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The Connected Community
The Future of the Telecommunication Industry

A presentation to the World Productivity Congress, Edinburgh, October 1999.
by Louis Tanguay, President and Chief Operating Officer of Bell Canada

 

I am particularly pleased to be able to join you in Edinburgh. Not only is it a charming city, but I have been employed within the Bell Canada Group of companies throughout my professional career. Bell Canada is one of the 2 original telephone companies founded on the basis of Alexander Graham Bell's patent for the 'harmonic telegraph' or telephone, the other being the enterprise now known as AT&T. And this city is his birthplace, from whence he emigrated to Canada while still a boy.

I have been asked by the Conference organisers to predict and assess the future evolution of the global telecommunications industry for your consideration. It is a task which I frankly approach with some trepidation.

Indeed, to understand how wrong one can and probably will be about the future of telecommunications, consider what a speaker would have been saying one hundred years ago today, if asked the same question about the 20th century. In 1899, Bell's telephone was less than 25 years old; and Marconi had demonstrated his new system for point-to-point communication - wireless telegraphy - just a few years earlier. If the speaker had recited the conventional wisdom of the day back in 1899, he would have probably told you this:

Alexander Graham Bell's telephone is destined to become the great broadcast medium of the 20th century; while Marconi's wireless spark transmitter will be the great breakthrough in point-to-point communication - the innovation which will enable Britannia and the Royal Navy to continue to rule the waves.

As we all know with the 20-20 vision of hindsight, that conventional wisdom had it all wrong.

Telephony - what the President of Western Union Telegraph in the United States had once dismissed as "an electrical toy", grew throughout the 20th century into a global, two-way, point-to- point communications network. And early in the 20th century, a second, though less well-known Canadian, Reginald Fessenden, confounded such sceptics as Thomas Edison by broadcasting voice via continuous radio wave, paving the way for radio to be the key to mass, one-way broadcasting throughout the rest of the 20th century.

One lesson we can take from the conventional wisdom of 1899 is that :

those who live by the crystal ball are destined to eat ground glass.

But I think the real lesson is this.....While it may be true, as the Bible tells us, that where there is no vision, the people perish, it is even more true for telecom visionaries that where there are people, the vision perishes. For, when it comes to communications, the ingenuity of man knows no bounds. So with that deliberately large caveat, let me take up the challenge and paint a picture of the communications industry in the early years of the 21st century. Note I said the early years, because predicting the future of communications is much like forecasting the weather. You have a 60% chance of being right about the weather tomorrow if you simply say it will be the same as today. But your chances of accuracy recede thereafter. So I am going out on a limb and predict a few of the key characteristics of the telecom industry of the early 21st cen-tury - based on trends and developments which have already taken place.

We all know we are in the midst of the creation of a digital world -- the fusion of the formerly distinct worlds of video, voice and data transmission into integrated communications and computer networks, where information intended for the human brain, whether via the eye, the ear, or both, can now be reduced to the same bit.

It is now only the regulators and the legislators - and those seeking to retain or gain competitive advantage through public policy - who are keeping us from a world where a bit is a bit is a bit. But we are now well on the way to creating the Connected Community, and we are going to get there eventually, some time in the 21st century. Just as the familiar terminals - the telephone, television and computer - are converging, so too are the worlds of wireless and wireline communications. Of course, there has always been a need for a certain degree of interconnection between wireless and wireline. But due to technological and regulatory constraints, wireless networks were developed separately from the existing wireline infrastructure during the latter part of the 20th century. Their interconnection is now growing each day, as both landline and wireless networks go digital.

What we are seeing, and will continue to see, is the development of a seamless, multi- layered web of networks, with both wireline and wireless dimensions, which can be accessed by a growing array of devices.

We are moving to open networks based on a small number of interoperable common platform standards. In short, the 21st century telecommunications industry will increasingly resemble the current competitive model of today's computer industry, with a variety of service providers battling for your business over open networks - both niche players offering specialised services and large service providers who will be attempting to hold the loyalty of their best corporate and individual customers - and gain a greater share of their wallet - by meeting all their communications needs everywhere.

It is going to be a game where competitive, low cost technology will enable one to play; but where creative marketing and the quality of customer service will drive the results. A game where the current players may face competition from a number of new sources, like entertainment companies, banks, transportation carriers and utilities.

And it is going to be an industry with a dramatically different pricing and investment model, where prices will no longer be distance-dependent; where the large gap between the price of a voice and data bit will close, with voice service perhaps even becoming free; and where more solutions-based services will be offered, priced according to their value - not their cost.

In a few years, large service providers will also be in the position to meet the desire of their largest corporate clients for custom-tailored service world-wide that is the equal of service received at the corporate head office, with the same levels of security and service quality, and different performance levels based on their business needs - frankly, something that is impossible for anyone to deliver right now with the global chain still only as strong as its weakest link.

They will provide this guaranteed level of end-to-end global service over networks based primarily on broadband, fibre-optic technology - where recent innovations have produced huge improvements in price-performance ratios.

The reason for this profound industry-wide shift from circuit switching to packet switching is simple. The latter provides a 10,000% improvement in price/performance - a dramatic sea change in the fundamental economics of the industry.

Why this significant difference? Because unlike circuit switching (or dial tone), which has been used in the past for voice services, packet switching does not require a full-time direct connection between the two ends of the call. Instead, packets of information can be borne by light from node to node throughout the network in a 'store-and-forward' fashion, to be reassembled into the original message at the receiving end. As a result, packets from different users can be commingled on the same channel, dramatically improving the cost performance and capacity utilization of networks.

To date, there have been two big obstacles in the way of a true seamless global network of packet-based transmissions. One has been the transmission delays inherent in the reassembling of packets, which have made it adequate - but not yet perfect - for voice communications. This problem is being addressed in labs around the world, so one can expect voice transmission via packet switching which is of the highest quality in just 2 or 3 years time.

And the second obstacle is a matter of economics. Domestic and global data networks currently operate on many different technologies. But when the investments made to date are written off, and new investments are made, this problem too will disappear. Another characteristic of networks in the 21st century - they are going to be remarkably intelligent, as more and more digital logic is embedded deeper and deeper into the system and access devices.

By accessing these computer processors and their associated data bases calls will be handled in special and increasingly precise ways, making it possible to finally realise the long-held vision of true personal communications - the vision of one number attached to a multitude of devices which can be used to access the network anywhere at anytime. Dick Tracy's videophone watch and Captain Kirk's communicator are just around the corner! We all know that intelligent networks can already route calls to different locations depending on the time of day and/or the originating location, allowing such features as roaming or call forwarding. We are now seeing the development of server-based call-around services, where the network itself searches out the cheapest route for a call - a network capability which is destroying the old, arbitrary and archaic structure of international phone call settlements based on monopoly gateways.

Through advances in sensor technologies, networks are soon going to be able to initiate communications and actions without human intervention, as they recognize key messages and respond as programmed. The key to this increasing intelligence, of course, is the remarkable, ongoing revolution in microprocessing, which has transformed digital computing into a cheap, ubiquitous commodity.

And developments this summer confirm that we 'ain't seen nuthin yet'. . That's because science is already preparing to meet the physical limitations of silicon with a transition to the molecular computer. By harnessing organic chemicals, starting with the molecules known as “rotaxanes, and by using light to etch molecular circuits onto photosensitive chips, we are about to develop molecular computers which will be a billion times more powerful than current chips.

In the foreseeable future, the computing power available in inexpensive, handheld devices, let alone within the network, will be the equivalent of today's supercomputer, creating untold applications limited only by our imagination.

So those are the characteristics that I see in the communications industry of the early 21st century.

  • the complete blurring of the old and familiar lines between television, telephone and computer networks and industries;
  • a new competitive industry model which will be akin to today;s computer industry, with a very different, though still unclear, pricing and investment model;
  • an industry where technology will be the enabler, but marketing and customer service will be the driver;
  • a seamless, multilayered web of interoperable and interconnected networks, an internet with both wireline & wireless dimensions, with thousands of practical applications accessible by dozens of different devices;
  • global networks which will be based primarily on broadband fibre-optic technology and internet protocol packet-switching;
  • highly intelligent, powerful networks and devices driven by molecular computers;
    networks which will allow the realization of true personal communications, allowing access anytime and anywhere.

That's where many of us are going including many of the key nations of the emerging world. All around the world, governments have recognised that modern communications infrastructure is the key to improving the lot of their people. They are privatising their old PTTs and relying on wireless technology to create competition and to increase teledensity.

That, in fact, is what Bell Canada International is all about - using digital wireless networks to meet the huge unmet demand for quality communications services in key emerging markets.

Serving the private interests of our shareholders as we serve the public interest in emerging nations. In Mexico and Brazil, for example, we are involved in creating competitive local exchange carriers using state-of-the-art fixed wireless access technologies, in licensed territories with a combined population of approximately 225 million and a teledensity of about 10%. As a result of such activity, countries like Mexico and Brazil are going to enjoy communications infrastructure in the near future which are as good as, or even better, than those found in leading OECD nations - a tremendous step forward.

However, while many of the leading nations of the developing world are making great strides forward, the exact time when the whole world arrives is still very much in doubt. It is in doubt for two principal reasons.

First, because there are densely populated countries in the developing world which are not attracting the capital needed to modernize their information infrastructure. While basic access is growing, let us not forget that most of humanity is still without access. They are not yet, nor will they soon be, members of the connected global community.

And second, because, in this period of great technological change in the global information infrastructure, technology and political philosophy - or at least politics - are on a collision course.

Technological change is creating the borderless world of cyberspace and shredding the carefully-drawn regulatory boundaries between industries and services.

But national borders and national regulators still exist.

If there is one jurisdiction which is in sync with technological advance, it is here in the United Kingdom, which led the way in cablephone and is leading the way into third generation wireless. As a member of the younger generation might say, when it comes to the enlightened regulation of broadband and radiowaves, 'Britannia rules'.

Elsewhere, however, technology and politics are on a collision course. Because the rapid rate of technological change is challenging not just what the regulators decide to do, but how they decide - threatening to warp technological development and innovation and destroy fair competition. New industries are being created and old ones are eyeing new opportunities; and neither regulators nor elected representatives are really equipped to predict the development of markets for new technologies - even when decisions are made on a timely basis, with the public interest truly at heart.

Often, the collision takes place because the public interest itself is not really clear. Take for example, the conflicting interests apparent in recent state rulings involving AT&T. Oregon wants AT&T to provide access to Internet service providers over their upgraded cable networks. On the one hand, consumers would benefit from this ruling through increased competition and choice. On the other hand, the proposed investment by AT&T may never take place. No company - not even AT&T - can justify investing billions of dollars in network improvements with no prospect of a reasonable return.

Finally, technology and politics are colliding because the stakes are very high, with very real winners and losers.

So the pressures on domestic decision-makers from powerful local interests are immense. Witness the difficulties and delays that many new, competitive carriers have faced gaining fair interconnection to the incumbent network.

Quite apart from the impact of domestic politics on global communications development, it is also clear that a global network requires a global set of standards governing security and privacy and a consistent approach to consumer protection.. Security in a world where safecrackers have given way to computer hackers; and where you don't need access to the vault - just the PIN. While we can express with full optimism that de facto security and privacy standards will quickly emerge from the industry to meet customer demands, it is far from clear that international agreement on enlightened regulations, or the lack thereof, will quickly or easily follow at the government level.

We would do well to remember that enlightened regulations governing international trade in such politically-sensitive areas as agricultural products have defied the best efforts of negotiators for 70 years - long enough, I would suggest, to drive one 'bananas'! And there is no denying that the social and economic impacts of information technologies and the internet are truly profound. They raise extremely sensitive issues: for governments who sense they are losing control: and for the many nation-states outside the connected community who sense they are losing ground.

If it is true - and I believe it is - that being connected is becoming a necessity of life in knowledge-based economies, and if the diffusion of knowledge via the internet is becoming the great equalizer, how do governments ensure equal and universal access for citizens in urban and rural areas or with different incomes? More bluntly, who is going to bear the cost of creating equal access and equal opportunity?

And if it is true that the world is dividing rapidly into 'Info-haves' and 'have-nots', with the rich getting richer and the poor getting poorer, what are the nations of the connected community going to do to create a truly global community.

But those are questions for another day, and for other people in other forums. We are here today in Edinburgh with a more focused mission: to discuss best practices in improving productivity. So I'd like to leave you with the following thought. The Economist recently noted Nobel laureate Robert Solow's observation that, You can see the computer age everywhere these days except in productivity stats. Part of the problem, surely, lies in the stats themselves - the rather archaic way we measure productivity. Another is the sheer difficulty of capturing gains in quality. But the professor has a good point: Creating a world of seamless networks with multiple applications is one thing. Using them to full effect is quite another.

It is clear that information technologies open up remarkable opportunities for efficiency and improved effectiveness through the elimination of those two major obstacles - time and distance. But it is equally clear that the real challenge facing the users of technology is a management issue. How to manage the organisational change necessary to realise these benefits and avoid the very real hazards implicit in the adoption of new technologies and processes.

Because one thing has never changed. Organisations are based on people; and people really don't like change. Better the devil they know. And they will downright hate change if, in this intensely competitive world, they perceive that access to the ubiquitous computer and communications anywhere and anytime means they must work everywhere and all the time - at the expense of their private life. Hopefully, as we manage the change which is coming; as we learn how to optimise the benefits of communications and computer networks of the 21st century; as we strive to improve daily life by transforming copious amounts of information into productive knowledge... hopefully, we will also have the wisdom to encourage our people to occasionally log off the network, catch their breath and 'get a life'.

 

 

 

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