Broadband Opens Business To World of Possibilities (Commentary by Steve Hankins)

In a meeting of business leaders recently the question was asked, “Just what is broadband anyway?” The real question from a small and medium sized business perspective seemed to be, “Why should I care?”

Business leaders could easily think of “Broadband” as just another technology fad. The reality is that the term broadband represents both a fundamental physical change and a conceptual change. Neither will be a fad.

In the late ’90s Forbes ASAP published a series of articles by George Gilder that eventually were published in book form in 2000 under the title “Telecosm.” His central theme was that the era of “computers” was over and that the era of “communications” was beginning. Gilder’s notion was that high-speed “bandwidth” would one day be “universal, instantaneous, unlimited in capacity, and essentially free.” With that being the case, Gilder’s view was that the world would undergo radical change.

While Gilder was putting forth these ideas, the telecommunications companies were in the midst of a massive build out of fiber optic network capacity.  Fiber optic cables carry light waves over which digital data bits ride. Their advantage over traditional wiring lies in the capability to carry magnitudes more data.

As sometimes happens with a good idea, the telecoms got a bit carried away. They figured that, since they were going to the trouble of digging trenches anyway, they should put a lot of those fiber optic cables in it. Thus you had AT&T, MCI (WorldCom), Sprint and a host of others laying out their own fiber networks, all considerably overbuilt based on existing demand.

Around that time it occurred to the cable television companies that they had wires leading to their customers that were greatly underutilized. These wires could easily carry digital data in addition to the analog television signals.

If you think of the cables and wires as “pipes” and the data they carry as “water” you can describe this as a situation where the number of water pipes available expanded greatly. At the same time, the size, or carrying capacity of the pipes, expanded greatly.  The old pipes were narrow.  The new pipes were very wide, or “broad.” Broadband became the catchall term to describe the new physical delivery capability.

The supply of carrying capacity grew to greatly exceed demand, leading to huge decreases in price for voice and data communications.

The notion of high-speed data delivered to every home, small business, and cell phone tower became realistic. Cellular devices morphed into data delivery devices, carrying e-mail, Internet data, video, and specific applications wirelessly from the physical network to people on the go.

Gilder’s vision of “universal, instantaneous, unlimited in capacity, and essentially free” bandwidth is close to reality. What was before unfathomable is now not only possible, but also practical. As Gilder predicted, radical change is taking place.

To determine whether or not your small or medium sized businesses should “care” about this, you must face the question, “Is broadband helping or hurting my business?”

Some traditional business models, such as music sales and newspapers, are being hurt badly. Americans of all ages flock to the Internet as their first source for information, from reading hotel and restaurant reviews to comparing prices and gathering owner feedback on potential purchases. Books, flights, hotels, rental cars, tee times, ordering take out meals, pizza delivery, new pants, window blinds – all can be easily purchased online.

New business models are rapidly developing as the economics of business change. With limited upfront investment, sophisticated supply chains involving global partners and world-class operational and financial technology can be accessed. Online stores not burdened with the fixed cost of physical storefronts can be easily established.

It is important that small- and medium-sized business not view broadband as a fad or even in the sense of the physical wires. Broadband as a concept has and will continue to change the way business will be conducted. The capability it provides is fundamentally changing the way the world communicates.

(Steve Hankins is CEO and co-founder of Accio.US of Springdale, a technology company providing advisory and management services for small to medium-sized businesses.)