IP convergence: The golden age of telecommunications, 08/10/98

The golden age of telecommunications

By John Sidgmore
Network World, 08/10/98

We are currently in the middle of probably the biggest change in the history of communications. Perhaps one of the biggest changes in history, period ??similar to the growth of transportation and aviation at the beginning of the century. In fact, 50 years from now, people are going to look back at this time as the golden age of communications.

Today, demand for Internet bandwidth has become insatiable, doubling not every 18 months as Moore's Law would have it, but at an unprecedented rate of every 3.5 months. At that growth rate, Internet traffic will soon consume half the available bandwidth on networks worldwide. By 2003, the percentage will climb to 90%, and in 2004, Internet traffic will account for 99% of the bits traversing the world's networks. At that point, voice - the driver of bandwidth demand since the beginning of the telecommunications industry - will become a niche market.

Combine this growth with the historic deregulation sweeping the country and the rest of the globe and you've got a whole new telecommunications industry. The once impenetrable old order finally is being overturned.

More than ever, businesses are realizing that Internet technology offers dramatically less expensive, more flexible alternatives to traditional telecom services. Perhaps more important, the Internet gives companies the opportunity to ubiquitously reach all potential customers for a reasonable cost.

Such profound changes are altering the structure of many industries, while the cost and technology implications of the Internet have fundamentally and fatally altered the structure of the communications industry.

A prime example is the low-hanging fruit of the telecom market: fax. Today, 50% of all international minutes that are counted as voice transactions are actually fax. Customers using IP fax can potentially save 30% to 40% of traditional fax costs. As fax and other services move the Internet, traditional carriers risk losing their core business.

Internet technologies are not going to stop at fax. The industry is quickly developing the infrastructure to support commercial-strength voice mail, voice messaging and interactive voice communications for the Internet. Ultimately, all this will blur into a single seamless fabric.

The circular pattern of new applications driving bandwidth growth ??and bandwidth growth enabling new applications ??will continue at a furious pace. More audio and video applications are coming, and computer-to-computer applications are starting to proliferate. Intelligent Web agents searching servers throughout the world will probably accelerate bandwidth demand over the next few years.

These computers will also be increasingly mobile as "wearable computers" such as personal digital assistants, pagers and other IP devices proliferate. Imagine the complexity of communications in a world where most people have one or two IP-enabled computers on them around-the-clock and are online not just with their home computers, but with each other, as well.

The Internet and the technology surrounding it will continue to expand. This realization has forced the telecom industry to wake up to a new world.

The next few years will bring an explosion of new technology like nothing that has ever come before as the world's intellectual and financial capital becomes increasingly focused on the Internet. We have created a unique environment similar to an experiment in an ever-expanding petri dish, where the best and brightest are all focused on expanding the technology and the size of the experiment. These are very exciting times to be part of the communications golden age.

The implications for telecommunications companies are profound. No other industry has ever faced the challenges this industry faces everyday, right now. The winners in this industry five years from now will be the companies that can move quickly, take advantage of new technology and capitalize on immediate opportunities. Young, fast, entrepreneurial companies, such as WorldCom, Qwest and others, are making a serious impact on an industry that has been static for years.

Our mantra at UUNET has always been that?in a world where bandwidth demand (and therefore your infrastructure) is growing by 1,000% per year??if you're not scared, you just don't understand. The old order of telecommunications is finally starting to understand, and if they move quickly and aggressively, some of them just may survive the ride.

Sidgmore is vice chairman of WorldCom and CEO of UUNET Technologies. Mike O'Dell, vice president of research and development at UUNET, also contributed to this column. Drill down into IP convergence:

The big picture
The opportunities and the obstacles.

Economics
How convergence saves you money.

Regulatory
Gov't. may yet turn the tables on IP.

Customers
Pioneers who are putting convergence to work.

Technology
The standards that make it all possible.

Carriers
Who's planning what, plus interviews with Sprint, UUNet execs.

Pundits
Opinions from Network World columnists:
Anderson
Heckart
Nolle

Links
For even more information!

ICANN board approves reform agenda

House committee subpoenas WorldCom executives

KPMG Consulting to hire Andersen IT staff, not unit

Xerox accounting troubles may total $6 billion

Analysis: Ciena/ONI deal done

All of today's news