THE ELECTRONIC DOORS OF THE 21ST CENTURY
by Jean-Guy Rens
Partners in telecommunications
Vol. 4, No 1, January/February, 1996
Magazine for Bell Employees in Quebec
In the traditional telecommunications-network economy, bandwidth was rare and difficult to increase due to the engineering costs associated with installing new lines, whereas switching was relatively inexpensive. As a result, today's trans-Canadian network comprises 41 toll switches. That is all changing, however, with the arrival of fiber optics and virtually limitless transmission capacity. Now, increasing already enormous bandwidth is simply a matter of modifying optoelectronic terminal equipment.
This change in perspective has far-reaching consequences, explains John MacDonald. "If you were to redesign the trans-Canadian network from scratch, you'd need only six toll switches. For diversity reasons, the Stentor telcos could double that number, ending up with a maximum of 12 instead of the current 41. A new entrant that doesn't have the same universality constraints as Bell and its allies could cover the country with as few as five switches, making its cost of entering the long distance market that much lower."
The Service Explosion
Equally important is the change in the nature of the network. Until recently, telephone services were integrated into the infrastructure. All the network components--terminals, switches, transmission equipment--were designed to provide simple, efficient telephone service. "Gone is the time when you just had to call an equipment manufacturer to obtain a service," explains MacDonald. "Today there's an explosion in services, and all kinds of them are being designed outside the telecommunications sphere. This in turn is leading to a split between network and services. It's now up to the telecommunications companies and specialized providers to develop those new services. In the future, users will even be designing their own."
A classic example of this infrastructure-service split is the Internet. A host of suppliers, many of which are small businesses or individuals, have developed applications with nothing in common except the operating system. "More and more, the added value is moving away from the center to the edge of the network," notes MacDonald. "That's the Internet model. We can't fight the trend; we've got to study it so we can use it to our advantage, which means becoming the champions of content creation."
The Content Battle
Naturally, Bell won't charge into the content fray and start custom-producing a grab bag of multimedia services such as video games, teleshopping, distance learning, telemedicine, etc. Even if that were possible, it wouldn't be desirable. On the other hand, Bell can set out to define the telecommunications operating system that will let every supplier create applications for every market. "We're going to provide high-performance tools to all our competitors, so that we can help them offer their services and increase the content volume," says MacDonald. "We'll measure our success by the number of our competitors: the more there are, the more traffic they'll generate for our network."
At the heart of the telecommunications operating system is the agent. There's nothing new in the notion: In human form, it's the telephone operator who answers 411 calls to help customers find the numbers they need. In paper form, it's the telephone directory. But the multimedia universe needs a digital agent that lets users find their way through the profusion of new services.
A Business Revolution
In its basic form, the agent is passive. It acts as a filter, eliminating needless information while letting through only relevant information in a specific field of interest: travel to the South in February, for instance, or the latest sporting news as it pertains only to the Montréal Canadiens hockey team. But to be truly practical, the agent must be bidirectional. And that's where the business revolution comes in.
"An interactive agent can take orders," explains MacDonald. "I can say to it, `Go find me the cheapest mortgage on the market.' That may seem like a simple request, but it totally negates the notion of customer loyalty, and shifts the value added by banking institutions to the agent itself. As a customer, my loyalty will go to whomever can provide me with the best agent and let me shop from bank to bank via the information highway."
The impact of this agent on business activity will be so great that many large businesses are already worried. Does this mean Bell will enter the banking, sports or travel market with the help of the agent? "Not at all," replies MacDonald. "Bell will create a navigational agent that will put customers in touch with specialized agents in those fields. Our specialization is navigation, and our role is to cooperate with information brokers to provide customers with the best navigator on the market."
Marketing New Services
Like any company, Bell will also face the challenge of specialized agents seeking the long distance, cellular, satellite and, soon, local carriers that offer the lowest rates--with subscription not even entering into the equation. Since there will always be a specialized carrier or reseller offering lower rates over a given route or at a given time, telecommunications companies risk falling victim to the efficiency of their own navigational agents.
Bell's response to the problem of what MacDonald calls the "death spiral" will be to make all telecommunications services available to all customers at all times. For example, if a customer is organizing a party for the members of his golf club and needs a second telephone line--or video, cellular or any other special service--all he'll have to do is activate the service for the evening and pay for the time it is used. The user-friendly interface of the telecommunications operating system will let customers easily switch from one service to another.
"This extreme flexibility in Bell services won't depend solely on technological feats," warns MacDonald. "Bell employees have to be constantly on the lookout to offer a broader range of services that are more accessible than those of our competitors'. The key to success is Bell employees' ability to learn faster than our competitors and, above all, to react more quickly."
THE NEW INFORMATION-HIGHWAY PARADIGM
The information highway is not a fad: it's the outcome of 20 years of network digitization. For Bell Canada, it's also the beginning of a tremendous transformation. Marcel Messier, Vice-President - Operations (Information Highway and Multimedia), affirms that "the Internet is bringing about a new paradigm. Rates no longer reflect distance, but bandwidth. In the telecommunications world of the 21st century, billing will revolve around applications."
Messier believes that Bell's future lies in content. "If we stick to only distributing signals, we're condemned to become the water carriers of the information economy. Content is where the true added value is. But there's content and there's content. Bell won't try to create specialized information for each market segment. We're going to develop enhanced interfaces such as home shopping, telemedicine and distance learning."
Companies and institutions will have to create the content for their markets themselves. In fact, Bell won't even develop the enhanced interfaces alone: "We'll have to adapt to the culture of each market. That's why we're likely to see a proliferation of subsidiaries and joint ventures specializing in the retail, education and medical markets."