Multimedia services over fiber-optic networks to thrive in next decade
Approximately two-thirds of 120 executives at leading U.S. telecommunications, cable-TV, consumer electronics, entertainment and publishing/advertising companies expect the era of interactive, multimedia products, services and fiber-optic networks to hit full stride from the years 2000 to 2010. Nearly one-third does not anticipate widespread usage after the year 2000.
These outlooks are the highlights of an extensive survey report, Interactive Multimedia Age II, conducted by Deloitte & Touche LLP, a Washington-based management consulting company. Of the executives queried, 55% were company chairmen, chief executives and presidents; 30% were vice presidents; and 15% were managers.
Overall, the participating executives are optimistic that advanced products, services and networks will soon make headway in the communications marketplace. However, the executives also caution that the tasks of developing advanced networks and devices, as well as new types of program contents, are complicated by the fast pace of technology and the slow pace of applications development. By the year 2000, for example, the power of computers, optical networks and programming features could easily outrun the capabilities of networks designed in the mid-1990s. Increased collaboration and dialog among concerned companies are needed to overcome this problem, according to the executives.
The executives also state that the proliferation of new electronic media means stiff competition ahead for rivals seeking to establish themselves as the channel of choice--network providers (telephone companies, cable-TV operators, satellite carriers and wireless operators) and device manufacturers (personal computers, television sets, telephones and set-top boxes). The officials also observe serious troubles ahead for network providers and device manufacturers that lag behind the competition in exploiting the potential of advanced technologies.
According to Dwight Allen, Deloitte & Touche associate national director of telecommunications and electronic services, who conducted the study, "Companies in the industries covered in the survey should update their strategies for dealing with the changes underway. Information and technological changes are continuing at an accelerating rate. Content providers, network operators and device manufacturers will face strong competitive pressures to adapt their products and services to meet the new expectations."
The surveyed executives agree that both the telephone companies and the cable-TV operators are pursuing major network initiatives and upgrades involving fiber-optic and hybrid fiber/coaxial-cable technologies. These technologies should foster the delivery of such advanced services as video-on-demand, electronic shopping and telecommuting.
Requested to expound their views on the delivery of advanced multimedia services over fiber-optic networks during the years 1998 to 2000, the participating executives offered these insights.
Interactive multimedia networks. Approximately 54% of the executives anticipate that the telephone companies will build fiber-optic upgrade networks that will pass 10 million to 25 million of their 101 million residential customers. More optimistic, 29% of this group say the number of passed customers will range from 25 million to 45 million, and 11% of the executives claim the passed customers will reach more than 45 million. For perspective, a market of 25 million today equals the total households in California, New York and Texas.
Approximately 44% of the executives declare that the cable-TV operators will deploy upgraded fiber-optic networks to 25 million to 45 million of their 99 million residential customers. These officials attribute higher numbers to the cable industry because they say the telephone companies are burdened by larger network sizes and by regulatory authorizations.
Institution links. Approximately 57% of the executives maintain that more than 25% of all schools, libraries, hospitals and clinics in the United States will be connected to a fiber-optic network by the end of this decade; these networks could be operated by a telephone company, cable-TV operator or network provider. A minority executive group of 36% contends that the number of connected institutions will vary from 10% to 25%. On a more positive note, almost 23% of the executives foresee a 45% institution-connection rate.
Computer connections. According to 39% of the executive group, approximately 28 million to 50 million households will have a personal computer connected to a fiber-optic network operated by a telephone company, cable-TV operator or a network provider. In comparison, approximately 36 million households today own personal computers, 11 million to 12 million have modems and 6 million subscribe to online services.
All the participating executives expect computer-type services to offer users more selection and manipulative capabilities than those associated with the passive offerings of television movie and video selections.
Multimedia devices. Assessing the outlook for digital devices, including computers, video games and video-disk players, which are projected to handle the delivery of multimedia interactive services and programming, an executive group of 49% suggests that 11 million to 28 million households will purchase such equipment. By comparison, only 30 million households today use cartridge-loaded video-game players.
Telephony over cable. There is a 50-50 split on the question of what proportion of cable-TV households will obtain telephone services from their cable operator. Half the executives conclude that approximately 10 million households will receive telephony services by their cable-TV operator. Slightly more affirmative, a 47% executive group expects the households to total between 10 million and 25 million.
Telephone-cable merger. Despite the previous failures of various telephone-cable company alliances, 90% of the executives are confident there will be at least one outstanding merger between one of the top 10 cable-TV operators and one of the top 11 telephone companies.
Government impact. As for the federal government`s efforts at encouraging investment, aiding research and development, and promoting advanced communications services, 62% of the executives expect government actions to be more positive than negative or to remain neutral; they do not expect the government to stand in the way of communication companies` goals. q
This article was abstracted by the editorial staff of Lightwave from the study report, Interactive Multimedia Age II, generated by Deloitte & Touche LLP, Washington, DC.