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Broadband Baloney

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DQI Bureau
New Update

As the growth of the Internet flags, the people who run

struggling on-line media, e-commerce, and networking companies think they have

identified the elixir to revive it: broadband. From Cisco Systems and Intel to

Sony and Yahoo!, they’re all betting that high-speed Internet service will

spur multimedia ads, snazzy video, and the ability to make impulse purchases–thereby

getting more people on the Net to spend more time and more money. Unfortunately,

it’s a bad bet.

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Let’s face it, most people simply won’t get high-speed

connections at home for years to come. Blame the steep costs of installing

high-speed lines, clumsy regulatory rules, or the poor economy, but broadband

has been slower to take off than expected. Market watcher Forrester Research

estimates 72% of dial-up Net access customers won’t pay more than $25 a month

for broadband–half of what most providers now charge. As a result, fewer than

5% of US on-line households have anted up. Intel’s executive vice-president,

Leslie Vadasz estimates it could take a decade for two-thirds of households to

get broadband.

That’s just the start of the problem. Too many companies

assume the Net is simply slow television and hope broadband will magically

transform it into a familiar entertainment medium. But that’s a wrongheaded

view of the Net. It’s best at activities that involve interaction, not passive

viewing. "Communication is the past, present, and future of the

Internet," says Eric Schmidt, chairman and chief executive of search engine

Google. That’s why e-mail and instant messaging remain the most popular things

to do on-line. Neither requires broadband, now or ever.

Don’t get me wrong, it’s not that broadband doesn’t

improve use of the Internet. Faster-loading pages are cool, the always-on

connection is even cooler, and speed is crucial for some popular activities such

as downloading music. But crucial enough to overcome all the costs and other

obstacles? Not anytime soon.

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Moreover, other bit-hogging activities such as video seem

unlikely to spur many people to pay for broadband at any price. Films on my PC?

Sorry, my office chair at home doesn’t recline far enough. Multimedia ads? No

thanks–they’re just as likely as TV ads to send me to the fridge for a beer,

or more likely to another site. Media companies and advertisers still haven’t

found a way to make money in the narrowband world, how are they going to make

money with broadband?

Even if some people might want to watch this stuff on their

PC, or the PC somehow finds its way into the living room, the broadband

connections available today aren’t nearly broad enough for video and the like.

On a dial-up line, you get grainy, jerky video in a tiny window. On a DSL or

cable modem connection, you get grainy, jerky video in a larger window.

Technology to compress data helps, but TV-quality video on a big screen may

require the same optical fiber used in commercial high-speed lines to be

installed all the way to each home. By most accounts, the cost of doing that is

so high it’s at least 15 years away.

The thing is, tech companies and websites already have plenty

of ways to improve the Internet experience at their fingertips. Why on earth don’t

we have instant-on PCs yet? How about installing more servers at sluggish

websites? The main reason many Web pages load slowly, points out Microsoft’s

senior researcher Jim Gray, is that servers are under-powered, not that Net

connections are too slow. And when are PC and network gear makers finally going

to create seamless links between computers and entertainment equipment? The

sooner the techies quit chasing broadband pipe dreams and work on these basics,

the sooner we’ll get jazzed again about the Internet.

By Robert D

Hof
in BusinessWeek. Copyright 2001 by The McGraw-Hill Companies, Inc

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