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Newspapers and fiber optics: ANPA report considers competitive implications of the new technology; urges newspapers to understand the direction of fiber optic development.

Newspapers and fiber optics

ANPA report considers competitive implications of the new technology; urges newspapers to understand the direction of fiber optic development

The fourth in the American Newspaper Publishers Association's New Channels series of publications is Fiber Optics -- How Soon? The series, a part of the ANPA's Competitive Analysis Project, gathers and presents strategic information about newspapers' competitors.

Prepared with additional material by ANPA telecommunications analyst Randy Bennett, this latest report is based on a speech given at ANPA/TEC 90 by Washington Post planning and advanced systems vice president Elizabeth Loker.

Its February release was most timely in view of last month's announcement that Time Warner Inc. plans a 150-channel interactive, fiber optic cable television system that will initially serve several thousand residents in one New York City borough. It is significant in view of video's presumed effect on demand for fiber optic installations and for the fact -- noted in the report -- that cable television, in this area at least, shares with the newspaper industry the same potential foe.

Indeed, the thrust of the report is recognition of that familiar potential competitor, the regional Bell operating companies. RBOCs, it argues, may be best positioned to install the glass cable networks -- broadband channels capable of moving a huge number of two-way digital services within one cable.

Time Warner is not the first to test fiber optics in the home. The report notes that several telephone company trials are under way across the country.

The report acknowledges benefits from fiber optics over conventional copper cabling, including inexpensive maintenance, high-quality transmission and far greater signal capacity. The newspaper industry and others are already aware of and adopting fiber optics for some internal data communications. Long-distance telephone service is also being improved by the technology, but conversion of residential hookups is seen as years, even decades, away.

Newspapers, the report says, face two competitive aspects in fiber optics. First, and indirectly, telephone companies' perceived installation advantages may be used as a lever to loosen content restrictions on communications services when RBOCs argue that revenue from such services will be needed to finance the staggering costs of rewiring America.

The report restates the ANPA position on video- and audiotext services -- that author and bearer of commercial messages should not be one and the same. It makes the public policy case on technical and economic grounds: "Completely integrating the fiber network through one player -- besides presenting the potential for monopoly abuse -- runs counter to market trends in the telecommunications industry."

Even if it delays residential installations, the report says, an open, diverse network serves consumers by promoting competition and better services.

The second implication poses a more direct threat to newspapers: "Fiber's speed and capacity allows for more interactive media and increases opportunities for both readers and advertisers to bypass the print product."

The possibility of addressable television could affect all print publications' advertising. But for the total newspaper product, a fiber optic residential telephone line, says the report, "will undoubtedly profoundly affect the way consumers obtain news, information, entertainment and advertising."

For all the above reasons, the report urges that newspapers see a "compelling business and policy interest in understanding the direction and pace of fiber optic development."

Understood in a network context rather than merely as a better wire, fiber optics will eventually revolutionize information exchange. Besides software controls, networks would rely upon cabling, connectors and converters.

Cables are bundles of very-clear, very-thin glass filaments (and possibly improved, cheaper plastic), carrying digital data by laser rather than by electrical current. Connectors that splice cables are currently trickier than simple electrical connections and, at the source and user ends, converters will be needed for changing electrical signals to light signals and vice versa.

Furthermore, users will also become their own sources of televideo, telephone, fax and computer data traffic.

One glass strand in a bundle can carry 15,000 phone calls (a copper wire carries 24) and boost video capacity to 160 channels (coaxial cable carries 78). In both cases and in other applications, the digital signals will be of higher quality.

According to the report, quite apart from questionable demand for such services, residential hookup will likely be slowed by current costs (which are expected to come down), ongoing testing of underlying technologies and the lack of agreement on communications standards.

Nevertheless, the report recognizes fiber optics as superior to heavier copper cabling in congested urban communications conduits and to long-distance microwave satellite signals.

However, to fully rewire the U.S. phone system by the year 2003, estimated costs cited range from $100 to $500 billion. Even the lower figure amounts to an average additional monthly subscriber charge of $5 for 33 years to fund the required investment.

According to Fiber Optics -- How Soon? "Almost all of what is written on fiber expects video to drive the market." But it also reports uncertainty that there exists enough demand for video to offset the huge investment needed.

Possible video applications include education utilizing interactive capabilities, video on demand (also using interactivity to order and control commercial video products that are currently purchased, rented or borrowed, then transported to the home), video conferencing, expansion to 1,000 tv channels, and support for high-definition television.

Video applications most likely to generate the largest demand are those for entertainment. Here, the report is cautious, providing economic, demographic and technical obstacles.

Citing David Rosen, of Link Resources Corp., the report points out that whereas products are best launched at the outset of an economic upturn, the economic climate today is one of slowing growth. It also notes lack of time in dual-earner families, points to the "huge growth" of households without children, and cites results of a 15-year Harris survey showing a 36% decline in leisure time (10 hours per week), with the largest declines found among upscale households. As for HDTV, the report says opinion runs against implementing the technology as long as it would obsolete current tv reception capabilities.

In conceding that telephone companies "clearly . . . have a large and important role to play in rewiring and in developing new services," Loker asks, "must we allow them to vertically integrate all aspects of the service into their domain for them to do any part of the job?"

Free copies of the report were sent to ANPA members, who may obtain additional copies for $5 each ($25 for non-members). The booklet includes a list and order form for other ANPA Telecommunications Department resources, including the three earlier New Channels reports on voice services, database marketing, and identification of the major competitive electronic threats and opportunities.
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Title Annotation:American Newspaper Publishers Association
Author:Rosenberg, Jim
Publication:Editor & Publisher
Date:Apr 6, 1991
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