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02/13/95

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Who will play in coming telecommunications "Field of Dreams"?

STANFORD -- Every few months the media report that another multibillion-dollar merger among computer, communication and entertainment companies is being considered, has been consummated or has fallen through. What's it all about?

"The telecommunications people are trying to build an electronic 'Field of Dreams,' where they hope people will come play," Professor William F. Miller, who holds a joint appointment in computer science and the Graduate School of Business, told an audience of newspaper executives Friday, Feb. 10. "There are a lot of unanswered questions about this plan: Who will the players be? What will they play? Who will make the rules? How much will it cost?"

Nobody knows the answers to these questions, but there are some clues, the veteran computer industry observer told listeners in a campus talk that was part of the annual meeting of the California Newspaper Publishers Association.

Although there are between 80 to 100 different projects under way at present, they fall into three general categories:

  • Private-sector-led, top-down development with a target of home entertainment. The outstanding example is a $1-billion project by Time- Warner and U.S. West in Florida. Miller called this a $1-billion gamble, because entertainment is the least well understood potential application. The changes that are taking place in people's lives are quite likely to affect the kind of entertainment they prefer, he said.
  • Government-led, top-down development with a target of public service. The prototype for this is the Iowa Network, a $400-million project financed by the state to network schools, libraries, universities and government agencies.
  • Business-led, bottom-up development with business as its target, such as Smart Valley Inc., one of the projects of Joint Venture: Silicon Valley, in which Miller has been deeply involved. Its purpose is to help revitalize Silicon Valley by developing the information infrastructure in the region.

"This is different from the other projects in being bottom up. The several dozen companies who are members are involved in making all the decisions," Miller said.

One of the specific projects of Smart Valley is CommerceNet, a 50- company organization that is developing the tools needed to allow companies and individuals to transact business over a public network, the Internet. This is already being done on private networks, but the companies involved want to use a public network because it is potentially less expensive and because it has a potential for opening up entirely new kinds of markets.

Once the problem of ensuring access to everyone is solved, or regulatory constraints can be loosened, there will be plenty of competition to provide access to the emerging information infrastructure, Miller said. Key players are likely to be the telephone companies, cable television companies and other utilities such as electric companies.

A recent demand study conducted by the American Electronics Association that ranked potential uses for the national information infrastructure provides some clues as to how people are likely to use these new capabilities. The study found that people ranked business uses as the most important. Public services ranked second in importance, while entertainment was near the bottom of the list, he said.

"No technology since the automobile has had as big an impact on the way we live and the way we work," Miller said.

New telecommunications technology, for example, is having a major impact on the companies using it. It is now far easier for companies to form alliances with companies in different parts of the world, so global trade patterns are changing.

It is also affecting the basic way in which the companies are organized. "Already the computer industry has moved from companies that were vertically integrated to ones that are far more horizontally integrated. That is also an increasing trend in the telecommunication and energy industries," he said.

According to Miller, the information revolution is also making governance more difficult. For one thing, it is fostering the establishment of "horizontal communities" where people are tied together by common interests, ranging from political and religious to recreational and sports, rather than geography. That will make governing increasingly harder because representatives continue to be elected on the basis of geography, he predicted.

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