A Crippled Giant

The “Internet” is actually a network of networks (think of the streets of your community being part of a larger whole of roads and highways across the U.S.). Its architects never intended it to be what it has evolved into today. The origins of the “Internet” stem from a defense project, which became a popular means for the top minds of the country to exchange academic related work. One man brought it to the public, with the World Wide Web making its way in mainstream society during the mid 1990s.

Today, we are trying to use the Internet for something it was not designed. The circuitry of the U.S. is limited and outdated. Basic web browsing is not an issue for the current infrastructure because it does not demand large bandwidth requirements. The performance of applications such as streaming audio and video will be limited once becoming as popular as email. Unless an investment is made to upgrade our networks then highly acclaimed entertainment services such as Video on Demand (VoD), a pay for view service, cannot become the killer application that so many companies hope it will be.

An investment is not likely to be made by the ailing telecommunications industry. They poured large amounts of money into building long distance nationwide and regional fiber networks but were burned by the lack of demand for their service by corporate users. These companies are not soon to invest in upgrading what is referred to as “the last mile” (although there is a recent push to call it “the first mile”). The last mile is used to refer to the wires going into the home or business. Similarly, many telecom companies have been impacted by the dot-com bubble burst in 2000, which saw many eCommerce sites go belly up.

Broadband, known better to the public as high speed Internet, remains costly to consumers in the range of $30-$50 per month. This may be one reason that the U.S. is continuing to fall behind in the penetration rate of this technology. These higher bandwidth connections are available through cable companies like Cox or Comcast or telephone companies such as Verizon or SBC that have DSL technology. The much talked about broadband over power lines (BPL), which would do just that, allow high speed connections to work over power lines, is the type of catalyst that could help jump start this market.

Since there are really only two main types of broadband providers, bringing in another player could stir up some much needed competition. A domino effect would follow. Pricing to consumers could be more competitive and the market would open up to those of us who are more price sensitive. More consumers would demand broadband services. Businesses would try to differentiate themselves from competitors and healthy investments could be made.

The playing field needs to be leveled. That does not mean by the government dictating what the current Internet Service Providers (ISPs) can and cannot do. Giving incentives for the testing or development of broadband alternatives such as BPL or wireless networks would eventually allow the market to fix the problem.

It does not stop there. With broadband becoming the standard within every home, content providers who need higher bandwidth for their multimedia applications would finally have the infrastructure necessary for things like VoD. They in turn would turn to the ISPs to ensure that the service maintains peak performance.

While the suggestion to encourage competition would far from solve all of the problems within this industry, it would stimulate it. This sector of the economy must learn from its recent mistakes and avoid the hype of the latest and greatest technological developments. Investments cannot be made on an assumption that there will be a return but instead must be a result of careful planning and analyzing market trends.