‘An Ice Age of Information that Will Kill a Few Dinosaurs’
Craig McCaw, McCaw Cellular
Craig McCaw is founder, chairman and chief executive officer of McCaw Cellular Communications, the nation’s largest cellular telephone company and the fifth largest paging company. Typical of his refreshing, back-to-basics style, McCaw had no glitzy presentation to deliver.
He had only one slide, made from an old Gary Larson “Far Side” cartoon: A driver glances in his side-view mirror, which is completely filled by the image of a huge eye. The caption reads, Objects in the mirror are closer than they appear. “And that,” said McCaw, “is us.”
McCaw said that wireless communication technology is going to play a major role in developing the multimedia pathway into our homes and offices. Equally important, he believes that wireless will be the link that keeps us connected to our world when we’re in between the two.
THE ART IS TO MAKE ALLIANCES MEANINGFUL
In an atmosphere of promiscuous deal-making, McCaw believes that the art of an alliance is to make it mean something. His example: McCaw is still hammering out the terms of a far-reaching deal with AT&T that was announced almost a year ago and still has not been finalized. “We are trying to get it right before we actually do it,” he said.
Very few of the superpowers of the digital convergence share this philosophy. McCaw said he’s been amazed at the sheer volume of alliance announcements. (We listed more than 300 in our last issue.) The activity appears so random, he said, that it looks like companies are doing the equivalent of “picking softball teams and going into global competition with them.”
McCaw doesn’t see today’s deal-making yielding more than five successful global alliances. And he warns against the most common goal of alliance-building: when companies that make up the old guard join forces to try to escape the inevitable.
GENE-SPLITTING WON’T MAKE A NEW INDUSTRY
“This is a new ice age for information, communication and entertainment, and we do believe it will kill a number of dinosaurs,” said McCaw, who called alliances among the megacorporations “gene-splitting” to stay alive. “If you mate a brontosaurus with a stegosaurus, you’re not going to get a pterodactyl or a tyrannosaurus rex.”
In addition, he said, too many alliances are cast in the executive suite, with no buy-in from middle management or the employees who actually have to turn words into action. “We are very skeptical that (alliances) lacking that fundamental alignment can really come to anything in the long term,” he said.
Wireless is overlooked.>> Perhaps part of his concern comes from the fact that wireless communication has been largely overlooked in the gold rush to interactive TV and services. Today, the objective for every company in the emerging technology industries is to find a multimedia pathway into the home and into the office. McCaw believes that wireless has to be part of that process.
Although wireless may not be the obvious enabler that fiber-based communications is thought to be, McCaw said it is a pivotal technology because it does something today that we already know people both need and want: it allows them to conduct business and pleasure from wherever they happen to be.
The nature state.>> McCaw calls this a return to our “nature state” as nomads. He believes that personal computers and other sophisticated technologies continue to overlook these basic human needs, and he doesn’t see the trend changing as we move into the world of high-speed networks. “For the benefits of fiber to really come to fruition, you have to include the human being in the process, and that means (supporting) human beings in their nature state.”
Hundreds of years ago, being nomadic was much more rooted in the physical world: nomads did what they chose, moved as they wished, and took their environment and their possessions with them.
A custom infrastructure.>> In a digital world, where much of what we require in daily life comes over a network, McCaw believes communication-centric digital assistants such as those being developed by Apple (Newton), General Magic (MagicCap and Telescript), EO and others help fulfill our requirements as data nomads.
The technology built into these devices is capable of delivering the power to communicate in almost any environment: two-way voice and data links, paging, seeking and delivering specific information based on custom profiles, finding information in one place and delivering it to another. In a nutshell, these devices will soon be able to provide people with the ability to take with them their own, personalized infrastructure for information, communication and entertainment.
The power to communicate.>> It is for these devices that McCaw is building his network. His plan, which he says is shared by many others in wireless communication and some telcos, is to build a flexible, economical, multi-tiered network that can support you and your digital assistant wherever you happen to be, doing whatever you happen to be doing. This is the concept behind AT&T’s new EasyLink network as well (see story on General Magic, Vol. 2, No. 10/11, p. 3).
BANDWIDTH ON DEMAND MEETS THE NEEDS OF DIGITAL NOMADS
“We have ideas that include choice, bandwidth on demand,” he said. “It’s not the notion of a telephone or cellular phone that has a fixed amount of capability, but one that will allow you to choose how much bandwidth you need and how much to pay for it. It obviously has to be very economical to accomplish the kind of paradigm shift we believe is possible.”
The pursuit of bandwidth on demand can be seen in almost every project that McCaw undertakes. The company is still aggressively pursuing the widespread adoption of its Cellular Digital Packet Data (CDPD) specification that enables wireless data communications for PDAs, automated vending machines and portable data terminals. The technology allows the transmission of packets of data during idle times on the cellular voice channels (see Vol. 2, No. 12, p. 22). McCaw says the company plans to launch commercial CDPD service this fall at Comdex in Las Vegas.
Digital cellular.>> McCaw has already implemented commercially the first digital system in the United States for cellular in Florida, and, he said, the company is moving rapidly to be “100 percent digital capable in the U.S. by mid-next year within our networks.”
McCaw also has a fully digital, nationwide, air-to-ground system already in service; it is the first one in service in the country. According to McCaw, the company has set up 85 ground stations and has access to 600 planes already; by this fall the company plans to have deals in place so that passengers on a cross-country flight could be connected during the entire flight and never drop the call. (Now that’s a bill we wouldn’t want to get.) Obviously this service requires cooperation on the part of a whole series of local area networks and mobile networks.
BRINGING PEOPLE INTO THE PARTY
In closing, McCaw said that focusing only on multimedia and services that can be delivered over fiber misses the point, which is finding a way to deliver services that people actually need and want. His mission is to offer an alternative for individuals who would like to return to a nomadic lifestyle where there is no boundary between work and play.
McCaw is also aware of the importance of good alliance-building, despite its random nature today. “We’re part of a certain number of global alliances, and we’re working on a lot more ourselves,” he said.
Bringing two worlds together.>> Aside from trying to figure out what’s happening in a playing field that appears to change daily, he said, the challenge for a communications company like his is to figure out how to bring together the two very disparate worlds of telecommunication and computing. They’ve been conducting themselves by rules that are diametrically opposed: the world of telecommunications has always operated under imposed standards and regulations, while the computer industry has created itself based on success in imposing de facto standards.
If McCaw can figure out how to make these two worlds work together in a way that benefits customers and helps create this new nomadic industry that he dreams of, he’ll have accomplished more than most people ever conceived of. As he said, “There’s a lot happening.” He obviously intends to be part of it, whatever it turns out to be.
Denise Caruso, Janice Maloney
‘THE PROMISE … WILL BE REALIZED ONLY IF WE IMPLEMENT IT WELL’
Richard Brown, Ameritech
Ameritech isn’t often cited as a company on the cutting edge of the digital revolution, but it may have the boldest vision of any of the regional Bell operating companies. The Illinois-based RBOC shocked the nation some months ago when it proposed to the Federal Communications Commission that it would give up its local telephone monopoly in exchange for permission to compete in providing video on demand and long distance services.
In essence, Ameritech has offered to separate itself into two parts. One would provide (on an open and equal basis) switched local communications infrastructure. The other (which will buy services from the first) will offer local phone, video and interactive services as well as long distance services. Anyone who wants to compete with this second company will be able to buy as much or as little of the services provided by the first company on an equal basis.
Intellectual vs. natural resources.>> Ameritech vice chairman Richard Brown has been the chief architect of these proposals. Brown believes that we are at the point in history when we will “shape and deploy the most powerful technology in the history of human civilization,” based on high-speed, two-way, switched networks. These technologies will encourage the use of intellectual resources rather than scarce natural resources; they will change education, health services and social relationships.
Like most of the Digital World speakers, Brown acknowledged that mass market entertainment and shopping applications will provide the financial incentive for building the essential framework.
However, he said, once the basic infrastructure is deployed, the same technology that makes possible video games and movies on demand can transform the way we work and learn, and help solve the crisis we face in medical care. The new networks will enable new applications such as telemedicine, telecommuting and distance learning. They will be a means of providing vital personalized services to socioeconomic and geographic regions that never had such services before, help save billions of dollars in resources, and ease strain on the environment.
Brown exhorted the audience to look beyond the entertainment market, where most people are looking for quick returns on infrastructure investment. “We will miss an historic opportunity if we fail to see the bigger picture for digital technology,” he said.
FIBER TO THE HOMES — OF FOURTH GRADERS
Brown detailed an Ameritech project where fiber-optic cable was installed in the homes of 100 fourth graders to connect them with the audio-video center at their local school.
One Saturday morning, assuming that the kids would be watching cartoons, the Ameritech technicians went out to perform service checks on the system. To their surprise, the workers found that every access link was tied up solid for many hours. The system was such a success it was kept open all summer long.
Though he knows no “normal” student would deign to agree with the statement, Brown takes this as evidence that “in an interactive network, school is never out.” Not only is information available at any time, but the network can make the same information and educational resources available regardless of neighborhood. Tax base no longer is a measure of educational opportunity. (Of course, it is not clear what this might mean in terms of reallocation of resources within communities.)
Beyond “universal access.” The privatized local U.S. phone system has been built on the promise of “universal access” — low-cost access to the network for everyone who asks for it. Brown envisages what he calls “Advanced Universal Access”: a nation in which every home, office and school has reasonably priced, ubiquitous access to the gamut of digital media — from full-motion digital video to news and other kinds of information services — priced as phone service is priced today. We presume that this means that access by low-income or low-use families is at least partially subsidized by the rates paid by heavy volume users, as is the case today via the phone networks’ common carrier status.
We are not certain how you would implement this in the kind of open, competitive world that Brown envisages, except perhaps to dictate that all other communications networks — including cable, wireless and direct broadcast satellite — be made common carriers as well. (It seems only fair that if these companies want to play on the phone company’s turf, they be asked to play by the same rules.)
But don’t hold your breath.>> “The pie is still in the sky,” said Brown. “The door-to-door broadband network is a long way off.” He does believe, however, that there are significant services that can be deployed today, before there is a fully implemented digital highway. “There are interim steps that can get us most of the way — not all of the way — to where we want to go.”
HOW PHONE SYSTEMS ARE BETTER THAN CABLE
Because the first applications of the digital network focus on entertainment, and because the 1984 breakup of AT&T forbids the regional companies from operating video delivery services in their service areas, national interest has focused on the existing TV delivery system — the cable industry — as the natural first providers of such services. However, Brown believes that the established telephone systems have some distinct advantages over cable.
The telephone companies already have national connectivity; the phone system’s architecture was designed from inception for two-way, switched, point-to-point communications; and the network backbone is already digital, with digital services moving rapidly down the wire toward the home.
In addition, as telephone service in the United States has become critical to the conduct of commercial and social life, phone systems have been increasingly mandated by law to provide high standards of reliability. To date, no similar requirements have been placed on the cable industry. (See Part I of our piece on interactive TV, Vol. 2, No. 12, p. 3.)
The ISDN (Integrated Services Digital Network) communications protocol can provide switched digital interactive services over copper today, although Brown admits that ISDN is not adequate to provide on-demand video entertainment. Another digital protocol called ADSL (Asynchronous Digital Subscriber Line), however, can provide two to four video channels over standard twisted-pair copper wires.
CAN COPPER REALLY COMPETE WITH COAX?
We pressed Brown on this point. The advantage that cable has over the phone companies is that it already has coax cable, rather than twisted-pair copper wire running into subscribers’ homes. Brown acknowledges that the phone companies are not going to replace the “last mile” of copper with fiber cable anytime soon. Does he really think that digital video images delivered into the home over copper wire under real-world conditions will be good enough to compete with digital cable?
He hedged. He hopes that further technical advances will make twisted-pair competitive with cable for the crucial last mile. But he didn’t guarantee that this would be the case.
No sworn enemies.>> Perhaps partially because of this, Brown does not profess to see the cable and telco industries as mortal enemies. Bringing fully switched broadband service to every door is an enormous job — one that Brown believes will require the shared resources of cable, telephone and satellite industries.
(Interestingly, Brown did not mention the computer industry as a needed partner. We hope this is an assumption on his part and not a strategic oversight.) To accomplish such a massive goal, he said, “will require full capital deployment of resources — all of our technologies, expertise and imagination…. It’s also a job that will require full competition at every part of the existing network for price, efficiency and variety.”
It is the latter requirement that led Ameritech to petition Congress to allow Ameritech to offer video and long distance services in exchange for opening up its local monopoly to competition. Brown explained that the proposal, which is for the Ameritech region only, not the entire country, was intended to act as a “laboratory for bold change in access to local exchange.”
THE WORST THAT COULD HAPPEN IS NOTHING
In addition, it would take far too long to try to have the policy changed on a national level. “The worst thing that could happen to the telephone industry is nothing,” Brown said. “Without some fundamental regulatory and public policy changes, investors are not going to pony up the dollars it takes to bring that infrastructure to the consumer.”
History will be the judge.>> Brown presented a cautious (realistic) picture of the time and effort it will take to deploy a fully digital, switched broadband network. But he is quite convinced that we must start this effort as quickly as possible — and that we should think about what we are doing, and what the consequences will be.
In a call to the conference audience (later echoed by Mitch Kapor and many of the attendees in following sessions) Brown warned that “the promise of the digital revolution will be realized only if we implement it well. History will judge our generation on the values we bring to this powerful new technology.”
David Baron