-Commerce Blues">

E-Commerce Blues

In business-to-consumer applications, the delay in broadband is having an even more serious impact. Many companies are hesitant to develop innovative content—which is essential if the Internet is to keep growing as a commercial medium—without high-speed lines to deliver it. Executives at CareerSite Corp, a six-year-old Ann Arbor, Mich.-based company that manages Internet help-wanted pages for newspapers such as Crain's Detroit Business and trade associations like the Florida Banker's Association, had hoped by now to be able to offer more advanced Internet features, such as live video job interviews, that could potentially generate a lot of additional revenue. But that part of its business plan has been shelved for now because clients refuse to sign up for anything more than the bare-bones classified listings. "We've tried to sell advanced services, but the acceptance rate is pretty near zero," says Owen Medd, CareerSite's chief technology officer. "Without high bandwidth, the most you can do is offer real-time chats. For interviews, that's not a particularly good option."

Facing similar broadband disappointments, many technology chiefs have given up waiting for the high-speed Internet. Instead, they're building their Web sites primarily for the larger dial-up audience while in some portions offering a richer experience for broadband customers. People with broadband surf the Internet 25 percent more often than dial-up subscribers and spend 23 percent more time on the Web, according to Nielsen//NetRatings. As a result, there is a greater window of opportunity to lure broadband users into purchasing something—or at least to gain their loyalty for future product sales and promotions. For that reason, even though there is only a relatively small group of people with high-speed Internet access, most companies feel there is some gain in not ignoring them.

BellSouth's Web portal, for instance, which offers the usual array of channels—personal finance, autos, news, entertainment and the like—has clearly marked links sprinkled throughout indicating areas specifically designed for "fast-access users." Features include video demonstrations of new cars, streaming audio news reports, music downloads to accompany stories about new CDs, even movie trailers. The next step for BellSouth will be to publish a dynamic, up-to-the minute guide that lists all the broadband content on the site so high-speed Internet users can see immediately what's available. "The whole aim is to keep people on the site longer. So while we aren't abandoning our dial-up users, we want to give our broadband subscribers relevant content," says Stan Yeatts, BellSouth's vice president of Internet and portal services. "If we get the customer experience right, revenue will follow."

For other companies, BellSouth's approach is not a viable option, because their business depends on providing dial-up users as well as those with broadband access an experience that isn't painfully slow and uninviting. Their challenge is to juice up the speed of Internet access with technological sleight of hand so it appears they're operating at a comfortably fast speed. A dozen or so companies—Akamai Technologies, Inc., Inktomi Corp. and Transfinity Corp., among many others—offer caching and compression hardware and software that anticipates which information people need and then stores it on a server for instant delivery. This avoids the slow process of having to download fresh data every time it's asked for.

Companies like Global Knowledge Network, Inc., a Cary, N.C., Web-based training firm, are perfectly suited to take advantage of these technologies. Because Global Knowledge offers what are essentially scripted courses over the Internet, primarily for IT certification and continuing education, the company knows what data, graphics and video presentations need to be shown to students and in what order. Using data compacting software, the company lines up content on its server in stages so that when the student is ready to view it, it's already being sent to his computer. "That at least eliminates the lag even for the bulk of our students working from home on dial-up," says Eric Goldfarb, Global Knowledge's CIO.

Such jury-rigged solutions are not a long-term fix, Goldfarb admits. He says his ultimate dream is a broadband-based Web that will allow him to turn over to the student control of what he's looking at in the classroom and let him choose what he wants more information about. He could click on a 3-D image of the hardware he's studying, for instance, and get precise schematics and internal depictions of the equipment.

Such fantasies may yet come true, if industry prognosticators have it right. According to Forrester Research, even with broadband's stuttering record, upwards of 50 million households will have high-speed Internet access by 2005. That seems hard to believe, however. To reach those numbers, many experts say, the federal government would have to essentially mandate widespread deployment of broadband. That's a long shot considering the FCC's record of inaction and the government's lack of any real interest in considering some of the more creative ideas to jump-start broadband, such as giving subsidies to people to choose their own high-speed Web provider while providing tax breaks to companies that roll out broadband networks. "The government is missing the point that the broadband debate is much bigger than just an argument about deploying a new technology," says Karen Kornbluh, a Markle fellow at the New America Foundation. "It's about productivity, the future of the high-tech industry, and innovation." Yet recent reports in The Wall Street Journal suggest that the Bush Administration is planning a policy statement on the issue, including money to promote rural broadband access and a proposal that the FCC loosen the rules on the Baby Bells' investment in high-speed access. Whether the move will help jump-start the industry is anyone's guess.

Wireless networks, especially the next-generation 3G digital technologies, could be the answer to breaking the broadband logjam, according to some experts. The telecom companies are motivated to install these networks because they're counting on them for so-called mobile commerce, which would let people purchase travel tickets or groceries, conduct banking transactions and locate the nearest French restaurant on their cell phones. With 3G links throughout the country, they could serve as wireless broadband hookups for the last mile from the curb to the desktop. But no one expects 3G to be widespread for five years or so. In fact, 3G spectrum sales have been pushed back to at least 2004.

There is one business imperative, however, that could change the broadband landscape much sooner. Major content providers, whose growth is being stymied by the slow Web, may finally take the lead in goading telecom companies to speed up the Internet. There are already promising signs in the escalating rivalry between America Online and Microsoft Network, the two biggest Web portals, both of which are keenly aware that growth in usage and revenue depends on broadband. Without it, potentially lucrative e-commerce and music and video downloads will never get off the ground. To ensure that it does, AOL Time Warner Inc. has begun to aggressively market broadband services through its sister company, Time Warner Cable, and has released a new version of its software incorporating advanced entertainment and e-mail capabilities that require high-speed access to use it to full advantage. Meanwhile, Microsoft has signed agreements with Verizon, BellSouth, Qwest Communications International Inc. and SBC Communications to market MSN to 90 percent of the households currently capable of receiving DSL, and to twice as many additional potential DSL subscribers within the next few years.

Even with the battle between AOL and Microsoft heating up, the bulk of visitors to most company sites dependent on the Web for revenue will continue to get there by dial-up lines for at least the next few years. Consequently, the Web content strategy that most CIOs will have to grudgingly continue to live with is one that satisfies dial-up users without alienating the broadband audience. However, now that companies with the most vested interest are demanding broadband rollout, there's some light at the end of the tunnel. No one ever got rich betting on broadband before, but with Microsoft and AOL's money on the line, this may finally be the time to beat the odds.

Jeffrey Rothfeder writes frequently about business, security, environmental and technology issues. Comments on this story can be sent to editors@cioinsight.com.

This article was originally published on 02-25-2002
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