The politics of information services spur growth — and new interest in ISDN

If you do nothing more than scan the business headlines every day, you have noticed that the U.S. government — by way of the Federal Communications Commission — is bent on crowbarring the Regional Bell Operating Companies (RBOCs) into the online information services business — come hell, high water, or threat of monopolistic practices.

Though the FCC probably didn’t plan it that way, fear of what havoc the RBOCs might wreak seems to have prompted existing and potential information providers to get off the dime and start moving on plans to market such services. And it has also prompted a bold move on the part of the Electronic Frontier Foundation (EFF) to kindle U.S. Congressional interest in Integrated Services Digital Network (ISDN), which run over existing copper telephone wiring, as the platform for a National Public Network. (See Vol. 1, No. 5, p. 8.)

Too little, too late. ISDN has been shunned to date by most of the U.S. telephony community as too little, too late because running at a “mere” 1.5 million bits per second over copper (today’s most popular modems do 2,400 bps), it has already been lapped, so to speak, by the incredible bandwidth possible via fiber optics. And it’s true, ISDN certainly doesn’t look too snappy when compared to other digital protocols, such as SONET, that can achieve speeds up to 51 million bits per second.

But EFF makes the case that such comparisons are apples-and-oranges: deploying ISDN today does not obviate deploying fiber, and in fact it will ensure that there are plenty of quality information services — flourishing in a healthy, competitive market not dominated by the phone companies — to be shipped down fiber when it reaches ubiquity some 15 years hence.

NEW PARTNERS, SERVICES

As in any situation where companies stand to make or lose a lot of money, the nascent information services business is creating some interesting bedfellows. Sworn enemies — e.g., cable and telephone companies and newspapers — are cutting deals with each other. Newspapers are talking to online information providers. Magazines as politically divergent as National Review and the Utne Reader are providing online bulletin board systems for their readers. Former Minitel executives are popping up everywhere from San Francisco’s new 101 Online, where they’re creating a new Minitel-like service, to Motorola, where they’re working on mobile data communications.

For example, recently America Online Inc. (AO, formerly Quantum Computer Services) joined forces with the Chicago-based Tribune Co. to provide local editions of AO’s national information services. Tribune also made a minority equity investment in AO.

Chicago Online. The first new service, called Chicago Online, will be launched in early 1992, according to AO president Steve Case. Another local service, Florida Online, will be launched in the fall of ‘92.

“Ten years ago, the concept was the ‘electronic newspaper,’” says Case. “But now newspapers see online services as much more an extension of the newspaper. Some content is provided online, but the purpose is to create interactivity among readers, and to provide in-depth information that appeals to special interests, such as school-related topics, that makes it an extension of the information the newspaper provides. They are also beginning to recognize that interactivity and communication is what makes this new medium interesting. Instead of being scared of it, they’re looking for ways to embrace it.”

LEAVING US TO OUR DEVICES

As computer storage gets cheaper and data networks get easier and cheaper to navigate, the whole idea of stored media — even the enormous storage capacity of a CD-ROM, for example — is called into question. Will we need CDs at all in a future where virtually all information is available online?

Commodore, for one, believes the answer is yes. It is already working on ways to augment Commodore Dynamic Total Vision’s (CDTV’s) offerings with what’s available online.

Where’s the intelligence? David Rosen, director of international marketing for CDTV, talked briefly about Commodore’s strategy at the recent Multimedia Expo in San Jose, CA. He said Commodore is already working to figure out the logistics of the relationship between stored and online media. “Where’s the intelligence, in the box or in the network?” he says. “How do you find the key to programming? How do you handle distance interaction, like online games?”

To answer these questions, he says, Commodore is talking to cable TV firms and is in discussions with telephone companies to explore the possibilities of ISDN usage in the home, “via some machine or other.”

RESURGENCE OF INTEREST IN ISDN

Why ISDN? Well, Rosen says, what other way is there to do it? “Fiber’s just a conduit, a delivery material. It’s a wire,” he says. “You can deliver over a fiber just as easily as you can over a copper wire. And at this point, copper wire is what’s available. Other things are possible, but you have to start from where you are.”

Rosen’s comments about ISDN echo the sentiment of the Electronic Frontier Foundation. As most interested people know, one reason the phone companies have lobbied heavily to sell information services was because, they said, it was the only way they would be able to afford to undertake the massive job of installing fiber-optic wires into U.S. homes.

But last month, in testimony before the House Subcommittee on Telecommunications and Finance of the Energy and Commerce Committee, EFF cofounder Mitch Kapor asked Congress to push ISDN technology into every home, office and school in the country, and not to wait for fiber to be installed into the home before setting the groundwork for an affordable national public network.

Here’s what Kapor proposed:

• That the nation employ existing ISDN technology to enable anyone with a copper-wired telephone connection to telecommunicate affordably, ubiquitously, and easily;

• That we use the existing technology and infrastructure of ISDN to begin building a National Public Network now;

• That we stop waiting for the nation to spend hundreds of billions of dollars and decades to rewire with fiber optics;

• That we act now to benefit from affordable connectivity for all;

• That we use existing technology to gain experience in the human uses and benefits of networking; and

• That this technology be priced like local voice service.
The Subcommittee was sufficiently impressed to ask EFF to develop the proposal in detail, and it asked for input from the Internet community and computer industry.

THE IMPATIENT ENTREPRENEUR

Kapor agrees that ISDN is “probably the slowest” digital protocol around. “But that’s like criticizing the Mostek 6502 [the microprocessor in the original Apple computer] for being slow — it’s not the point,” he says. “The best technology is not the fastest, it’s what creates new classes of products for new kinds of users.”

In any case, he says, it doesn’t matter. Even by the estimates of its most optimistic supporters, fiber to the home is 15 years away from being a consumer reality. “We’re talking about ISDN in addition to, not instead of, anything else,” he says. “We can’t wait 15 years to get started.”

Not surprisingly, Kapor sees strong parallels between the fledgling online world today and the early 1980s, when then-tiny Apple started the PC revolution and Kapor made his fortune with Lotus 1-2-3. “I’m convinced that there will be a whole new class of applications and services that will be driven by individual users, entrepreneurs and others who see potential uses for a public network,” he says. “It’s a case of entrepreneurial impatience.”

It’s paid for. Also, he says, ratepayers have already paid for the phone companies to upgrade to the digital switches that are the principal technical requirement for ISDN — the process has already been mandated and funded and is well under way. “The incremental cost of offering ISDN service to consumers is quite modest,” he says. “It’s a question of whether the telcos see it as an opportunity to mount a platform. And the key question is, do they make it ubiquitously available as a consumer service and do they make it affordable?”

Kapor says the telcos and the FCC are still working off the model of central control, where all intelligence is in the network and all services are provided by the network. “They just don’t understand the arena that they’re playing in, or the opportunity that exists,” he says.

TO THE MOON, ALICE

Another factor not typically taken into account is that Europe and Japan are already standardized on ISDN. Deploying ISDN in the U.S. opens up vast markets to any firm wanting to play in the global information market.

For example, at the Telecon show in Geneva in October, many Japanese manufacturers showed high-quality ISDN picture phones. People familiar with the chip technology required for such devices say that very high-quality talking-heads video over ISDN absolutely will exist. “That opens up a whole new set of applications,” says Kapor. “Once VCR-quality video over ISDN happens, and if there’s a fat ISDN data pipe available to everyone, the incentive for better video compression goes to the moon.”

Kapor says he’s talked to companies such as Thinking Machines, NeXT, Sun, Shiva and Apple, and “They all know what they’d do with that kind of pipe if they had it –everything from video bulletin board services, to selling cheap Internet connections, to a bridge for corporate local area networks, to doing various types of low-end interactive multimedia.”

Though philosophically the EFF is aligned with the cable companies and newspapers that are opposed to telcos competing in the information services market, Kapor thinks getting them out is “not politically saleable.” EFF’s idea is to make ISDN deployment a condition of the telcos’ ability to compete in information services, along with whatever restrictions and safeguards are imposed by Congress.

An elegant solution. It’s funny how elegant solutions to thorny problems are often sitting right under our noses. If the Internet community, which serves as the backbone of EFF’s support, throws its weight behind the idea of a national public network based on ISDN, the ramifications for the U.S. information industry could be immense. It would solve the stultifying “chicken-and-egg” problem — i.e., why provide services if there isn’t decent conduit vs. why provide decent conduit if there’s nothing to ship over it — that has kept potential information entrepreneurs, and their clever and useful applications, off the wire.

Denise Caruso