The road ahead - broadband applications - Industry Trend or Event

CommunicationsWeek International, Oct 23, 2000 by Andrew Gliniecki

So big bandwidth at the core is in place. At the edge, 3G, DSL and LMDS are waiting in the wings. But what about the bandwidth-hungry applications that will fill these pipes? We all believe they will emerge-an awful lot of money is riding on it-but how? Where will the ideas come from-and how will they progress from the drawing board to fully formed commercial services? As telecoms come under greater scrutiny from the capital markets-which are becoming increasingly uncertain about what the future holds-these are questions the industry needs to urgently address.

The pan-European guys are feeling the heat. They need the kind of demand that they believe will be unlocked by broadband technologies at the edge. Meanwhile, at the edge, there are major concerns about what these next generation broadband applications are going to look like.

OK, some opportunities are obvious and will help kick off initial demand. In the fixed space, for instance, fast Internet access and various forms of video and television on demand are likely winners.

But what about a structured approach to developing a more extensive suite of broadband applications? Addressing this issue from the next-generation mobile point of view, Ron Sommer of Deutsche Telekom made a telling point earlier this year. He argued that instead of spending billions for overpriced licenses, the money would better be spent on developing 3G applications. He was right.

The high license prices have proved disastrous for the industry. Current concerns about the banks' overexposure to high levels of borrowing by the telecom sector have been fuelled, in part, by the vast sums operators are borrowing to pay for licenses.

Not that there is any going back. The financial community has to realize that you can't build half a bridge to the new information economy. Complete networks need to be in place to carry the applications and content that are going to drive wealth creation.

Assuming the money men get this message-and we're all in trouble if they don't-the next stage is to focus on creating and developing next-generation applications.

And time is a critical factor here. No doubt successful applications will emerge. But the longer it takes, the more telecoms casualties there will be along the way. But there is light at the end of the tunnel. Sonera has the right idea Its Mspace project is about creating an advanced trial environment where any number of combinations of applications, technologies and handheld devices can be trialed.

There are two key aspects of this project which make it noteworthy for the rest of the industry. First, the shrewd use of Finnish early adopters to test out offerings. No matter how compelling an application or technology sounds within a telco R&D hierarchy, it is only through trying things out using carefully selected trial groups that you can get an idea of whether the user demand will be out there. And the same goes for devising realistic price points around which to devise workable business models.

Which brings us to the second pertinent point. Sonera will consider ideas from anywhere-be it from vendors, network operators, content providers or two guys holed up in a basement. And that's the right approach. it's the ideas that count-not their genesis. There is no reason why other next generation players should not watch and learn from adopting this kind of philosophy and approach.

These are testing times for the industry. The money men are already looking askance at the costs involved in building the infrastructure for the networked economy. It won't be long before the spotlight turns to issues connected with creating a compelling suite of next-generation content and applications. The industry needs to be ready with some convincing answers.