The Meeting Point

It has all the ingredients of a dream
story. But this dream certainly has a touch of reality which will
come true. The hot topic of this dream story is none other than
convergence. By “convergence”, we mean the meeting
point of voice, data, and image or a process to integrate
different technolgies.

To make this reality happen, the need
of the hour is an imaginative and intelligent appreciation of the
potential of convergence of technologies.

 

What Is Convergence?

Here we are trying to give a
few definitions of convergence. The first one we call “the
basic concept”. It defines convergence as the coming
together of networks, terminal devices, and applications. On the
network side is the telecom, data, and entertainment networks.
Telephone, computer, and television stand on the terminal devices
side. And on the part of application stands corporates, Defence,
consumers, etc.

Naturally, the question then arises is how is
it possible? Primarily, because the networks have been
digitalized, especially the telecommunication networks. Cable TV
networks are currently undergoing the same change. In the
process, these networks are adding more users. More important is
the access across these networks. It is provided in the form of
specialized applications and intelligence embedded in the
networks.

Digital networks have the unique ability to
treat all information streams as a digital bit stream. ATM-based
networks accomodate information with predictable levels of delay.
Even the studies are moving in this direction. Some analysts have
predicted that the information riding over the Information Super
Highway will be 98 percent digital by the year 2001.

Meanwhile, the rules of the game have also
assumed new proportions. With the development of optical fibre
and the micro processor, ground rules of network design are
changing. On the economic front, the cost of transmission has
declined by one third over the past 15 years. And the net results
are the new opportunities in multi vendor-compatible optical
networks transporting digital information at low costs. To add to
the advantages are the advances taking place in the area of
lightwave transmission. Now 2.5 Gbps commercial fibre systems are
estimated to reach a trillion bit capacity system by 2002. The
experimental trillion bit system has already been demonstrated by
the scientists at the Bell Labs.

“The basic
concept” defines convergence as the coming together
of networks, terminal devices, and applications.

The second definition of covergence, we would
like to call, is “network convergence”. Here, the
digital foundation of contemporary and developing networks lies
in the convergence of computers, communications, and
applications. It mainly comprises computer elements embedded in a
large number of computing systems providing specialized
applications.

In a network-centric scenario of convergence,
two main constituents play the vital role–application server
and content server. The application servers will provide large
number of client points of network access for sophisticated
telephony, computing, video, and image. Meanwhile, media servers
will store vast volumes of video information. It will be provided
to end user devices on schedule and demand basis.

The third and final definition will be called
“information concept of convergence”. It is the
convergence of information provided by print, computer, audio,
video, etc. Gone are the days when print information was provided
via physical distribution network. Now you can access The New
York Times
here in India through Internet at the same time as
it comes on the stands in the US. The surmounted barricades here
are time and distance. The advent of Internet paved the way for
the transfer of information crossing the traditional borders of
organization. With the convergence of technologies, any one can
access any kind of information anywhere in the world irrespective
of the media source. In a nutshell, the following are the features
of convergence.

  • “Any-to-any” networking where
    networking solutions will be platform independent.
  • Seamless information flow.
  • Cross industry access (IT,
    telecommunications, etc.).
  • Digitalization of the data.
  • Intelligent equipment.

Convergence has been a matter of serious
discussion in the industry for years. Signs are already visible
for the transmission of this much publicized dream into a
reality. Look at the following indications.

  • PC penetration in the corporate and
    individual market is ever increasing. And also for PC
    computing, power, intelligence, new applications,
    products, and services are at the fore front.
  • Information is the key word for any
    successful business decision. PC assumes the role of an
    access, process, and display tool.
  • The regulatory obstacles are being removed
    slowly which will give cross-industry alliances in the
    communication and IT fields.
  • Popularity growth and utility of Internet
    are increasing by leaps and bounds. It is emerging as the
    most significant medium for convergence.

Then it is the turn of the components of
convergence. The impression gaining ground is that the players
will reposition across five functional areas. These being, create
(content); store (databases); display (devices); process
(applications); and distribute (transport).

When customers begin to use and rely on the new
multimedia services, the area of operations is likely to reduce
to three. Experts feel in the new scenario the industry will
consist of companies specializing in networks, devices, or
content.

Network business will evolve from simply
providing the transport conduits. It will not only include the
distribution of multimedia services but also the supply of
value-added information processing. In the meantime, the business
devices will grow to encompass display as well as multimedia
information storage. However, content creation will remain
separate and is likely to emerge as the industry’s power
house. With the availability and rapidly falling price of
hardware and dramatic drop in the cost of digital transmission,
the users will need access to multimedia content.

The second
definition of covergence is “network
convergence”. Here, the digital foundation of
contemporary and developing networks lies in the
convergence of computers, communications, and
applications.

Now we are coming to the practical aspects. It
is a game of complexities. Needless to say any-to-any networking
must accommodate a host of legacy and leading-edge technologies.

In this context, the question that assumes
significance is what technologies have to converge to make
any-to-any networking a reality. As said earlier, the hardware,
software, networking, access, data communication, broadcasting,
and Internet technologies will have to work towards a common
platform for convergence to be a reality. Says S Viswanathan,
manager (technical), Datacraft RPG, “It means that the
software should be able to run on any hardware using any
networking technology for communication. Above all, you also need
the infrastructure to support the latest developments in the
field of computers and communications.” In this regard, the regulatory and economic
concepts and issues are to be addressed. Normally, these issues
will differ from country to country. But at the same time, in a
generic sense some issues are removing the barriers between
industries. For instance, take the case of utilizing cable
networks for receiving voice telephony, video-on-demand, TV
channel programs, Internet access, etc. Another hurdle lies in
allowing hybrid networks consisting of VSATs, leased lines, and
microwave to build corporate networks. The issues do not come to
an end here. Says Subodh Shukla, general manager, Datacraft RPG,
“Monopolistic practices are to be eliminated to allow free
investment to build infrastructure and access networks. When the
competition increases, users will get value for their
money.”

When the above mentioned hurdles are removed, a
close synergy is required between various business vendors. Of
course, the ultimate solution will be a mix of technologies. It
seems the application development is necessary to the telecom
providers. The telecom operators have to transmit data along with
voice and video images. It will be a scenario in which software
developers, telecom providers, and IT vendors work together. A
situation in which each one has to understand what the other is
doing. The service providers need to understand the need of the
corporate users, individual users, and application developers,
who are independently developing data-based communication
solutions.

Is cable TV network a way to deliver data,
PSINet? Answers Viswanathan of Datacraft RPG, “Cable TV
network operators already have the cabling infrastructure in
place and need to invest only on a few amplifiers/repeaters in
their network. It will be easy to deliver data on the cable
network.” Today cable modems with very high access rate are
available. Although there are no standards for cable modems now,
they are likely to be set in the future.

On the technological front too, some ideas are
gaining ground. ISDN is one among them. No doubt, it will provide
access to information at a faster speed. It will be useful in
providing more bandwidth to the users. Since the maximum
bandwidth is 128 kbps, ISDN cannot be used in the backbone
technology. There seems to be no debate on the backbone
technology in the case of ATM-switched platform. Says
Viswanathan, “Core networking would be ATM-based on which IP
traffic will flow. The important feature would be the performance
and cost factors.” All points lead to a consensus–an
evolving telecom world in which data communication,
internetworking, and any-to-any connectivity are essential within
companies and among enterprise networks. But the million dollar
question is when will it be possible? Industry watchers differ on
the vexed question. The available indications lead to a
conclusion that any-to- any digital networking will be a vital
part of the global communications by the first half of the next
decade.

E-commerce

As a special case of
convergence, we are analyzing the scenario in E-commerce. Gone
are the days when IT was just a matter of office automation. But
in the changing scenario, IT has to play a pivotal role in the
complex arena of business. It involves the deployment of networks
designed to cross the traditional borders of organization.

These inter-organizational systems paved the
way for the creation of electronic channels. And the net result
is enhanced productivity, improved flexibility, and crucial
competitive advantage. With the proliferation of Internet, these
channels can be effectively deployed by using various
technologies.

The technologies ranging from Electronic Data
Interchange (EDI) to Electronic Fund Transfer (EFT) come under
the common category of Electronic Commerce or E-commerce as it is
better known. It begins with the deployment of EDI which is an
application-to-application exchange of business documents using a
standard. It has been traditionally used in conjunction with
Value Added Networks (VANs), which facilitate mailboxing,
tracking, and archiving of documents. But despite its long
history of 25 years, EDI has never been popular whereas much is
expeted from Internet- based transactions. According to GE
Information Systems estimate, only 100,000 companies use EDI out
of a potential world-wide market of two million firms. The reasons for the dismal performance are
simple. It is expensive and proprietary. Moreover, it was
implemented primarily on major and continous procurements from
large suppliers. With Internet and IP protocols, the signs of
change are visible. Now the question doing the rounds is, can
Internet standards bring EDI to everyone?

The third
definition will be called “information concept of
convergence”. It is the convergence of information
provided by print, computer, audio, video, etc.

The idea gaining ground is to take the EDI
standards and experience and to make it work along with the basic
structure of EDI code. In short, the idea is to encapsulate and
converge EDI into Internet interfaces. But problems also exist.
Internet still faces security concerns and though technologies
such as Secure Electronic Transaction (SET) are coming up,
business organizations continue to use the services of VANs for
doing EDI. As per reliable estimates, in the US alone, growth of
EDI has been significantly higher after the upsurge of Internet.

However, Internet-based business-to-business
E-commerce is attracting considerable interest. To add to the
advatages are the EDI capabilities, which will enable it to
expand new classes of users. Forrester Research forecasts a
market of $66 billion by the year 2000, while Yankee Group puts
the figures twice that size. Forrester Group also predicted that
spending on Internet commerce will increase from $22 million in
1996 to $3.2 billion by the end of this century. All predictions
point to the conclusion that the opportunities are high.

While Internet continues to be causing much
hype, certain solid business reasons are emerging in favour of
adopting E-commerce.

  • Opportunities to cut overall costs and
    expand profitability.
  • The expanding business networks
    snowballing into more business opportunities for their
    members.
  • As IP continues to dominate within
    businesses of all sizes, the companies will have access
    to the hardware, software, staff, and communication
    facilities needed to move into E-commerce.

For broad based E-commerce, all the numbers
seem to be in place for the time being. It is already happening
in the US and other developed nations. In a survey published by
CommerceNet, an industry consortium, and Nielson, a media
research firm, more than 70 percent of Internet users had used
the web for shopping during a particular month. By the year 2000,
46 million consumers in America alone will buy on-line, spending
at an average of $350 a year, says the projections of
International Data, a Massachusetts consultancy. Consumer
Internet transactions in 1996 were to the tune of $500-600
million.

The ground swell in India is clearly apparent.
The Ministry of Commerce is aggerssively driving EDI at ports,
customs, export councils, and excise departments. The governments
in Singapore and Europe have already issued deadlines for EDI
compliance in India. In the short run, we can expect a headlong
rush into EDI by exporters along the lines of ISO 9000
certification. Broad based E-commerce is likely to appear as a
business strategy by industry leaders. According to experts,
organizations which have made significant IT investments in
networks and ERP software will be among the first to take off on
E-commerce. Global competition will be another important driver
to make E-commerce an important tool with corporates.

But the slow growth of E-commerce, after
Internet has taken off, has been a matter of disappointment. One
thing that deserves serious attention is the fact that most of
the predictions about E-commerce few years ago have turned out to
be wrong. For instance, the road to success lies in
business-to-business commerce rather than in consumer shopping.
This could prove wrong. The shift to Internet makes the business
transaction process cheaper, faster, and easier. Secondly, the
industry’s definition of E-commerce was too narrow. Most
analysis included only transactions carried out on Internet. But
in practice, consumers do research on their purchases on-line
before making the purchase. Third, the on-line readers are not
the traditional commercial giants. Interestingly, most of the firms having web
site are not conducting transactions on the web. The reasons for
setting up web sites are to market their wares and help their
customers save money in the process. However, on-line commerce
seems suited to services like finance, travel, and automobiles.
This can be gauged from the fact that in the past their physical
counterparts have benefited from the general public’s
limited access to information.

In practice, the promise of a seamless global
market is still a dream. A new set of Internet currencies was
prepared to resist the attack by hackers. Now the promoters of
such payment systems are struggling. The truth is that very few
companies are making money out of E-commerce, while plenty are
trying. 

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