Powell predicts “brutally intense” battles ahead
January 5, 2004
In year-end comments at the Chicago Economic Club, the FCC Chairman Michael Powell made some strong predictions that will bring little comfort to technology executives hoping for a smooth economic recovery.
Watching as the walls that separate traditional communications and broadcast businesses and the growing demands of a sophisticated new generation tech-savvy kids begin to crumble, Powell predicted “brutally intense” competition in a “sea change” for traditional communications companies.
“Not long ago, you would have said SBC is a telephone company. Comcast is a cable company. T-Mobile is a cell phone company and NBC is a television company. They enjoyed near-monopoly positions within their lanes and had no significant cause for concern from companies in other lanes. But with digitalization transforming all communication services into data applications that can run over any platform, these barriers will fall revealing new and formidable competitors. Any player with a digital platform can now provide almost any form of human communication,” Powell said.
“But you ain’t seen anything yet,” Powell continued. “The Internet threat is even greater. Over the Internet, applications are separated from the infrastructure. Now, services can all be software applications that ride over the platform as bits. A consumer can download a piece of software over a broadband connection and set up their own communication channel. Your kids have done that with programs like AOL Instant Messenger and Skype. Voice, video and data all can ride over Internet networks easily, and will.”
“The fact that applications are divorced from infrastructure means companies like Microsoft, Intel and Apple are suddenly competitors to traditional communications companies,” Powell said. “Apple, for example, sells a high quality web camera that combined with free software enables very easy computer to computer video conferencing to anyone with a broadband Internet connection. All for $149. What did any of you pay recently for video conferencing services? The once vaunted picture-phone the phone company promised has finally been delivered by the Internet industry.”
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