Thought-provoking articles hosted by Blue Cat Design on new media and telecommunications technology topics including: the Internet, multimedia, Canadian television industry and World Wide Web content publishing.


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Internet at a crossroads

Will the Web fulfil its promise and become an all-powerful mainstream medium?

by
Wade Rowland

(originally published in the Toronto Star newspaper on June 13, 1996)

© 1996 Wade Rowland


The Internet is at a crossroads. Once a quiet little back road winding through academia, it has suddenly become a rip-snorting 24-lane expressway to no-one- knows-where, clogged with every manner of vehicle from skateboards to highballing, diesel-guzzling Kenworth tractors pulling oversize loads.

It threatens to become a true mass medium, but still, for many people, it's just too damned expensive, when you add up the cost of a computer and modem and monthly access fees. The graphical content, real-time audio and fledgling video content that caused the current surge in interest are clogging its arteries, slowing everything down, annoying newbies into going back to Friends  or Baywatch.

For a minority of users, the fact that you can type "Simon de Montfort" into an Internet search engine like Alta Vista and get several dozen fascinating returns on crusades and 13th century French politics and Catholic heresies is exciting. But many others are underwhelmed by this international network of computer networks. Who needs it, they wonder.

Wily marketers, ever watchful for the main chance, have discovered the Net's distribution power and sexy demographics and are intent on plastering advertisements on every computer screen connected to the World Wide Web: billboards lining the DVP. Hardly anybody, with the exception of the search engines, CD shops and pornographers, is making much money on the Net.

It boils down to this: if you compare it to television or even the movies as a medium of mass entertainment, commercial entertainment, the Net just isn't making it. Oh sure, there will eventually be more bandwidth and better video and content with broad popular appeal ... computer prices are falling as well. That's all coming, but so's Christmas, as my mother used to say. She meant, I wouldn't hold my breath.

So, a crossroads is in prospect. Is the Net going to slip back into being a research tool for academia and a communication instrument for business? Will marketers realize their dream of making it into the perfect advertising and sales vehicle? Will it overcome its current technical limitations and take over the entertainment industry? Will it catch on as a mass, person-to-person communications tool? Which will it be?

The most probable answer is: all of the above. If we were talking about conventional, two-dimensional media like radio, television and newspapers, a crossroads would imply a choice between success or oblivion, advertising or content, popular or academic, black or white. In the 1920s, for example, radio faced a choice between being a funded vehicle for high-brow entertainment and quality information, like today's public television, or going for the big money in direct commercial sponsorship. Sponsorship won: non-commercial radio was at first ignored, and later confined to fenced-off areas in the nether reaches of the crowded broadcast bands, rather like tiny national parks amid clear-cut operations.

But the Net is not like conventional media. When you reach a crossroads on the Net, you don't have to make a choice: you can gallop off in all directions at once. That's because in a digital, interactive environment, there is a third dimension to choices. Options are multiplied like they are in three-dimensional tic-tac-toe. Neither time (as in the 30-second TV spot or the half-hour newscast, or the 90-minute made-for-TV movie), nor space (as in the news hole left over after the Thursday grocery ads have been printed) is a constraint on what you can do. There is unlimited time and unlimited space. You can be all things to all people.

So let's say, rather, that the Net is at a turning point - better yet, a branching point. It is, by my reckoning, branching point number four.

Those darlings of the entertainment industry, multi-million dollar market tests for interactive TV, shrivelled and died overnight. Videotron threw in the towel. Apple, Microsoft, Oracle, Newscorp, MCI and a host of other media heavyweights double-clutched and shifted gears to focus on the World Wide Web. Fear and loathing stalked the big proprietary on-line services like CompuServe and America On Line.The Net had become everybody's future. Said AT&T Chairman Robert Allen: "The company that brought everyone the phone now will bring the Internet to everyone." If assurance was needed that the Net is with us to stay, this has to be it. Immediately after the announcement, the company was swamped with 600,000 requests for free Internet software. Within two months they had shipped 300,000 disks and 150,000 of those receiving them had signed up for the service. In late May AT&T announced it had suddenly become the second-largest Internet service provider in the United States. U.S. West, Pacific Bell and and other telephone companies scrambled on to he bandwagon in the following weeks, offering similar free or very low-cost Internet packages.

The numbers of customers involved are significant in themselves and point to a huge new influx of Internet users. But what seems even more important is the signal AT&T's decision has given about long-term development of both the Internet and the 119-year-old telephone system it piggybacks on.

AT&T's roots go right back to the invention of the telephone network and the earliest inter-city links. It is a spin-off from the original American Bell Telephone Company of 1877, set up to handle long-distance traffic between regional Bell operating companies. A corporate reorganization in 1885 made it American Bell's corporate parent. In many ways, AT&T embodies telephone history more than any other company on the planet. When it decides to give its customers free Internet access, it behoves us to pay attention.

To understand the company's motives, it is only necessary to realize that the value of any network increases in proportion to the number of nodes on it. If you've got one telephone, you don't have much of anything. If you have three, you have a useful communications system. Three thousand and you've got a profitable business that's likely to grow of its own accord.

Having been in the network business for a century and more, AT&T understands this very well. Its legendary founding president Theodore J. Vaile said in 1899: "It is more the system established in connection with the telephone, than the telephone itself, that makes the value of the telephone."

The real value of the telephone, in both commercial and social terms, emerged only when access to it became something close to universal: when everybody had a phone or easy, affordable access to one. In much of Canada and the U.S., that milestone was passed sometime in the 1920s. At that point the telephone became, literally, invaluable, in the sense that it was no longer possible to imagine modern social and commercial life without it. Had the phone system vanished overnight, the damage caused would have been incalculable.

From a business perspective, there can be no more attractive product than one which is considered a necessity of life. The telephone had achieved something close to that status early on, and it retains it still, thanks to its ubiquitous network. In a way, the network is the telephone.

The commercial significance of the network is even more profound in the case of the Internet than the telephone, because the Net is not just a communications tool - it is also a front-line marketing vehicle par excellence. While the phone's value to business is all but inestimable, it nonetheless has limits. As a direct sales tool, it is a crude and often objectionable instrument for pitching products and services, and it can't display pictures.

The Net, on the other hand, might have been made for marketing. It permits elaborate multimedia delivery of information to potential clients, at their request, and facilitates collection of information about them. It is inexpensive in absolute terms, and measured in cost per person, ridiculously cheap. It gives the smallest of companies access to a worldwide market for a tiny fraction of what similar coverage would cost in any other medium. It allows an intimacy with the customer that was lost, we thought forever, with the corner greengrocer, dry good store and butcher shop.

In short, the Internet can supply all the current communications and business value of the telephone system, plus a great deal more. How much greater, then, will be the economic value of a mature Internet than a mature phone system? It's a question AT&T planners asked themselves.

And they asked: how does one help the Internet mature so as to create all that wealth? They knew the answer to this one, too. In the same way as the phone system was helped along, by making sure as many people as possible have access early on, so that it can reach a critical mass beyond which growth will take care of itself. Hence, the decision of AT&T to give away free access. The more people it gets signed up, the more valuable the system as a whole becomes. Before long, presto! it's a necessity, just like the telephone.

In the early days of the telephone, building the network was a two-headed challenge for the Bell system and AT&T in the U.S., and Bell Canada here at home. Of course, the physical network had to be built from scratch, all those telephone poles and glass insulators and miles of wire, but also, people had to be provided with the telephone appliance itself. Those early phones, with the mouthpiece on a nickel-plated stand and the earpiece hung on a clip that opened the circuit when it was lifted, sold for between about $8 and $20. That sounds inexpensive, but the 1902 Sears, Roebuck catalogue listed a top-of-the-line camera for $4.95, their best touring bicycle for $15.75, a top quality men's suit for $5.95.

In terms of today's buying power, that would put the cost of a telephone at around $500. Which, coincidentally, is the price projected for the new breed of computer due on the market late this year, called the "Internet toaster". Toaster, because the people who are making them hope they will become as common a household appliance as ... well, a toaster. It's a black box loaded with microprocessors that you plug into your TV set and telephone line, and it puts you on the Internet and gives you e-mail access with a minimum of fuss. Some models will have a screen and attach right to your phone; toasters will come in a number of flavours. Apple, Oracle, IBM, Sun Microsystems, Sega, Philips, Sony and Northern Telecom, the research and manufacturing spin-off of Bell Canada, have all announced plans to get into this new market. Some analysts expect the Internet toaster to be the Cabbage Patch doll of Christmas, 1996.

The analogy between the Internet toaster and the early telephone becomes all but irresistible. Today's challenge for the phone companies is, as it was a hundred years ago, to get as many of these appliances as possible into homes and businesses, to exploit the full potential value of the network.

In the very early days of the telephone, Bell decided that it would not sell the appliances, only lease them to customers, a policy it clung to with limpet-like tenacity until forced to abandon it only recently by federal legislators. Of course, the leasing policy was a long-term revenue-building strategy. But, for many years, it was also an effective way to make the telephone affordable. For a turn-of-the-century family that saw a phone as a trade-off for a new stove or fridge, the choice was difficult. It became much easier when the telephone was available on lease for a few cents a month.

Until now, the cost and complexity of the personal computer has been the major brake on growth of Internet use. Many who could afford the $2000-$3000 cost of a full-blown home computer system, not to mention the $20 or $30 a month for on-line access, have neither the time nor the inclination to make the machinery work for them. And many of those who do have the time and the inclination, don't have the cash. The $500 Internet appliance will go some way toward solving both problems, because it will be about as simple to use as a Nintendo, and it will be relatively cheap. Still "relatively" is the operative word. Many people will still be unable to afford one.

You have to wonder whether AT&T' s sense of history is strong enough to have raised the question among current strategic planners: "Should we be leasing these gadgets to our customers?" What parent would balk at paying four or five dollars a month to give her kids access to the most significant educational tool ever invented? And that's just one facet of the Net's appeal: it is, despite teething problems, fast becoming a leading source of home entertainment; North Americans already spend more time surfing the Net than watching rental movies.

There's a sense in which asking, in 1996, whether the Internet will survive and thrive is like asking, in 1920, whether the telephone is here to stay or just a passing fancy. The votes are already in. If the toaster's a flop, it won't matter. The network is alive and well, it has 30 million users at last count and growth shows no sign of flagging. Or is that 20 million? Or 40 million? Pollsters are engaged in furious debate over the numbers. Mark Resch of Xerox shrugs off the controversy: "Yeah, we're in a hurricane, and they are arguing about whether wind is blowing 150 miles an hour or 120 miles an hour. The argument is intellectually interesting, and it totally misses the point. Activity on our Web site is up 10% a month, steadily."

Someday, some genius evolutionary biologist or mathematician will calculate how many nodes it takes to get a network past its take-off point and into long-term sustainability, and I'll bet the answer is a lot less than 20 million. Remember, a century ago the North American telephone web had about 200,000 phones on it, and it never looked back.

Which brings us back to branching points and crossroads. What I am trying to say is that, it may be that the Net turns out to be a failure as a replacement for, or even a serious competitor to television, though I doubt it. It may be that the Net is a mirage as the Eldorado of marketing vehicles, though I doubt that too. The indisputable fact remains that as a communications vehicle, it can not be matched, and that alone guarantees it a significant role in our collective future. As a social and technological phenomenon, the Internet is, at a bare minimum, the telephone of the 21st century. It will very likely be much more than that as well.

© 1996 Wade Rowland


credit: Wade Rowland is a journalist, author and media consultant active in online information applications. He is a partner in Blue Cat Design, a pioneering Web design house specializing in Internet marketing and strategic planning. He can be reached at the Blue Cat Design offices or via email wade@bluecatdesign.com..


Other articles written by Wade Rowland:


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