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Trends and turbulence on the information superhighway.

The heart of today's battle for dominance in the telecommunications industry involves a fight for access to "broadband" revenues. This focus has caused the vast majority of telecommunications companies to acquire cable television businesses in an effort to gain access to the coax cable that is used by most cable networks. Why? These cables carry 900 times more information than Alexander Graham Bell's copper telephone wire. Most of the cable multiple systems operators (MSOs) are upgrading feeder systems with fiber optic technology and are moving these systems to hybrid fiber/coax for improved capability and reliability and a true two-way broadband capability. It will cost an estimated $20 billion to upgrade existing cable systems to this hybrid, compared with $400 billion to rebuild existing telephone copper wire systems. More homes in the U.S. have television sets than telephone service and, at the end of 1995, about 97 percent of the TV-owning households had access to cable owned by an MSO or a cable TV company.

The telecommunications industry is undergoing rapid and profound consolidation and centralization, and telecommunications companies have most of the market share and clout. It is clear that only a handful of the key decision-makers will buy most of the products that these big companies need.

Microsoft Versus Oracle

Netscape Communications made a powerful thrust for the continued control of the Internet early in 1996 by unleashing its highly-publicized Internet Explorer. However, Microsoft was able to blunt Netscape's marketing efforts with its precision marketing strategy by introducing its own Internet Explorer web browser and, by the third quarter of 1996, by signing with virtually every major on-line service. Microsoft is now focusing on its new adversary - the Redwood City, California-based Oracle Corporation. Oracle Corporation is the second largest software company with a stronghold in the lucrative market for corporate database software. The word on the street is that the contest will eventually boil down to Microsoft versus Oracle.

Trends in the software and telecommunications industries virtually mirror each other in their strategies and efforts - the large swallow up the small at an alarming rate. The introduction of a new company capable of competing with the superpowers of a Microsoft or an Oracle might be impossible. The best strategy for some might be to stay quiet, and on the fringes, lest they attract the attention of one of these feasting giants.

Fight For Control

The focus of the future will be on efforts to control the Internet for the revenue produced by on-line services and the purchase of software and hardware needed to support access to those services. The year 2000 will bring a wave of simpler computers - a back-to-the-basics era in which the average user is the everyday person. The primary responsibility of these computers will be to bring the World Wide Web into every home. They will be as common as the telephone. In some cases, they even may be presented as a "gift" to subscribers who sign up with a particular on-line company. This scenario places Oracle in the perfect position to take the number one slot as the superpower in the computer and software markets. Oracle's clear advantage is the database manufacturing capability of master hubs and their software strength. These master hubs are used to route the subscriber through their systems.

If Oracle has its way, and I believe it will, the computers of the future will replace today's PC with a new class of inexpensive appliances called network computers (NCs). NCs will be as easy to use as a telephone and could resemble today's laptops or may take the form of a telephone or a television set. The possibilities are endless. The approaching simplicity, and the clear cost advantage to the consumer, lend credibility to this vision. If this transformation happens, all of these appliances could be tethered to the Oracle technology. The NC itself, the hardware, the operating system, and even the browser would pale in comparison with the network and the data at the other end of the pipeline.

Impact on Education

The most profound impact from this new direction of telecommunications will be felt in our educational system. Irrespective of the outcome of the PC-versus-NC war, the educational system stands to benefit the most from the introduction of low-cost access to the World Wide Web. For little or no cost to schools, information from around the globe could be used to raise our students to the level of knowledge they need to succeed in the global and technological society of tomorrow. With the United States ranked 14th in the world in its ability to educate its citizenry, the issue is much too timely and critical to allow adequate coverage in this article. Globalization and the communications connection to all corners of the world will only increase the necessity to educate our children about the information technologies of the future. Success will hinge on our ability to rapidly enhance teacher-training methods and to supply the tools educators need to train our future work force.

What transpires among the large communications companies in the next few years will shape the direction of the information age. It will change the way we live our lives. It will change commerce. It will change culture. It will change the way we educate our children, the way we communicate with each other, the way we entertain, and the way we work.

MARK SABET is the owner and president of MIS Computers in Cerritos, CA. He has been a lecturer in computers and information systems for the School of Business and Economics at California State University, Los Angeles since 1985. He also is an adjunct professor in information systems at the University of La Verne. His considerable consulting experience includes assignments at the State Bank of India, the DeVry Institute, and several law firms in Los Angeles and Orange counties.
COPYRIGHT 1997 California State University, Los Angeles
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1997 Gale, Cengage Learning. All rights reserved.

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Author:Sabet, Mark
Publication:Business Forum
Date:Jan 1, 1997
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