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Life After Television, Updated
In 1989 the
great information companies financed by Michael Milken’s junk bonds
were still seen as sleazy corpocracies teetering on towers of debt. By
1993 TCI, McCaw Cellular, MCI, Turner, NewsCorp, Viacom and Time Warner—collective
beneficiaries of $10 billion of Milken funds—had emerged as the titans
of the new information economy and ruled the business pages of the press
or months on end. Scorned in 1989 as part of a Milken scam or “Ponzi
scheme” by Benjamin Stein in Barrons, James B. Stewart in the Wall
Street Journal, Connie Bruck in the New Yorker and other acclaimed reporters
and analysts, TCI and McCaw together attained in 1993 a total market value
of around $50 billion.
In 1989 the most weighty wisdom on the future of media was the “Negroponte
switch”—the theory launched by Nicholas Negroponte of MIT’s
Media Lab that what currently goes by air—chiefly broadcast video—would
soon switch to wires (fiber optic and coax), while what currently goes
by wires—chiefly voice telephony—would massively move to the
air.
In Life After Television I urgently touted the Negroponte switch.
I still believe it brilliantly captures the key vectors of change. Shortly
afterward, though, I began to have my doubts that the victory of fiber
as a delivery system would be quite so total as I had imagined. After
all, the spectrum of electromagnetic vibrations is essentially infinite,
and several companies, led by Motorola, were offering wireless local area
network (LAN) equipment operating at Ethernet or Token Ring data rates
in the 18-gigahertz band—a frequency previously used chiefly in outer
space. Moreover, BIIC, Photonics and other firms were offering LANs in
the infrared bands of the spectrum—up in the terahertz and beyond—previously
used in the air only by low-data-rate TV remotes (although infrared pulses
were the medium of fiber optics).
By 1994 the vision of scarce spectrum behind the Negroponte switch was
in a rout. Qualcomm Corp. of San Diego introduced a cellular technology
that allowed use of the entire spectrum in every cell (rather than permitting
frequency reuse only once every seven cells as in current cellular technology).
By creating smaller cells in larger numbers, it would be possible to multiply
spectrum almost without limit while drastically lowering handset power
usage. Spectrum once too scarce to waste on video was becoming as cheap
and abundant in the air as in wires, where fiber optics had already opened
an era of potential bandwidth abundance. Andrew Grove, CEO of Intel, memorably
declared: “You think computer prices are plummeting. Wait till you
see what happens to bandwidth.”
Still, there remained limits to the use of higher frequencies for communication.
Higher frequencies, it was believed, created prohibitive problems of interference
and power. Rain, for example, would drown out microwave communications.
Pigeons would fry on the antennas. Then Cellular Vision of New York Inc.
overthrew this conventional wisdom. It announced in the fall of 1992 that
it was broadcasting 49 channels of studio-quality video in the 28-gigahertz
band of the electromagnetic spectrum to 500 homes in the Borough of Queens.
The total cost was some $300 per home. Months later, Gigahertz Equipment
of Phoenix was seeking similar licenses in the West.
Although many observers scoffed at these microwave ventures, on August
4, 1993, Bell Atlantic signed up to market the system through the City
of New York and in neighboring suburbs to the north. US West signed up
with Gigahertz to supply service in its own region.
Shaking most of the certainties of 1980s conventional wisdom, such insurgencies
all stemmed from the still deeper forces of the microcosm and telecosm—described
in Life After Television—that are still gaining momentum in 1994
and will continue to cascade through the technoscapes of the coming decade.
The Avalanche Of Bits
But with Milken banished from financial markets and Malone in harvest
mode, who will ride the next avalanche of bits on the information superhighway—and
who will be buried under it? Widely regarded as likely winners are Edward
McCracken of Silicon Graphics Inc., the aspiring king of the set-top box
and the video server, and Jim Clark, SGI founder and chairman until February
28 (when he will leave to start his own interactive TV software company).
In the form of 3D graphics hardware and software, SGI’s technology
is central to the triumph of computers over television and games. Yet
the company’s present strategy is to retrofit these digital engines
into the television set-top boxes and Nintendo game machines of the pre-computer
culture. Clark hopes to provide the content.
SGI offers compelling reasons for this strategy: production volumes and
foundries for the Mips 4000 microprocessor family comparable to those
of the Intel X86 standard; a siphon amid the possible floods of software
revenues to be earned by Nintendo using the SGI architecture; and sales
of SGI superservers to the television programming industry. But in harvesting
these benefits over the next five years, SGI and Clark risk dissipating
their energies by serving the industries of the past.
Is Mickey Schulhof of Sony Corp. going to countervail these trends? He
is trying to converge and digitize all the technologies of the past into
a pinata of new consumer appliances, musical hits, videogames and movies,
making blockbuster turkeys such as “Last Action Hero” and selling
everything but the feathers and the popcorn. Schulhof grandly plans to
rule both ends of the information superhighway, with Hollywood video and
musical content and a panoply of appliances to play them, from high-definition
TV sets to minidiscs, CDs and videotapes, game players and walkmasters.
But Sony may merely be supplying digital cosmetics to two dying industrial
establishments: Hollywood and consumer electronics. Making an array of
incompatible and incommunicable devices, Sony is defying both the law
of the microcosm, which compels the distribution of intelligence, and
the law of the telecosm, which asserts the exponential benefits of interconnection.
Lest the information superhighway clog up with wrecked hopes and misbegotten
plans, let us look for the false assumptions behind some of the disappointments
of today.
GTE’s Cerritos, Calif., project—the first full test of interactive
services, launched in the mid-1980s—rolled out its cornucopia of
on-demand video, instant banking, shopping, games and other services to
an indifferent marketplace. Although the results are still shrouded in
secrecy, news reports suggested that people just didn’t want to take
the trouble. US West and TCI are said to have made similar discoveries
in Denver. If the world lusts for interactivity, why does it spurn the
leading interactive market tests?
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