Take A Trip into the Future on the Electronic Superhighway

Everybody knows what the telephone is for. It rings. You pick it up. A voice travels down a wire and gets routed and switched right to your ear.

Everybody knows what to do with the television. You turn it on, choose a channel and let advertising, news and entertainment flow into your home.

Now imagine a medium that combines the switching and routing capabilities of phones with the video and information offerings of the most advanced cable systems and data banks. Instead of settling for whatever happens to be on at a particular time, you could select any item from an encyclopedic menu of offerings and have it routed directly to your television set or computer screen. A movie? Airline listings? Tomorrow’s newspaper or yesterday’s episode of Northern Exposure? How about a new magazine or book? A stroll through the L.L. Bean catalog? A teleconference with your boss? A video phone call with your lover? Just punch up what you want, and it appears just when you want it.

Welcome to the information highway. It’s not here yet, but it’s arriving sooner than you might think. Already the major cable operators and telephone companies are competing — and collaborating — to bring this communicopia to your neighborhood, while the Clinton Administration is scrambling to see how the government can join in the fun.

Driving this explosive merger of video, telephones and computers are some rather simple technological advances:

— The ability to translate all audio and video communications into digital information.

— New methods of storing this digitized data and compressing them so they can travel through existing phone and cable lines.

— Fiber-optic wiring that provides a virtually limitless transmission pipeline.

— New switching techniques and other breakthroughs that make it possible to bring all this to neighborhoods without necessarily rewiring every home.

Suddenly the brave new world of video phones and smart TVs that futurists have been predicting for decades is not years away but months. The final bottleneck — the “last mile” of wiring that takes information from the digital highway to the home — has been broken, and a blue-chip corporate lineup has launched pilot projects that could be rolled out to most of the country within the next six or seven years. Now the only questions are whether the public wants it and how much it is willing to pay.

We won’t have to wait long to find out. By this time next year, vast new video services will be available, at a price, to millions of Americans in all 50 states. Next spring Hughes Communications will introduce DirecTv, a satellite system that delivers 150 channels of television through a $700 rooftop dish the size of a large pizza pie. At about the same time, Tele- Communications, Inc. (TCI), the world’s biggest cable-TV operator, will begin marketing a new cable decoder that can deliver as many as 540 channels; next week it will announce plans to provide this service to 100 cities within the first year. Time Warner (the parent company of this magazine) is up and running with a 150-channel system in Queens, New York, and early next year will launch an interactive service that will provide video and information on demand to 4,000 subscribers in Orlando, Florida.

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The prospect of multiplying today’s TV listings has launched a furious debate over what a fragmented and TV-anesthetized society will do with 100 — or 500 — offerings. Will scores of narrowcast channels devoted to arcana like needlepointing or fly fishing fracture whatever remains of a mass $ culture, leaving Americans with little common ground for discourse? Or will the slots be given over to endless rebroadcasts of a handful of hit movies and TV shows — raising the nightmarish specter of the Terminator saying “I’ll be back” every few minutes, day in and day out?

But to focus on the number of channels in a TV system is to miss the point of where the revolution is headed. When the information highway comes to town, channels and nightly schedules will begin to fade away and could eventually disappear. In this postchannel world, more and more of what one wants to see will be delivered on demand by a local supplier (either a cable system, a phone company or a joint venture) from giant computer disks called file servers. These might store hundreds of movies, the current week’s broadcast programming and all manner of video publications, catalogs, data files and interactive entertainment. Remote facilities, located in Burbank, California, or Hollywood or Atlanta or anywhere, will hold additional offerings from HBO and Showtime, as well as archived hits from the past: I Love Lucy, Star Trek, The Brady Bunch. Click an item on the menu, and it will appear instantly on the screen.

This is the type of system that most of the top cable companies — including TCI, Time Warner, Viacom and Cablevision — hope to build within the next year or two, at least on a demonstration basis. Many of the regional Bell operating companies (the so-called Baby Bells) are trying to create their own interactive networks, either by themselves or in partnership with cable companies. Bell Atlantic is scheduled to begin offering video on demand to 300 homes in northern Virginia this summer. U.S. West has announced plans to deploy enough fiber-optic lines and coaxial cable (the pencil-thick wire used by cable systems) across 14 states to deliver “video dial tones” to 13 million households starting next year.

Once the storage and switching systems are in place, all sorts of interactive services become possible. The same switches used to send a TV show to your home can also be used to send a video from your home to any other — paving the way for video phones that will be as ubiquitous and easy to use as TV. The same system will allow anybody with a camcorder to distribute videos to the world — a development that could open the floodgates to a wave of new filmmaking talent or a deluge of truly awful home movies.

Today’s home shopping networks could blossom into video malls stocked with & the latest from Victoria’s Secret, Toys “R” Us and the Gap. Armchair shoppers could browse with their remote controls, see video displays of the products that interest them, and charge these items on their credit cards with the press of a button — a convenience that will empower some folks and surely bankrupt others.

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In the era of interactive TV, the lines between advertisements, entertainment and services may grow fuzzy. A slick demonstration put together by programmers at Microsoft shows how that might be so. The presentation opens with a Seattle Mariners baseball game. By clicking a button on a mouse or remote control, a viewer can bring up a menu of options (displayed as buttons on the screen). Click on one, and the image of the batter at the plate shrinks to make room for the score and the player’s stats — RBIs, home runs and batting average — updated with every pitch. Click again, and you see the Mariners’ home schedule. Click yet again, and a diagram of the Kingdome pops up, showing available seats and pricing. Click one more time, and you have ordered a pair of field box seats on the first-base side (and reduced your credit-card balance by about $25).

This is the vision that has the best minds from Madison Avenue to Silicon Valley scrambling for position at the starting gate. The telephone companies, with their switching networks already in place, want to build the superhighway and control what travels over it. The cable-TV companies, with their coaxial systems, think they should own the right-of-way. Computer companies such as IBM, Hewlett-Packard and Sun want to build the huge file servers that will act as video and information libraries. Such software companies as Microsoft and Apple want to build the operating systems that will serve as the data highway’s traffic cops, controlling the flow of information to and from each viewer’s screen. Meanwhile, TV Guide is racing against InSight, TV Answer and Discovery Communications to design electronic navigators that will tell viewers what’s on TV and where to find it.

“Make no mistake about it,” says Vice President Al Gore, who was talking about information highways long before they were fashionable. “This is by all odds the most important and lucrative marketplace of the 21st century.” If Gore is right, the new technology will force the merger of television, telecommunications, computers, consumer electronics, publishing and information services into a single interactive information industry. Apple Computer chairman John Sculley estimates that the revenue generated by this megaindustry could reach $3.5 trillion worldwide by the year 2001. (The entire U.S. gross national product today is about $5.9 trillion.)

During the 1992 presidential campaign, Clinton and Gore made building a “data superhighway” a centerpiece of their program to revitalize the U.S. economy, comparing it with the government’s role in creating the interstate highway system in the 1950s. The budget proposal the Administration submitted in February includes nearly $5 billion over the next four years to develop new software and equipment for the information highway.

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Private industry, fearful of government involvement and eager to lay claim to pieces of the game, has been moving quickly in the past few months to seize the initiative. GTE, the largest independent telephone company, has already built a system in Cerritos, California, that lets customers pay bills, play games, read children’s stories and make airline reservations through the same wire that brings them basic cable television and 30 pay-per-view channels. Three hundred fifty miles north, in Castro Valley, Viacom, the purveyor of MTV and Nickelodeon, is building a similar system to test consumer reaction to the new services.

Some of the projects seem more impressive than they are. TCI customers in the suburbs of Denver already have what looks like true video on demand. By pointing a remote control at the TV set, they can select from among 2,000 offerings (from Hook to old Marx Brothers movies to last night’s MacNeil Lehrer NewsHour) and have their choices appear on screen whenever they want them, any time, day or night. But behind the high-tech service is an almost laughably low-tech delivery system. When a customer presses the Enter button, a bell goes off in a three-story building a few miles away, alerting a TCI attendant that he has five minutes to run to the video library, grab the proper tape and slot it into one of a bank of VCRs.

TCI’s Denver setup reveals the weakness behind a lot of the information- superhighway hype: for all their posturing, neither the phone companies nor the cable-TV operators are quite ready to build a fully interactive and automated data highway that stretches from coast to coast. But thanks to a number of technical innovations, they are getting awfully close.

The key to the entire enterprise is fiber. Fiber-optic cable, made up of hair-thin strands of glass so pure you could see through a window of it that | was 70 miles thick, is the most perfect transmitter of information ever invented. A single strand of fiber could, in theory, carry the entire nation’s radio and telephone traffic and still have room for more. As it is deployed today, fiber uses less than 1% of its theoretical capacity, or bandwidth, as it’s called in the trade. Even so, it can carry 250,000 times as much data as a standard copper telephone wire — or, to put it another way, it can transmit the contents of the entire Encyclopedia Britannica every second.

In the mid-1980s, AT&T, MCI and Sprint installed fiber-optic cable between major U.S. cities to increase the capacity of their long-distance telephone lines. At about the same time, the Federal Government, spurred by Gore, leased some of these lines to give scientists a high-speed data link to supercomputers funded by the National Science Foundation. These two networks, private and public, carry the bulk of the country’s telephone and data traffic. In the superhighway system of the future, they are the interstate turnpikes.

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The problem comes when you get off the turnpike onto the roadways owned by local phone companies and cable-TV operators. Some of these are being converted to high-bandwidth fiber optic. But at the end of almost every local system — the “last mile” that goes from the local-service provider to the house — you run into the electronic equivalent of a bumpy country road. In the phone system, the bottleneck is that last bit of copper wiring, which seems far too narrow to admit the profusion of TV signals poised to flow through it. In cable TV, the roadblocks are the long cascades of amplifiers that run from the company’s transmission headquarters to the home, boosting the signal every quarter-mile or so. These amplifiers are notoriously unreliable and generate so much electronic noise that two-way traffic in a cable-TV system is all but impossible.

It has long been assumed that nothing was going to change much in telecommunications or television until fiber was brought all the way to the home, a Herculean task that was expected to cost $200 billion to $400 billion and take more than 20 years to complete. The breakthrough that is bringing the info highway home much sooner than expected is the discovery, by both the phone companies and the cable industry, that it is possible to get around the bottlenecks in their respective last miles without replacing the entire system.

For the cable-TV companies, the key insight came in the fall of 1987, when $ cable engineers demonstrated that coaxial wire could carry information quite effectively over short distances; in fact, for a quarter-mile or so, it has almost as much bandwidth as fiber. They pointed out that by using fiber to bring the signal to within a few blocks of each home and coaxial cable to carry it the rest of the way, the cable companies could get a “twofer”: they could throw away those cranky amplifiers (giving them a system that has more capacity and is easier to maintain) and get two-way interactivity almost cost- free.

For the phone companies, the breakthrough came three years ago when scientists at Bellcore, the research arm of the Baby Bells, found a way to do what everybody had assumed was impossible: squeeze a video signal through a telephone wire. The technology, known as asymmetric digital subscriber line, has some drawbacks. It cannot handle live transmissions, and the picture it produces is not as clear as that provided by a well-tuned cable hookup — never mind the high-definition TV signals expected to come on line before the end of the decade. Bellcore researchers say they have already improved the quality of the picture and that with further compression they may be able to accommodate several channels of live video.

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The Government is the dark horse in the race to the information highway. It got into the business almost by accident: thanks to Gore’s lobbying during the 1980s, it funded the fiber-optic links that form the backbone of Internet, the sprawling computer grid that is for students, scientists and the Pentagon what Prodigy and CompuServe are for ordinary computer users. Today Internet has grown into the world’s largest computer bulletin board and data bank, home to 10 million to 15 million networkers who use it for many of the purposes the information highway might serve: sending and receiving mail, sharing gossip and research results, searching for information in hard-to-reach libraries, playing games with opponents in other cities, even exchanging digitized sounds, photographs and movie clips.

During the 1992 campaign, Clinton and Gore repeated the information-highway metaphor so often that many voters — and industry leaders — were left with the impression that the government actually planned to build it, to use taxpayer dollars to construct a data freeway that anybody could ride. But the spending proposals released after the election make it clear that the Administration’s goals are more modest. Of the $5 billion requested for the next four years, nearly $3 billion would be spent building supercomputers. Most of the rest would be set aside for developing techniques for transmitting different kinds of data over the networks — such as CAT scans and engineering blueprints — and on pilot projects to give schools, hospitals, libraries and other nonprofit institutions access to Internet.

The government is more likely to play a critical role in cutting through the thicket of state and federal regulations that have grown up over the years to keep the local telephone and cable-TV monopolies out of each other’s business. White House officials say they want to give the private sector incentives to invest in the data highways. At the same time, however, they insist on preserving features of the current system that voters value, such as universal access to affordable phone and television service and protection against price gouging.

In a speech in New York City two weeks ago, acting Federal Communications Commission Chairman James Quello cautioned industry executives against making all television pay per view. Free TV, he warned, “is essential to a well- informed citizenry and electorate in a democracy.” As if to punctuate his remarks, the FCC last week voted to cut the cost of most cable-TV services 10% and to make it harder for operators to raise rates in the future. The commission also issued a ruling in an ongoing dispute between the TV networks and the Hollywood studios, relaxing restrictions that have prevented the networks from owning shows and sharing in the lucrative rerun market. As new ways of packaging and delivering these shows emerge, skirmishes over copyrights and program ownership are likely to become increasily bitter and complex.

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What shape the highway takes will depend to some extent on who ends up building it. The cable companies tend to think in terms of entertaining mass audiences. Their emphasis is on expanded channels, video on demand and video- shopping networks. They admit the possibility of more special-interest programming — such as MTV, the Discovery Channel and Black Entertainment Television — but only if they can be convinced that the demographics are sufficiently attractive.

The phone companies, with their background in point-to-point switching, tend to focus on connectivity and anything that will rack up message units. They emphasize services that will generate a lot of two-way traffic, such as video phones, video conferencing and long-distance access to libraries.

The computer users, and some enthusiasts within the Clinton Administration, tend to see the information highway as a glorified extension of computer bulletin boards. Vice President Gore talks about making it possible for a schoolchild in Arkansas to have access to a book stored on a computer in the Library of Congress or take a course at a distant college. Mitch Kapor, co- founder of a computer watchdog group called the Electronic Frontier Foundation, wants the superhighway to do for video what computer bulletin boards did for print — make it easy for everyone to publish ideas to an audience eager to respond in kind. He envisions a nation of leisure-time video broadcasters, each posting his creations on a huge nationwide video bulletin board.

The technology makes all these things possible. It’s easy to imagine families exchanging video Christmas cards. Or high school students shopping for a college by exploring each campus interactive video. Or elementary schools making videos of the school play available to every parent who missed it.

It’s even easier to picture the information highway being exploited to make a lot of money. The powers that be in entertainment and programming have their eyes on the $4 billion spent each year on video games, the $12 billion on video rentals, the $65 billion on residential telephone service, the $70 billion on catalog shopping. They are eager to find out how much customers will shell out to see last night’s Seinfeld or the latest Spielberg. They are exploring the market for addictive video games and trying to figure out how much they can charge for each minute of play. It won’t be long before someone begins using video phones for the multimedia equivalent of “dial-a-porn” telephone-sex lines. All these services can be delivered easily and efficiently by the information highway, and they can be backed up by a threat with real teeth. As TCI chairman John Malone puts it, “If you don’t pay your bill, we’ll turn off your television.”

In the end, how the highway develops and what sort of traffic it bears will depend to a large extent on consumers. As the system unfolds, the companies supplying hardware and programming will be watching to see which services early users favor. If they watch a lot of news, documentaries and special- interest programming, those offerings will expand. If video on demand is a huge money-maker, that is what will grow. If video bulletin boards — or teleconferencing, or interactive Yellow Pages, or electronic town meetings — are hot, those services too will thrive and spread.

We will in effect be voting with our remote controls. If we don’t like what we see — or if the tolls are too high — the electronic superhighway could lead to a dead end. Or it could offer us more — much more — of what we already have. Just as likely, it could veer off in surprising directions and take us places we’ve never imagined.

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