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A Future We Can Live With

by Glen Emerson Morris
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With the number one fiber optic manufacturer, JDS, posting a 50 billion dollar loss for the fiscal year, it's not hard to see that the drive to wire the industrial world with high speed Internet access is more than just behind schedule. At this point, it's probably closer to bankruptcy than anything else, and this is no exaggeration.

The potential default on approximately 700 billion dollars the world's biggest telecoms borrowed to finance upgrading their phone systems--for a now delayed communications revolution--is more likely now than ever. On the whole, the telecom deregulation that was supposed to lower prices and open the market to competition has been a disaster. On a worldwide basis, the telecoms overbuilt some metropolitan areas and underbuilt others. In the overbuilt areas, there's too much competition for any telecom to turn a profit in the near future. In the underbuilt areas, there aren't enough customers connected to make it profitable.

What this means for advertisers on the Internet is that the dream of delivering high quality interactive multimedia to potential customers is still several years away, at best. For the foreseeable future, advertisers will have to continue to view the Internet as a media with very limited bandwidth. This doesn't mean that there won't be significant improvement in the technologies available to Internet advertisers in the next few years. It just means that the improvements will be happening in areas other than bandwidth.

Even if the cost of high speed access won't decrease significantly in the next five years, the cost of E-commerce in general will. The days of needing an army of highly paid software engineers to launch an major e-commerce site are coming to an end, as off-the-shelf, robust, and highly scalable, e-commerce software becomes available at reasonable prices.

Some of the biggest software manufacturers are already ramping up for this next phase of Internet commerce, the most noticeable being Microsoft. With a stated goal of wanting a percentage of every sale made on the Internet, Microsoft is well on the way to making sales on the net as simple as basic Web design.

However, Microsoft is likely to have a difficult time getting a monopoly on the e-commerce market if history is any indicator. When Microsoft hosted the Star Trek site for Paramount, it required net surfers to do things the "Microsoft" way to access the site. Not enough people would, and eventually Microsoft lost the contract.

Given how cautious consumers have proven to be about spending money on the Internet, it's difficult to imagine Microsoft becoming the net's standard service for paying bills. Having recently been convicted of monopolistic practices, Microsoft is simply not in a position to become the Internet nation's friendly banker. This is a point completely lost with Microsoft, however, as it appears they are going to try anyway.

Microsoft's strategy for dominance of e-commerce seems to be fairly typical of them. First, Microsoft will offer billing software and services for a very reasonable fee. Then, as businesses become dependant on Microsoft for the software and services, Microsoft will gradually raise the fees until many businesses begin to feel like they're working for Microsoft, and not for themselves. In the past, Microsoft has never settled for pennies when it could get dollars. Microsoft will likely be the same in the future.

Given the probable results of any company getting a monopoly on e-commerce services, it would be better for the advertising industry if open standards for e-commerce developed. With a bit of luck, the biggest effect of Microsoft's attempt to create an e-commerce monopoly will be to raise industry standards and attract additional competition to the market, driving prices down, not up as Microsoft hopes.

In a post-crash economy, this isn't too much to ask for. It would have been nice to see high bandwidth lines connecting the most affluent 50% of the population to the Internet, but now that may not happen until the end of the decade. In the meantime, at least half the consumers in the country have at least some kind of Internet connection, and they'll be spending millions of dollars buying goods and services on the net in the next few years.

The challenge facing Internet advertisers in the near future will be to set up a viable long-term infrastructure to support widespread and reliable e-commerce transactions with the general public. The song and dance aspect of multimedia is out of the picture for the time being. It's back to basics.

We may not be facing the best of all futures, but with some luck, and a few good decisions, we're still facing a future we can live with.

Copyright 1994 - 2010 by Glen Emerson Morris All Rights Reserved

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