identities, environments, and accessories.

All of this content is, by definition, shared. It is all digital, and everybody is digitally connected to the network and one another. Peer-to-peer file sharing (i.e., people sharing their music, video, and other data files with each other) now accounts for two-thirds of the traffic volume on the Internet. Half of this is occurring in Brain Cohen's magical Bit Torrent protocol. With this online application, the more a data file is shared, the faster it downloads and the less bandwidth is consumed by any one individual.

Only Children Really Believe in Magic

Generation Y and their offspring are growing up in a Harry Potter world. They are afforded technology and applications that give them powers "indistinguishable from magic." They find magic wands everywhere. They are unafraid of them. They are instinctively savvy about them. They don't have to understand how or why they work. They become proficient at unleashing the magic by using (and misusing) them. And they are not limited in any way by what Generation X or baby boomers have "learned" by past experience is impractical or even impossible. They are growing up in a flat world in a single time zone, connecting to billions of others, real and virtual, around the world.

It is possible, even likely, that this generation's alternate, virtual world may become as prevalent as their physical world. Already there is a worldwide business of more than $2 billion annually in the sale of virtual avatars, tokens, keys, clothing, weapons, accessories, etc. on gaming sites and online communities. Read Tad Williams Otherland or Neal Stephenson's SnowCrash to fully realize the very real possibility of a parallel virtual world. These books describe believable worlds in which people give as much or more of their time and attention to their activities inside virtual reality environments online as they do in their physical bodies in the "real" world.

We--occupants of the real world--have only begun to scratch the surface of the possibilities in the new world. Most of what is possible in the new frontier is yet to be pioneered. It's all new and unexplored. And all indications are that the frontier will continue to grow more rapidly than it is pioneered! This virtual journey is not about the evolution and improvement of what we already know. It is about the advent of the totally new ... technologies, applications, abilities, experiences that are unimaginable today. When asked if the Internet is mature, if most of the applications are already developed, Amazon's Jeff Bezos responded, "Absolutely not. Every day is day one on the Internet!" Morgan Stanley recently offered a concurring opinion, "We believe that the first ten years of the Internet were only a warm-up for what is about to happen."

The Internet can connect virtually everyone and everything and the world wide web is functioning as humanity's collective brain. Any organization hoping to survive in this new world must fully tap into the Internet. It must be:

wide-eyed

non-linear

non-hierarchical

adventurous

impulsive

tightly networked

endlessly adaptable

unconstrained by reality

needing to know why much more than how

Who typically embodies these characteristics? Children--those free spirits, open to all possibilities, endlessly inquisitive and constantly in motion. Indeed this "otherworld" will be explored and exploited by Harry Potter and his friends who learned their magic at Hogwart's, a place where adults can't go.

Magic in Rural America

There aren't as many magic wands available in rural America as in some other locations. And, even those wands that the children there can lay their hands own have limited power. It is actually possible that more children in rural India may soon have unfettered magic than in rural America! Who will bring the magic to the children, the aged, and all those in between in the rural areas of this country? Who brought them the magic of electricity? Of telephone service? In large part rural electric cooperatives and the rural telcos delivered these critical and life-altering services. Who better to bring this new magic--that is actually based upon electricity and telecommunications--to these populations?

Bringing the benefits of this otherworld to rural America will, require altogether new ways of doing things. Incremental improvements to legacy telecommunications and electric power businesses will be woefully inadequate to unleash the power of the magic wands. The telco legacy has been based upon customers being physically tied to copper wires paying prices that are based upon distance and past cost structures. The electric utility legacy has similarly been based upon customers being physically tied to power lines and paying prices based upon distance and the past precedents. Electric utilities may be even further behind than telcos because they generally use the same old technologies employed in the 19th century to generate, transmit, switch, distribute, measure, and sell electric power.

Yet, even in rural America, consumers' expectations about quality of service, technical sophistication, and even the price competitiveness of their electric and telephone utilities are being set by Amazon and eBay, Skype and Apple, and Google and others operating in the new world. Consumers expect (very reasonably) that their local telco should be deploying and offering them the latest in magical powers, not impeding those technologies to protect cash flow. They expect (very reasonably) that their local electric utility should be making use of the latest in magical powers to provide the best and smartest service available--especially as their rates are increasing and reliability of service is of increasing importance to their daily lives and businesses. Sadly, some rural electric utilities don't even exist in the otherworld (no website, no e-commerce, no smart grid). Others focus on horror stories of all that can go wrong with new technology and attempt to constrain and control the magic. Only a handful of recruits from Hogwarts invest in the otherworld.

Rural telcos are being forced to change as retail competition is real and irreversible. The telco world is changing not because of legislators and regulators, but because of the magic that is available today. Their customers and competitors are using wireless magic for communications instead of the copper wires. Rural telco customers will eventually tap into the magic of broadband, perhaps through a competitor service provider.

Many rural electric systems seem to think that they have largely escaped competition and can safely continue business as usual. They neglect the power of magic at their immense peril. The same forces that make electronics ever more powerful yet cheaper, will also be brought to bear on energy technologies. As oil and gas prices rise higher and higher, and as occasional major electric grid disturbances become less "occasional" and even more disruptive, alternatives to the legacy monopoly franchise, central station generation, one size fits all electricity delivery system will be more attractive.

On a related note, all those mobile, wireless magic wands do require charging and still have to be plugged into the electric utility system every few hours. A magic wand is something less than magic if it has to be wired up all the time. This challenge will be overcome, likely much sooner than one might expect, with the development and distribution of tiny, portable power sources. When (not if) this happens, mobile power sources will be scaled up to sizes to meet the needs of homes and small businesses. They will become the equivalent of cell phones in the telephone business ... and they will make it possible for consumers to bypass of the legacy generation, transmission, and distribution networks.

There are many choices before us in the otherworld. What will your customers choose? What will your competitors choose? They will choose the future, not the past, just as they did with electricity and telephones and TVs and radios. Will you be there with them?

   I'll tell you about the magic, and it'll free your soul
   But it's like trying to tell a stranger 'bout rock and roll

The Lovin' Spoonful

Steve Collier is Vice President of Emerging Technologies for the National Rural Telecommunications Cooperative.