REMEMBER THE FUTURE
published in the journal Ekonom (Economist), NO 49, 4.-10. Dez. 2003
Within ten years archivists recording the early history of ICT will only laugh about the various »State policies of development of telecommunications until the year one or two«.
The protracted crisis of the market value of telecommunication companies is a projection of several levels of crisis. The first, most obvious level was represented by the euphorically tuned spirit of the market, which some time ago anticipated that the market success of the progressing communication technologies would copy the rapid development of the markets of the one-time industrial wave of the 19th and 20th centuries. It is, however, true that for the time being, the price of high-tech firms and telecommunications cannot be stable. It is because we live at a time, when all technological and telecommunication companies struggle for the position of the central moving force of developed economies.
The main impediment of a symmetrical development of the European section of the telecommunication branch are particularly the antiquated ideas about a traditional centralised vertical structure of management, which can achieve expansion only by way of expanding production and merging into »mega-units«. The much praised reengineering, or management concentrating on processes, was introduced in enterprises, it is true, but it was not able to affect the relation: state (the administrator of the branch) – enterprise. And the orientation on processes alone is not a universal solution, it is only one of many.
It is because from the time of their beginning, high-tech companies have produced a completely different model of organisation both within and outside the individual companies. It is the disintegration into small functional units, which serve their segment of the market fully and in a competent manner, and at the local or international level they integrate only for the sake of a flexible co-operation limited in time. National states, which were formed and raised to power by the industrial revolution, are not sure how to deal with this trend and try to introduce the information economy by way of the industrially mass method.
Therefore the greatest crisis affected especially those telecommunication units, in which the methods of management of the nationally and industrially defined state were most conspicuous. In these firms states occupy important positions in the supervisory councils and control a substantial, if not the majority blocks of shares. The crisis partly spared the sector of mobile telephones, because these companies originated as companies very much »young in sprit« and accepted spontaneously those structure-forming elements, which are indispensable for information economy. A small organisation, well supplied with the “blood of information” with a quick and particularly exact reaction to the requirements of the client can resist the pressure of the crisis in a substantially better way. The increasing complexity, i.e. complexity of the economic system, requires more refined, non-vertical principles of integration, which of course concerns also the activities of the management. Therefore mastering the modern model of management (of states or enterprises) requires an extraordinary ability of system integration (which is a concept from informatics, not from industry), which on the other hand requires an ever growing volume of information pulsating within the »organism«.
In information economy a more-dimensional development has already been taking place for many years. This development sets requirements, which directly contradict the traditional model of management of a national state oriented on mass production, whose power structure was once dictated by the industrial revolution.
Divide and conquer in a slightly different manner
The other level of crisis in telecommunications is linked with the fact that information is a highly selective product and resembles the industrial product perhaps only in one single aspect: The broader the highways (the networks), the more cars (information) can congest them. (The similarity with motoring is not coincidental, we transport the extended information instead of ourselves). It was completely against the efforts of all states (even the most developed) that the distribution of information started to create a power hierarchy of its own and is characterised by the appearance of millions of small, highly specialised firms, which become temporary suppliers of the great colossi partly run by the state (national telecoms) or of those world technological leaders, which avoided the danger of the deadly crisis by a timely disintegration and total change of structure (AT&T, IBM, and others).
A small digression to a concrete example: IBM with 370 thousand employees was threatened that it would be overcome by the more flexible products of small factories from all over the world. In order to survive, it split up into many smaller flexible units. In the year 1968, AT&T, the then greatest world company, ordered a study, which should have helped it redefine is mission. In the year 1972, in fact one decade before this company was subdivided by the American government into parts, AT&T already possessed a document, which proposed that in order to survive, the company should make a drastic restructuring and division into segments. This report also suggested the methods, by which the giant, hierarchically vertically managed company could split up and restructure in such a way that it should become again a dynamic and manageable organisation. Before allowing that the document should circulate at least among the top management, AT&T was suppressing this report for full three years.
Most of the present-day European telecommunication companies still do not think about prosperity in any other manner than as a form of an uninterrupted growth. The information market, however, requires super-fine sensors for demand, which cannot be sufficiently sensitively examined by the giant finger of the great telecoms. Their aspiration for greater markets is usually industrially oriented, mostly geographical and unable to harmonise and analyse the fine information flows from a client to the decision-making centre. Therefore states try to create balancing advantages for »their « telecoms by way of a system, which they once applied with regard to the declining industrial colossi (steel works, mines, etc.). But this once successful recipe of John Maynard Keynes can in no way be applied to telecoms. However, to be just, this is not equally true about all telecoms partly run by the state. But with some of them the inability to separate the role of the administrator of the branch from the role of the shareholder is so obvious that it may imply turbulent fluctuation of the value and output of the whole company. A typical example for this statement is the Deutsche Telekom, which first charged Ron Sommer to achieve the greatest possible expansion (which corresponded to the state policy of development of telecommunications) and due to the excessive indebtedness of the company removed him from office (again on the basis of a political consensus). But at the time of market instability, the ability of the enterprise to survive is paradoxically completely blocked in this way. In such a sensitive and spontaneously expanding branch it is impossible to fulfil a »state order« of any type, because the needs of the branch have long ago stopped to be identical with the needs of the state. Still ten years ago the structure of fixed lines was the only possibility of public communication links, but the period of time is too short to be able to say that the branch of fixed telephony is on the decline. Its time may come again in connection with the need of less vulnerable high-capacity data links of a new generation. The density of radio operation of mobile communications is ever greater and in future that may mean a vulnerability, which at present is signalised by the solar magnetic eruptions or by geomagnetic storms. But until then it is necessary to survive in the battle with the spiritually young mobile operators. But how?
New generation imperial centres
The third level of crisis is then the fact that the world development of technologies results in the appearance of new types of communication networks and subsequently also information communities, which cannot be defined on a national or geographical basis, but rather on the basis of economy, culture, opinion or religion. Their common sign is, however, a growing power, which they derive from well-mastered cognitive processes. Besides supranational corporations, a typical representative of these groups are not only students and various social or for example ecological movements, most varied militant organisations (including terrorist organisations, which were among the first to adjust to the new information, disintegrated system of decision-making flows), but even modern armies, which were quick in understanding the threat of the old manner of management. The mentioned subjects generate a completely specific demand for communications and have a great specialisation in their ability to make use of the latest communication services. But their demand can neither be ignored nor regulated.
Traditional states of the expiring industrial wave keep fighting with the temptation to control and restrict by command the flows of information. The reasons are understandably security reasons, but there are also economic reasons. Multiple expansion of the communication flows in the form of UMTS (Universal Mobile Telecommunications System, a new system of transmission of the third generation with a special ability to transmit the Internet and multimedia contents in high quality and amount, and an ability to be interconnected with any type of network), or massive introduction of optic cables in fixed main networks might result in serious crises of those states, which want at least to monitor, if not to control the information flows. At present multilateral information flows call in question the state structures, or shift the decision-making ability from the elected representatives to most varied spontaneously arising information communities. For example this concerns the manner, in which the Greenpeace movement distributes its information internally and externally and organises its activities. With the arrival of the Internet, states have lost the monopoly on the distribution of information, with the arrival of high capacity data networks there is a threat that they will also lose the monopoly on decision-making. It is because already now the technological development forces states to adapt their legislature and regulation policy to the spontaneously appearing conditions in the market ex post. The speed and the method of distribution of information affects the exchange rates of world currencies, the prices of key companies, of state debentures etc. The arrival of the third generation networks will further increase the gap between the speed of the decision-making process of the state and the speed of decision-making of subjects, which have high motivation and are associated for commercial or other interests. The source of power is ever more becoming the ability to obtain information, the speed of its analysis and the ability to react quickly and objectively correctly. Thus state formations of all sorts are caught in between the freedom to spread information and their own security. All these are critical conflicts, which affect the moods in the markets and stir the surface of a promisingly developing sector, which until recently has been quiet (cf. the table).
Flood of technologies
The slogan of the present stage of development is the transition from disintegration to new surprising forms of integration. The speed with which arise and are tested ever new possibilities of telecommunication transmission and data compression provokes the same speed, with which arises the demand for their mutual compatibility. But it is not possible to exclude some technologies and introduce some others in a normative manner, because in their diversity they display excessively different parameters. Of course, technologies look for their own clients and for their place in the Sun. This diversity can be seen most conspicuously in the approach to the so-called last mile, where there are a number of variants of connection to the main networks: starting with the FWA equipment (Fixed Wireless Access, mostly at the frequency of 26 GHz with the possibility of high transmission speeds), through the classical copper cable and various variants DSL build-ups (digital subscriber line – it arises by a conversion of the present copper cables to a digitalized high-speed line) up to microwaves. The situation slightly reminds us of the appearance of life in the ocean. Millions of species have found their defined modus vivendi in a mutually interlinked co-existence.
The problems of fixed main networks of the whole world then are faced by further disturbing questions: Who controls the world markets with copper and what political consequences would a sudden reduction of prices of optic cables have in Chile, Congo and other countries? What are the life and capacity limits of twisted copper cables?
Software is the key, beauty consist in simplicity
According to Daniel Goure, American top military consultant, it was already in the early 90s of the last century that the technologically underdeveloped dictator regimes had the possibility to innovate cheaply the outdated SCUD missiles by way of minor modifications. They cost not more than five thousand dollars per piece and make use of a simple commercial homing device on the GPS principle. Thus an intelligent software produced highly accurate missiles. But in the commercial world the software can also fulfil a completely different role – it can create something like a final downgrade, which would make a complicated technology available to a common technically unsophisticated user and would help him handle it in such a way that a minimum of operations would be left to him in his role of user.
In the beginning the dispute between IP (Internet Protocol) and the traditional technology of telecommunication transmission was conditioned by the interests of the manufacturers of the exchanges as against the interests of the manufacturers of hardware. Today it is obvious that here too it is necessary to react very sensitively to the structure of the demand of clients. For example voice communication through VoIP platform (Voice over IP, voice transmission through the Internet protocol) appears to operate well in the data form, but occasionally it does not fulfil the high requirements of quality, to which the current user of classical telephony is accustomed. In addition to that, voice transmission requires a highly functional modern data network, which is not cheap. Clients have also various technical equipments and expect other effects from convergence.
Users of mobile telephones are mostly not interested in the capacity of the memory card. If they replace the telephone, they are further annoyed to have to read new instructions for use every two years. If you ask most users of NOKIA 9210, among them also most top politicians, to what extent they mastered the software offer of the possibilities of their communicator, you will find out that they rarely make use of Internet and fail to use multimedia application completely. Many an intelligent telephone became a symbol of the image of a technical expert, it is true, but its software with the original Symbian versions required paradoxically a more tedious handling than the traditional great PC with Windows or Linux. In a simple, graphically pleasant and easy-to-handle software are hidden a number of secrets of the future success of complicated convergent communications, whether fixed or mobile.
The size of the hand cannot be reduced, the size of the eye cannot be increased
To a certain extent the possibilities to make use of new communication technologies are linked to the natural ability of perception of human senses. The example may be the compression of the sound signal. The necessary speed for a stereo transmission is 1.41 Mbit/s. At present, compression is based on the understanding of the physiological properties of the human ear. The principle follows the fact that it is not necessary to transmit the signals, which are under the audibility threshold and the signals masked by a stronger signal, which the ear will not distinguish anyway (a strong sound inhibits the sensitivity of the ear to other signals close in time and frequency).
But the same must be anticipated in the ever-progressing trend of reducing the size of the hardware of mobile telephones or in the so-far conservative construction of the displays of fixed telephones. The fingers must »fit« the keyboard, the miniature display for the transmission of picture and multimedia directly calls for some sort of extension of the picture out of the apparatus. The target should be to make it easier for the eye, so that it does not have to overexert its distinguishing ability infinitely. With telephones for fixed telephony the transmission of voice still prevails over the transmission of data and the picture element of perception is therefore not considered to be important. But every medical student knows that the human brain has eighteen times more neurons for processing the picture signal as compared with those for the sound signal, which means that in the evaluation process, our ability of communication utilises the eye much more than the ear. Though video telephones did not succeed because of the need of clients’ privacy, the classical telephone could easily transmit photographs, cartoons and complicated visual communications otherwise than by fax. For the time being it is not possible to compare the costs and energy demands of a PC and of a normal »sound« telephone, but soon perhaps...? Who knows? The first swallows in the form of „Netphones“, telephones operating on the basis of IP protocol already exist.
So far it can be seen that the resulting success vector of the provider of communication services depends on two variables:
- on the technological level of the offer of services
- on the ability of perception of these technologies with the target client (simple attendance adjusted to the function of human communication organs).
Homo ludens
The main cause for a mass demand for communication services is entertainment. To a great extent entertainment depends on the ability to transmit visual data. From the moment when the telegraph cut short the way of information in such a manner that newspapers started spreading information massively in real time, information became also a powerful entertainment. Besides that, in the sudden flood it was not possible to separate the information necessary for survival from the other one. TV brought the ability of information »to entertain« to perfection, the Internet was spread on a massive scale exactly because of the entertainment contents (chats, games, photos and multimedia). Games, cartoons and photographs have a guaranteed future in the offer of services of telecommunication operators. As the number of information and communication technologies in economy increases, the period of time for work will be getting shorter and the period of time for entertainment will be getting longer, or elements of entertainment will pervade more into the teaching and working process. The demand for e-entertainment will therefore keep growing, even though it will not be a steep curve. It will start to grow a little more steeply only when the speed of normal data transmission exceed 10 Mbit/s, which is the minimum speed of transmission of a good quality of compression of the picture in TV, video and graphically perfect games. It seems that the present system of the currently available DSL (digital subscriber types of lines, among which at the moment the best is ADSL – an asymmetrical version of connection, which allows a quicker data transmission from the provider to the user and a slower reverse transmission) – is unable to guarantee this speed and is unable to even approximate it in a sable manner. A possible exception is the newly arriving VDSL (Very high bit-rate Digital Subscriber Line, a digital line with a so far highest possible transmission speed, which with symmetrical transmission achieves as much as 13 Mbit/s, with asymmetrical transmission 26 Mbit/s as against the usual 3.2 Mbit/s). The time when the specified speed will be offered by operators, however, is close: whether this would happen by way of the best methods of picture compression or by way of increasing the capacity of the network flow. Then TV will become only one of the many sources of entertainment obtained from the communication networks. In other words, diversity is spreading everywhere.
Which way to proceed?
When the world Internet was still in its infancy, the original network was built and navigated by way of the so-called shareware – freely distributed and replaceable software. The simple design and the rule of free distribution helped users to become members of a new community, which could participate any time in the development and improvement. The original Internet was a world of shared cheap development. If there were not these beginnings, it would have never reached the state of world expansion. Subsequently the source code stopped to be publicly available and ultimately the users demanding communication had to rely on the manufacturers of ever more complicated browsers and of the respective applications. More advanced versions of software required new operation systems. They in turn required more advanced and stronger chips and higher capacity RAM (operation memory). Those who want to use web, get involved into an infinite circle of higher versions, for which they have to pay. The manufacturers joined forces in the campaign for controlled aging of software and hardware. It is because their target is to keep the growing curve of purchase of products (in the same way as it happed in car industry some time ago: aluminium coachworks do not rust, but who manufactures them nowadays?). Therefore in the sphere of Internet convergence of the open and closed codes of programs, and diversity of their development would become the moving force of the whole branch. Nowadays, the cyberspace is unequivocally dominated by the world of business, but remember! The trend of free distribution of information will remain present, which is beautifully documented by Linux and its worldwide distribution. In the same way as the so-called open sources are still of great importance for the work of analysts and advisers working for management, open protocols too face a strong business future. Whoever decides to block a development of distribution of information, is usually unpleasantly surprised by the complexity, if not impossibility of his efforts.
In future the word development will be headed by those states, which will be the first to realise the necessity to accept the fact that information flows cannot be controlled. In security praxis this for example means removal of the so-called »paralysis of analysis«, i.e. a condition, when the monitoring process of telecommunication churns out millions of irrelevant data (the so-called datasmog) and there is nobody to evaluate them in time. A sad example for this statement are the recorded discussions of Al-Kajda members, which were evaluated only two days after the fateful 11th September. For the future structure of a stable state this means to shift attention from the control of data flows to a highly imaginative analysis and top software of a higher generation. For the companies enterprising in the sphere of ICT it then means nothing else than an unorthodox approach to employees and contractors in the sense of avoiding the so-far deeply rooted bureaucratic structures of management.
From the reports of experts of the European Commission it follows that Europe lags strongly behind the USA both in the development of telecommunications and information technologies, and especially in research and development. In the USA there are 8.7 scientists per one thousand inhabitants, in Japan even 9.7 scientists, in the EU only 5.4. And it is so in spite of the fact that in Europe the number of those who finish their studies exceeds many times the number of those in the USA. Thus Europe provides scientists with the possibility to study, but then pays them better in other places. Why do they then leave? The reason is the fact that research and development in the USA is not paid from A to Z by the state, but it often starts to the order of private firms, which later offer their high-tech products to the state. In the last Iraqi war this trend was already quite obvious – the army no more develops secret technologies, but purchases top civilian products for its own purposes and informs about their need a long time in advance. Great firms, which want to obtain army orders, finance the research and development in the sphere required by the state and the best of them will succeed. The development of information economy is not determined by the number of grants allotted by a Ministry to scientists and specialists in development, but by a flexible, unorthodox, non-restrictive policy. Thus ICT becomes the first branch, in which there is no point in planning in the old way. The within ten years, documents of the type »State policy of development of telecommunications until the year one or two« will become a humoristic reading for archivists of the early beginnings of ICT. The most significant signal concerning the future development of telecommunications appears to be the fact that the American Congress passed through the first reading a federal bill, which prolongs the tax holiday for Internet services and introduces the same for telecommunication services. Until 2006, the value of this reverse »subsidy« amounts to 9 billion dollars.
Alexandra Makovičková, consultant in the sphere of telecommunications and transport
