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Key Trends Point to Faster Growth for Business Telecon Applications.

A year ago in January, a group of 19 leaders of the teleconferencing industry met for three days on Maui. The subject of this "summit meeting," as it was called, was "Why isn't teleconferencing growing faster?" At the time there was a great deal of skepticism about whether this industry would ever take off. The concern was not only the lack of growth in the number of companies committed to the use of teleconferencing, but also the lack of use of existing facilities, particularly the very expensive full-motion rooms that had been installed by early innovators.

Among the attendees were Dr. Robert Johansen of the Institute for the Future; Glen Southworth, president of Colorado Video; John Tyson, president of Compression Labs; major teleconferencing users such as Harold Hagopian of IBM and Tom Maher of ITT, along with consultants and experts from particular segments of the industry. Colorado Video's Glen Southworth said afterward that the meeting was "the most significant and productive" he had attended in the some 15 years he's been in the industry. Reflection and Speculation

Now a year later, it's worthwhile to look back at the list of conclusions that came from that meeting, to look at the progress that has been made on each action item and to speculate about where the keys for future growth in the wider use of teleconferencing lie. There were five major conclusions out of the meeting:

1. There had been an overemphasis on travel-cost displacement in the sale and justification of teleconferencing systems. While travel savings do occur, the real payoff is productivity.

2. The cost of full-motion teleconferencing facilities had to come down from the million-dollar prototype systems at Arco, Allstate and others to more-practical cost levels before more companies could enter the market.

3. The real success stories of teleconferencing, like IBM, Aetna Life & Casualty and Boeing, among others, needed to be accurately documented so the industry could use them as verifiable references for the success of the concept.

4. Applications development with adequate user training materials and software was needed to allow new users to quickly realize benefits from teleconferencing.

5. The industry needed to establish standards that would allow users of different codecs to communicate with each other.

Let's review what has happened on each of these issues since the Maui meeting.

Travel Displacement--It remains the most easily quantifiable benefit emphasized in most investment justifications for teleconferencing systems, but much more effort has been put into other factors.

* Productivity of key personnel. Instead of simply counting airline tickets, there's more analysis of the lost hours of executive time.

* There is a greater recognition of the value of teleconferencing for divided work groups. People who must work together on a project but are separated by distance--across the nation or across a city. Teleconferencing in some of these cases is the only way to get the job done.

* There has been a new attention to how teleconferencing systems can be used to make money rather than simply justified by cost savings; for example, forfee seminars previously held in one city can be broadcast previously held in one city can broadcast to several cities simultaneously.

We still must find a better way to present the productivity as a justification. It is hard, very hard to quantify productivity and turn it into something that you can use to justify the investment in a teleconferencing system within an internal corporate structure or government agency. There are some excellent examples. The Boeing Company credits videoconferencing with reducing the time to develop the 757 by 30 days. In a major aerospace system like the 757, 30 days represents a lot of money. Boeing was using a full-motion teleconferencing system, not across the country, but between Kent and Everett within the Seattle Area.

Costs--Too much publicity had been given to the early prototype systems like the one I was involved with at Arco. Those early rooms cost $800,000 apiece because they were prototype systems. The world was told, "It costs you a million dollars to build a teleconferencing room," and that was wrong. While the room costs have been exaggerated, the systems costs were also coming down. Roll-around modular systems are now available for $165,000. But the biggest reductions in costs have come in the communication cost. Two factors are bringing down the communications costs for full-motion teleconferencing: compression codecs and low-cost satellite communications.

The video compression systems have progressed over the years from 1980, when we were operating at three million bits per second, to today. Full-motion video teleconferencing systems can operate at 768 kilobits per second. The significance of that compression is in costs of communications. In a dedicated teleconferencing system the investment in the facility can be amortized over a number of years--it is a capital investment. But communications is a recurring cost; it is the key cost in the package. If you can bring the cost of the communications down you can use it daily instead of occasionally.

The combination of compression and satellite communications have, in one year, had a dramatic effect. A good example is international teleconferencing from the Intercontinental Hotel in New York City, provided by the hour, to London. They were doing it with analog transmission and charging $10,000 an hour in 1983. In 1984, with compressed video at 2.0 megabits per second, you can now hold a one-hour teleconference with London for $2,000 or less per hour.

Another example domestically is Picturephone Meeting Service, the flagship in the effort to introduce teleconferencing from public rooms. In 1983, PMS was offering an hour of teleconferencing between San Francisco and New York at three megabits per second for $2,000 an hour. Today Isacomm, Vitalink and many of the vendors with compression at 768 kb/s can offer nationwide teleconferencing at under $1100 an hour.

The compression at 768 kb/s is not the end of the line. There are compression codecs operating at 56 kilobits per second. Widcom of San Jose has a codec operating at 56 kilobits per second that gives you a motion picture in full color. The significance of the 56 kb/s speed is that as digital voice communication permeates the country, it will allow 56-kilobit data service over a phone line. We can have videoconferncing anywhere that digital voice is available. Dama Telecommunications and Argo Communications are already providing 56-kilobit data service at low rates.

Success Stories--Dr. Robert Johannson of the Institute for the Future had responsibility after the Maui conference to document the major teleconferencing user success stories. The companies he has looked at werw IBM, Aetna Life and Boeing. In each case, significant improvements in productivity far out-weighed the travel costs saved. IBM estimated they reduced product development time by one-third through the use of their freeze-frame system. Aetna estimate a less-than-five-year full payback just based on hours of programmer time saved through eliminating a 45-minute round trip over a nine-mile distance in Hartford, Connecticut.

Developing Applications--AT&T did a great service when they put the Picturephone Meeting Service rooms in operation. They provided to the public an opportunity to try teleconferencing. Unfortunately, if I am to believe Bob Johannson, his exit interviews with some of these people developed a significant pattern. They were impressed with the technology and they said, "Gee whiz, that is really neat," and then they were asked, "Would you like one yourself?" They said, "Well, I can't envision how I would use it."

The early demonstrations concentrated on the technology and presenting the technology; they did not relate that technology to how you would use it in applications. One of the applications that has been well-documented is teletraining. Training is a very successful application in almost every one of the teleconferencing systems. The book Teletraining Means Business by Dr. Lorne Parker of the University of Wisconsin-Extension is directed at the business community and how to effectively use teleconferencing in a training function. More effort is under way at AT&T and Isacomm to document additional applications such as sales and marketing and financial.

Establishing Standards--The International Teleconferencing Association (ITCA) has established a program on the overall effort to establish standards. At the Maui summit conference, Bob Cotton took on the role in ITCA last year. The ITCA now has taken a leadership role in seeking compatibility and standards in the industry.

The second source of information for this article was the three months I spent with Isacomm in Atlanta this summer. I was doing consulting on the question of increasing usage and Isacomm was developing a number of innovative usage promotion programs and a usage sales force. Five major points came from that work:

* Need for Internal Promotion--I spent some time reviewing the internal promotional programs of several companies currently using videoconferencing. I had the advantage of a great deal of information on Aetna and the fantastic job that Aetna has done in promoting teleconferencing internally. When American Satellite or SBS or AT&T sells a teleconferencing system, that is not the end of the sales job. The next job is for the user to sell his own company's employees on the use of that system. He or she must adequately promote the system internally with a sales program that sells potential users on the benefits of teleconferencing. It just does not come naturally for people to walk in and use the teleconferencing system. There are some very innovative programs already in existance. Aetna is one that new users should look at as an example of an internal promotion program to grow utilization.

* Innovative Applications--We looked at all the different kinds of applications that were being used by the Isacomm Meeting Channel users, and we looked at ways to develop new applications, and application oriented materials that would encourage the people who had already purchased a teleconferencing system to use it more often.

The role of applications in the growth of teleconferencing can be very significant. There are other technologies that have been introduced and have been widely accepted where a key application made the difference. For example, the personal computer became an accepted business tool faster than the telephone. In fewer years than television entered our homes, the PC has permeated virtually every office in the country. For PCs the key application was spreadsheet software. Many audiographic teleconferencing systems are now based on a basic engine of the IMB PC, or an Apple PC, or other personal computer. Since the personal computer is widely distributed as a device in offices, we can tie audiographic teleconferencing into those systems using the PC to facilitate the compression and the transmission. But the most important lession to learn from the acceptance of the PC is that we've got to find an application, the key application, that is going to break the teleconferencing industry open. Bob Johansen and I talked while I was at Isacomm about the categories of applications. Clearly the most significant point is to look for divided work groups or groups that must work together that are geographically separated.

* Connectivity--This is another way this market, this industry, this technology, this way of doing business is going to grow. The term connectivity can best be described by the example that when the telephone first came out, and you had only two telephones in a town, you could not have much usage. The wealthiest family in town could call the butcher shop, but there was no one else they could call. In many ways, early point-to-point private videoconferencing systems suffered from the same problem. In the last year there have been several announcements of agreements for the interconnecting of existing networks. The existing public networks like AT&T's Accunet 1.5, Isacomm's Meeting Channel and the SBS Service are offering to connect private networks. There are several private networks like Arco, Allstate and others--over 200 rooms that we can connect to these public networks. Bank of America can then talk to American Life Insurance or anyone on Isacomm's Meeting Channel. Aetna can now talk to JC Penney. If only both of those networks could talk to each other. Unfortunately, we have a standards problem in the interface of different codecs in those two particular networks.

A good example of connectivity is the Intercontinental Hotel room in New York. It talks to London and it talks to the AT&T Accunet 1.5 network and it now talks to the Isacomm Meeting Channel network. You can go in one room and you can talk to all of Isacomm's customers or all of AT&T's or you can talk to London. As we grow, connectivity will be the real driving force to increase the use of teleconferencing, because we are going to be able to call more people from our own rooms. We started with private dedicated networks that can talk only intracompany instead of intercompany. We are in a whole new ball game when we start talking between organizations.

* International Teleconferencing--Another example of growth and where growth is going to come from in teleconferencing is one that Dr. Richard Harkness, formerly of SBS and now with Compression Labs, pointed out. He compared the introduction to teleconferencing with the displacement of the passenger ship by the airplane on the North Atlantic route. You see, if you look at the history of early airline travel, airplanes were sort of dangerous and not very popular and it was hard to get people to accept this new technology. Harkness told the story of how some of the sales people for the airlines would go out and get traveling salesmen who traveled between Europe and New York drunk, stuff them in an airplane, fly them to London, and when they sobered up they would brag about the fact that they had flown to Europe. It helped promote the industry. Once airlines became accepted for international travel, their domestic use quickly followed. I am not suggesting you get people drunk and take them to your teleconferencing room, but what I am suggesting is that international teleconferencing, which this is really just beginning, with services provided by AT&T, Isacomm, Vitalink, SBS and others, is a valuable flagship to encourage new users to try teleconferencing. International teleconferencing is so clearly and easily justified because of the tremendous amount of time and cost involved. A Six-Hour Window

A gentleman at the Pacific Telecommunications Council meeting a year ago January pointed out that every major capital in the world shares six hours if you are willing to work from 7:00 AM until 10:00 pm. We all have worked for large corporations. I think I could safely say that everyone has been up at 7:00 in the morning for a breakfast meeting, or you have been at a dinner meeting, or a late meeting or working on a project at 10:00 pm. If you are willing to do that, then every capital in this world shares six hours and you can connect for six hours. International teleconferencing may be to our industry what the North Atlantic route was to air travel.

* Training--The final point may sound a bit self-serving because my company, Applied Business TeleCommunications (ABC), runs the TeleCon show each October in California and each June in New York (see Communications News December, 1984, page 110), but I am going to mention other people who do the same thing. Recent market research has indicated that 47 percent of the people queried first learned about teleconderencing or even heard of the concept from a brochure on a seminar program. That is twice as many as those who learned about teleconferencing from a vendor sales call. This educational process that ABC, Tom Cross of Cross Information in Colorado and Lorne Parker at the University of Wisconsin are carrying on is an effort to reach out to the business community and try and encourage, educate and open them to the

experience of others so that they will try teleconferencing. SBS research shows that once people try teleconferencing, they become enthusiastic advocates of the technology.
COPYRIGHT 1985 Nelson Publishing
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1985 Gale, Cengage Learning. All rights reserved.

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Author:Portway, P.
Publication:Communications News
Date:Feb 1, 1985
Previous Article:There is a 'Write' Way to Train More Effectively: Audiographics.
Next Article:Dispelling Teleconferencing Myths and a Look at Its Brighter Future.

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