March 10, 1997

Inside Looking Out
There's only one way to fix the bottleneck: Net welfare
By Mitch Ratcliffe


There's no such thing as the bottleneck blues: All you have to do is open your wallet. The only limit on the development of Net bandwidth is your willingness to pay-on behalf of your company and society as a whole. Sure, this sounds outrageous, but if you aren't helping to expand the Net infrastructure in every way possible, you'll probably never benefit from it to the extent you'd like, since the successful evolution of a networked marketplace depends solely on the expansion of carrying capacity.

So you're going to have to step up and-gulp!-subsidize the expansion of the Net. Here are some simple ways to do it. One, give your employees unlimited access to the Net after hours. Let them dial in and surf, spend and be silly. They'll also learn more about doing business on the Net.

Two, lobby against increases in local residential connectivity rates-and accept higher corporate prices, if necessary, to ensure that the market is expanding into more homes.

And three, donate technology and subsidized connections to a local school or organization that will make connectivity available to others. For example, get together with three other companies and share the cost of installing a T-1 line in a neighborhood storefront. Put your old computers in and ask for community volunteers to staff the place.

Skeptical? Consider this from a recent Deloitte & Touche study: It found that for every 1 percent decrease in the cost of wireless connectivity, demand increases by 0.5 percent.

Every time your company makes a decision to use more, or pay for more, bandwidth, it has a substantial, albeit mysterious, effect on the health of the Web marketplace. This is why the argument that there's a bottleneck that necessitates higher and higher prices for access is just plain silly. It's the networking equivalent of the rich shoving the tax burden of a society onto the poor, then denying the poor access to the roads and sewers the society builds. If we are going to build this gigantic digital network, then individual access to the Net by consumers must be subsidized by the Haves.

By the turn of the century, there will likely be more than eight networks competing for the connectivity business in every major metropolitan area. That includes the telephone, cellular, PCS, point-to-point microwave, cable and satellite companies contending in the vastly expanded bandwidth marketplace. The key to making the entire marketplace a success is whether the distribution of bandwidth makes near-ubiquitous access to the Internet economically viable.

At Internet/Media Strategies, we've calculated that the price of one minute's wireless connectivity will fall by 90 percent over the next five years, bringing it in line with telephone and cable network costs. In contrast, the expansion of wired capacity will raise the quality and quantity of service delivered, but will probably result in prices remaining stable to offset the infrastructure investments by carriers. That means in 2002, the amount of access to the Net available to the home or office will be roughly 10 times greater, but at almost the same price per minute that we pay today.

PC Week InsideSo, without major investments by you, the Web won't be a widely accessible medium. It's going to take a lot more consumers browsing the Web during their lunch hours and after work to make this market fly. You're just going to have to open up that wallet.

Mitch Ratcliffe runs the Internet/Media Strategies Inc. consulting firm, publisher of Digital Media newsletter.

Copyright(c) 1997 Ziff-Davis Publishing Company. All rights reserved. Reproduction in whole or in part in any form or medium without express written permission of Ziff-Davis Publishing Company is prohibited. PC Week and the PC Week logo are trademarks of Ziff-Davis Publishing Company. PC Week Online and the PC Week Online logo are trademarks of Ziff-Davis Publishing Company.

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