The "True Hollywood Story" of speech recognition, broadband and 3G wireless serve as valuable lessons for us all.
Broadband companies and telcos bite the dust on a monthly basis. Rhythm Networks and Northpoint are no longer with us. WorldComm, Global Crossing and Adelphia are teetering on the brink. AT&T is offloading its cable unit to Comcast.
Yet not so long ago, broadband was "The Way." IDC predicted 66.4 million DSL (digital subscriber line) customers in the U.S. by 2004. Onto the broadband wagon jumped Cisco, Nortel, Lucent and JDS/Uniphase, investing tens of billions in cash or stock to build a nationwide fiber optics network as the enabling technology for broadband.
AT&T spent $110 billion consolidating TCI and MediaOne to form AT&T Broadband. AOL merged with Time Warner in a $100 billion-plus deal as a means of leveraging the strengths of both for the coming digital content explosion. Microsoft, Earthlink, Gateway, 3Com, Compaq, Motorola and others bet heavily that broadband will enable the proliferation of Internet appliances and a whole new class of products and services into the home.
Both the business sector and the consumer bought into the message -- speeds 25 times faster than dial-up for only a few dollars more a month. Instant access to graphics-rich gaming and Video-On-Demand (VOD) -- the Holy Grail of the entertainment world. Renting or buying movies, music, games and other forms of entertainment from the comfort of the living room. People wanted it now, and that's when the problems really became apparent.
One resident of Pasadena, Calif. (15 miles from downtown Los Angeles) remembers seeing an ad for broadband on TV in 1997. When he called to order it, the sales person told him it wasn't available in his area. It was more than two years later before he finally hooked up a broadband connection to his home PC. The inability to deliver left millions wanting the service, but only the luck few were able to receive it.
This highlights a more fundamental reason for the broadband crash -- failure to deliver the technology to the customer. By some estimates, millions of people who have ordered broadband haven't received it, and they are not happy. Lawsuits are flying, New Yorkers organized mass protests about Verizon's poor service and anti-competitive practices, and lobbyists are pushing for a broadband bill of rights. This flurry of discontent has done much to damage public trust.
To gauge the extent of broadband woes, just spend a few minutes at www.DSLReports.com. It grades service providers and offers access to a litany of user complaints. These range from in-fighting between baby Bells and DSL providers like Covad to long installation delays and general technical incompetence.
Even more than the marketing hype it generated, an overall skills shortage appears to be hurting broadband. Take the example of network management vendor Somix Technologies Inc. in Sanford, Maine. IT manager Eric Peterson ordered cable for one of the company's satellite offices in Portland, Maine on Nov. 1. The installer came on Nov. 17 and everything seemed in order.
"A week after installation, I lost service," he said. "Time Warner could not resolve things via telephone."
Several more visits failed to resolve the situation. Finally, the day after Christmas, an engineer isolated the real bug -- a faulty splitter. "The installers appeared to have no knowledge of the technology," said Peterson. "They could plug in three wires and that was it. They were cable guys, not computer guys."
Despite its severe troubles, however, broadband continues to grow. Bottom line: it is an essentially sound technology that fulfills a definite need -- better throughput and faster speeds. The only thing holding it back is the shortage of technicians and installers. Yet hiring freezes throughout the telco industry make it impossible to speed up service delivery.
Lessons learned? Don't offer what you don't have. If three quarters of the country can't have it and you aren't set up to install orders in a timely manner, don't advertise it and pretend you can. Better to spend the marketing funds on training the needed technicians and support personnel to guarantee a great user experience. Done in that fashion, broadband will become rock solid and its ultimate success is assured.
Another broadband lesson? If you are racing a marathon, don't give up because you can't sprint to the finish. The broadband industry has invested a fortune in the infrastructure to create a broadband nation. Why pull back when you only have 50 feet to go -- those last few feet from to the consumer or business that wants it.
If broadband has become the poster technology for dot.com era overhype, then its designer label is third-generation (3G) wireless. Vendors and analysts alike confidently predicted the coming of 3G. Ever former President Clinton got in on the act during his presidency.
"Third-generation wireless technologies will bring broadband to handheld devices," he said. "Higher speeds and increased capability will lead to new audio, video and other applications that people will use in ways that are unimaginable today. Moreover, an international effort is underway to make it possible for the next generation of wireless phones to work anywhere in the world."
Early indications were that this barrage of confidence would translate into immediate reality. The switch from 1G analog wireless to 2G digital created a surge in mobile usage: 100 million U.S. mobile phone users and 23 million in Japan. 3G, therefore, seemed like a sure bet -- a new network designed specifically for data and voice over one fat pipe. The auction for 3G bandwidth licenses in Europe alone raised $130 billion -- all for an unproven technology.