COMM 574

Tele-Media: Strategic and Critical Analysis

© 1998,1999 A. Michael Noll

INSTRUCTOR: Prof. A. Michael Noll

TERM: Fall 1999

SUMMARY

This course is a course about strategic thinking and analysis. Such strategic thinking must be dome in an environment of realism taking into account a thorough understanding of the lessons of the past and also a thorough knowledge of the factors which determine business success. These factors include technology, finance and economics, policy and regulation, consumer needs, and business structure and marketing. Lessons from the past must include study of the causes not only of business successes but also failures. This course should not spread negativism but rather should instill realism and clear thinking into business decisions and strategic planning in the communication and telecommunication industries.

After describing the technological Utopia offered by today’s information and communication superhighway, the course begins by describing how this vision had its beginnings in the interactive TV and broadband highway of over two decades ago. The course then reviews the technological principles behind today's modern telecommunication networks, and explains the technological uncertainties associated with many new communication services and products. Recognizing that technology is only one factor in shaping the future, the bulk of the course presents and analyzes the financial, policy, business, and consumer issues that are necessary to understand the future from a strategic and critical perspective. Realizing that trials have their pitfalls, the course draws lessons from the planning and implementation of trials.

Throughout the course, lessons are drawn from history in strategic and critical terms. The course concludes by showing that today's switched telephone network and CATV systems already form a telecommunication superhighway carrying voice, data, image, and video communication for a wide variety of services. More recent communication products and systems are analyzed using the strategic and critical methodologies presented in the course.

OBJECTIVE

Students taking this course will be introduced to a critical and analytic perspective that can be applied to the strategic analyses of communication products, services, and ventures. This strategic and critical perspective includes the basics of communication technology, financial analyses, determining consumer and market needs, the principles of business, and policy aspects. 

GRADING

Students will analyze a specific communication business venture using the techniques learned in the course. This project will account for 40 percent of the final grade. Another 30 percent will be determined from class participation (10 percent) and written reports (20 percent), and the remaining 30 percent will be determined from a written, closed-book examination.

In summary, grading is based upon:

ATTENDANCE POLICY

Class discussion is an important component in the learning process for this course, and thus attendance counts toward the final grade. However, illness and other unexpected events can cause a student to miss class. Only two such excused absences will be allowed. All other absences will affect the final grade for the course.

CATALOG COURSE DESCRIPTION

Strategic and critical analyses of emerging and new communication technologies from historical, business, financial, technological, consumer, and policy perspectives.

REQUIRED TEXTS

Noll, A. Michael, Highway of Dreams: A Critical View Along the Information Superhighway, Lawrence Erlbaum Associate (Mahwah, NJ), 1997.

Reading packet – USC Bookstore.

Dutton, William H., Jay G. Blumer, & Kenneth L. Kraemer, Wired Cities, G.K. Hall & Co. (Boston, MA), 1987.

Fidler, Roger, Mediamorphosis: Understanding New Media, Pine Forge Press (Thousand Oaks, CA), 1997.

Gates, Bill with Nathan Myhrvold & Daniel Paisner, The Road Ahead, Viking: New York, 1995.

Negroponte, Nicholas, Being Digital, Vintage Books: New York, 1995.

Rogers, Everett M., Diffusion of Innovations (Third Edition), The Free Press (New York), 1983.

Stoll, Clifford, Silicon Snake Oil, Anchor Books: New York, 1995.

COURSE CONTENT

The course will consist of lectures augmented by outside visitors as appropriate. Students will be expected to read supplementary materials and contribute materials as events around the communication industry continue to develop during the course. The class sessions will include a lecture by the instructor or guest visitor. Students will then discuss the topic of that class session and will be expected to contribute intelligently to the discussion.

Students will make oral presentations to the class on the results of their business analyses, in addition to a written report. 

ACADEMIC INTEGRITY

Only the highest standards of ethical conduct will be tolerated in thiscourse. Accordingly, any student responsible for any violations of ethical conduct will receive a failing grade for the course and the incident will be reported to the School and the University with a recommendation for the imposition of additional sanctions, such as suspension form the Annenberg School and from the University. Unethical conduct includes such actions as plagiarism, cheating on examinations, fabrication, and purchasing papers or other assignments.

NOTE

This syllabus is subject to modification and change.

OUTLINE

We all read daily of the information superhighway, video-on-demand, interactive TV. But exactly what is it? Is it sense or nonsense? Hype and hope! Reality or fantasy?

"It" is a cornucopia of telecommunication utopian services, such as telemedicine, tele-education, home information, remote banking, shopping, 2-way TV, videophones, video teleconferencing, and meter reading. "It" is characterized as one medium to the home. A superhighway. Digital (numbers vs analog). Fiber. Fiber to the home, to the curb, to the neighborhood. What is convergence? Is telecommunication converging with entertainment? Have computers and communications converged?

But is "it" new? Do people want it? Can it be done technically? When? For how much? By whom?

How can we understand future? How to evaluate new technologies? How to think strategically?

1. Historical perspective.

2. Analysis by factors:

• technology

• finance

• consumer

• business

• policy/regulation

Topic 2: A Technological Utopia

A far ranging vision of the use of technology in communication and telecommunication, including HDTV, interactive TV, videotex, home information, home shopping, home banking, telemedicine, and tele-education. The purpose of this topic is to paint a high-tech vision of the future. It is this vision that will be analyzed in the remainder of the course.

Topic 3: A Strategic Perspective From The Past

A knowledge of history is used to develop a critical perspective in terms of learning lessons from the past. Review history, including the wired cities of 1970s, two-way cable (Reading, Cube, Mitre Reston, etc.), AT&T picturephone, video teleconferencing (as a mass market), and videotex. Discuss the French Teletel/Minitel system, teletext, and past Bell ownership of CATV systems.

Topic 4: History Repeats

Describe more recent events, including videotex again, picturephone again, and interactive again. Review GTE Cerritos trial.

Topic 5: An Electronic Technology Primer

Review some key technical concepts, such as: digital/analog, bandwidth (Hz), bit rate (bps), switching, and networks. Discuss modulation and multiplexing (frequency division and time division).

The purpose of this topic is to create a minimal technology literacy so that the student can understand the technological issues and uncertainties affecting the superhighway.

CATV vs telephone network (broadcast vs switched). Transmission media (copper wire, coax, fiber). Architectures (tree, hub, star). Fiber-to-the-home (curb, neighborhood). Switching needs. How to provide DC battery. Reliability. Too many wires, therefore multiplex.

Services and technological implications (TV vs telephony). One fiber or two fibers. Video-on-demand. Video server (storage needs -- switching needs). Compression & near video-on-demand (500 channels). Direct broadcast satellite (DirecTV).

This topic will show that technological uncertainties abound! Much of the technology is still only on paper. Standards issues also abound.

Topic 7: Financial Viability

Describe size of communication industry in terms of revenues. Examine the economics of Prodigy. Examine economics of Bell Atlantic/TCI merger. Examine costs of redoing infrastructure and subsidization issues. Examine average monthly household expenditures. Costs of bandwidth. Compare financial aspects of telephone companies with CATV firms, such as profit margins, investment, financing, and productivity.

Topic 8: Consumer Need

Discuss video-on-demand and flop of picturephone. Describe driving forces in consumer electronics. Information needs are not understood. Home entertainment, communication, work centers are separate and distinct. Content and conduit are different, and in entertainment, content is key. Not so in telecommunication in which user creates content.

How to determine consumer response. Most market research for new services is a waste. Trials become corporate PR exercises and achieve a life of their own. Evaluation is lacking. Failure can not be admitted (eg: GTE Cerritos). Even though trial might succeed (eg: Phoenix criminal justice use of picturephone), commercial exploitation might fail.

Topic 9: Pitfalls of Trials

How to ascertain consumer acceptance? Trials seem great, but... lack of honest evaluation. Trials become PR stunts and advocacy.

What do telephone companies know about entertainment? Brands are essential. Consumer contact/image. Provision of telephone service is an essential utility. Need for high reliability of telephone service. Fear, ignorance, confusion are driving forces within most large corporations. Tremendous ignorance of past. Much hope and self belief. A new form of corporate greed and imperialism has dawned.

Bell breakup had large impact. Subsidization of local service by long distance created opportunity for false competition. Regulation is needed of monopoly. Long distance charges continue to decline at 4% per year. Technological advance is a large component.

Telcos as unregulated monopolies. Monopoly of telephone & CATV service. Control of conduit and content. Baby Bells and AT&T are interlocked through trials and various joint ventures. Is old Bell System is coming together again?

Review history of packet switching, including ARPANET & Telenet. Discuss policy and funding issues. NSF spends millions subsidizing industry. Need simple e-mail terminal.

Topic 13: A Secret: The Superhighway Is Already Here!

Review today's telephone network. Switched. Public. Universal. Intelligence through computer control = functionality. Facsimile. Cellular. 100% computer-controlled. Use of time-division multiplexing. AT&T's self-healing long-distance network.

Review CATV coaxial networks. Use of communication satellites. Packet-switched data networks.

Convergence is a myth. Boundaries are blurring thereby creating new opportunities. Eg: dating involving newspaper ads + telephone response.

Students and business people need to understand all factors. Messianic zeal and faith belong in religion–not business. Much hype and nonsense and corporate imperialism.

Some missed opportunities: teletext, low-speed radio data, simple E-mail terminal. Reality can not compete with fantasy.

Superhighway is already here: switched network–voice, data, image. Anywhere–cellular & cordless. Is it a revolution? No! Progress is evolutionary and gradual. Digital era dawned decades ago with digital computer. A decade ago with digital disc for audio. T1 is decades old. Telephone network is all digital (transmission & switching) for long distance and between central offices. Perhaps, someday it will be digital from CO to our homes and perhaps even within our homes.