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April 30, 1997updated 05 Sep 2016 12:49pm

THE PROBLEMS OF WIRING UP AMERICA

By CBR Staff Writer

Who wants to go first to wire up America for broadband? asks Bruce Egan, an acknowledged expert in the field of wide area networking, some 160 pages into his deep and detailed book: Information Superhighways Revisited: The Economics of Multimedia. In a sense, he says, the race is on, at least on paper. But then again, in a sense, it is not. For a book that is entirely about the wiring up of America, Egan’s apparent uncertainty might seem rather disappointing. After all, if the author of the seminal 1990 book Information Superhighways: The Economics of Advanced Public Communications Networks still has more questions than answers five years on, that does not bode well for anyone seeking to make informed decisions in this area. Egan’s hesitancy, however, is born not of ignorance or indecisiveness, but of an immense knowledge and understanding of the complexities of the data communications business. His is the very same uncertainty which industry leaders working in telecommunications have only recently and reluctantly begun confessing to. John Malone, the chief executive of cable giant Tele-Communications Inc, for example, recently told shareholders that his company’s interactive broadband network plans were overly ambitious, overhyped, and impossible to carry out on schedule. Egan is not interested in the kind of hype and glib jargon about the information superhighway which helped raise Malone’s status and influence far beyond the world of cable television. This book is about how a national, or international, interactive broadband network could or will be built, who will build it, what it will cost and who will pay for it. The detailed arguments repeatedly lead to the same conclusion: the cost of building mass market broadband networks will be staggering, and will require a longterm approach, with shared costs and partnering. And, he stresses, it will require a liberal regulatory regime which allows the network operator to freely pursue all revenue opportunities.

Superhighway shelved

In fact, Egan’s analysis reveals that while the whole world stands aghast as the Internet gathers pace, the great project to build the underlying information superhighway to the consumer’s door has largely been shelved. He should know: as an advisor to many large corporations, he has the inside track on the calculations being made by the telecommunications companies. For example, Egan estimates that, even using an aggressive set of figures, a telecommunications company might still not get a return on investment on an advanced broadband network for 12 to 15 years. Investment bankers, he notes, have largely come to the same conclusion, and so are not willing to accept the entire risk for capitalizing new broadband infrastructure ventures. This means the telecommunications and cable companies must make the investments themselves – which many have committed to. But, says Egan, many of the major ‘commitments’ made by the telecommunication companies are really just a repellent to scare future rivals. These economic debates form just a part of what is a highly impressive, authoritative and well-argued book that also gives an excellent account of competing technologies and the complex political and legislative framework that affects everything that the telecommunications companies do. Perhaps the book’s only failing is that Egan shows less sympathy for the legislative actions of, say, European governments than he might if he was not a US citizen and also a hardened economic libertarian. These articles first appeared in the April 1997 edition of Computer Business Review.

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