The American free market has never shied away from a new technological frontier. At the inception of the Internet, entrepreneurs leaped with both feet into the unregulated chaos and spawned the biggest economic expansion in history.
But now, as the ‘Net makes a bid for ubiquity by spreading to devices like wireless handsets, handhelds and even the top of your TV, the free spirit of American capitalism may be less a help than a hindrance to technological progress.
Scores of firms around the world, from such centenarian mainstays as AT&T to scrappy Young Turks like Japan’s NTT DoCoMo, are racing to build the global standards for several next-generation content-delivery technologies. Two of the hottest — and most contentious — are interactive TV and high-speed wireless connectivity.
ITV can include enhanced TV, which generally means embedding Web markers in programming so viewers can concurrently seek out information related to the broadcast online. It also can mean services like onscreen schedules, play-along gameshows, access to e-mail and the Web, and even real-time video on demand.
Ironically, one of the most stubborn impediments to the swift uptake of ITV is the range of offerings that healthy American capitalism has encouraged.
There are nearly as many plans for ITV set-top boxes as there are electronics manufacturers and communications companies. The most high-profile names include Microsoft’s WebTV and AOL-Time Warner’s recently announced AOL-TV box, both of which operate (for now) over dial-up Web connections.
But that’s just the tip of the iceberg. All the major U.S. cable system operators have ITV services in the works, and most of them are built around broadband cable Internet access. That allows cablers like New York’s Cablevision to sell not only the Web at lightning speed, but also true video-on-demand in the very near future.
It also means that consumers will very shortly have to choose from a bewildering array of offerings, each with its own deals with content companies and many operating on different standards. Given the rapid onset of obsolescence in the high-tech world, the consumer may be hesitant to plunk money down before knowing which platforms will sink and which will swim.
That stands in stark contrast to similar efforts in Europe, where companies like British Telecom and France’s Canal Plus are making aggressive, continentwide roll-outs of high-speed interactive TV services, and subsequently making consumers’ choices much easier.
“In the U.S. it’s a very diffuse marketplace,” says British Telecom senior VP John Raczka. “You haven’t really seen any end-to-end national players emerge yet.”
But the nascent U.S. interactive TV industry hasn’t taken those concerns lying down. The major cable players, in fact, have been working toward a solution to the multiple-platform dilemma through an initiative called Open Cable.
Participants in Open Cable seek to set common standards for the development of software and content on digital set-top boxes nationwide, says Alan Yates, director of marketing for Microsoft TV.
“Every digital broadcast network is essentially proprietary: You can’t really be sure yet that content will work from one network to the next,” Yates says. “But the cable industry is working very hard to provide standards that will work as this develops.”
When asked whether government could have a role in speeding along efforts to reach a common standard through legislation, the response from the industry is a unanimous and resounding “No.” However, Yates says the feds should and do encourage the industry through less invasive means.
“The government is certainly putting pressure on the industry to resolve interoperability issues across platforms, and that’s welcome,” he says.
In Asia and Europe, consumers have enjoyed a lightning-paced roll-out of advanced wireless services. Over 8 million mobile-phone users in Japan, for example, have signed up for DoCoMo’s iMode wireless content service, on which they can retrieve data from the Web, and fire short text messages back and forth over the airwaves. And mobile subscribers from London to Madrid, Spain, will soon be enjoying wireless Internet access that’s faster than today’s best cable connections thanks to the impending roll-out of third-generation, 3G, mobile networks.
This rapid adoption has occurred for a number of reasons, including a lack of land-line infrastructure, densely packed populations, and, particularly in Japan, fanaticism for gadgets of all kinds. But one of the biggest reasons may be that both regions adopted a single standard for wireless transmission (CDMA for Japan and GSM for Europe) early on in network development.
In the U.S., however, the world’s biggest single national wireless market has been bitterly contested by several major players, operating on several technological standards. As with ITV, that clash of technologies has held U.S. carriers back from realizing the true potential of wireless as quickly as our neighbors overseas.
Another pressing problem is the allocation of wireless spectrum; the actual airwaves on which all of this broadband content must travel, says Adrian Nemcek, senior VP at communications and technology giant Motorola. “In the U.S., spectrum definitely has not been assigned to 3G as readily as it has in other parts of the world.”
Part of the problem is that the section of the radio spectrum that governments in Europe and Asia have set aside for 3G is already in use in the States, so American regulators must find other stretches of the airwaves to parcel out, according to Nemcek.
Another concern is the massive prices those chunks of spectrum have fetched at auction on both sides of the pond. At a recent sell-off in Germany, for example, six carriers paid a total of more than $46 billion for their respective pieces of the 3G future.
But when that future does arrive, the changes in communication technology will be nothing short of revolutionary, contends Nemcek. True 3G phones will pull data out of the sky at rates of up to 2 million bytes per second — fast enough for full-motion, broadcast-quality video and sound.
“The world telecom industry as a whole has embraced the idea of stepping forward into the next generation in all standards,” he says. “It’s only a question of when.”
Unfortunately in the U.S., it will probably be later rather and sooner.