Information Revolution Is Likely to Be Years Away : Communications: Baby Bells plan new services, but some fear consumers may have hang-ups about them.
The Baby Bell regional phone companies are still a few years and many regulatory and legal hurdles away from offering such sophisticated information services as home shopping and banking, “electronic Yellow Pages” and stock market quotes.
But, if the phone companies--given tentative permission Thursday to enter the information-services business--perform as expected and finally start their efforts, they are likely to revolutionize the way Americans get information on everything ranging from baseball scores to department store advertising to school lessons to movies, experts said Friday.
In the phone companies’ vision, consumers would not only tap into the phone network to get basic information but would routinely use that network--plus new “smart” phones outfitted with TV monitors and computer chips--to shop, pay bills and deliver their own electronic messages at work and at home.
At stake, experts said, is how big a slice of the information-services business--and its profits--the phone companies want and will be allowed to go after, and how much will remain for traditional media operators such as television programmers, movie studios and newspaper publishers.
However, some of the greatest resistance to such revolutionary changes could come from consumers themselves.
Early efforts to provide almost identical electronic shopping and information-browsing services have not been big hits with the average American, telecommunications experts note. Consumers either have been frustrated or intimidated by the technology, or unwilling to pay the still-high costs.
“The fundamental issue now on the table is how we’re going to deliver information and entertainment into the American home in the future,” said Jonathan Seybold, a technology market expert in Malibu. “But no one has proven any real commercial market for electronic delivery to the average consumer.”
In addition, efforts by the phone companies to move into these markets are sure to run into significant opposition from such established information and entertainment providers as newspaper publishers, cable television operators and movie studios. These groups have vowed to appeal U.S. District Judge Harold H. Greene’s historic decision on Thursday to allow the Baby Bells to enter the information-services business. Consumer groups are also lining up to oppose any attempt to merge the message with the medium.
Nevertheless, telecommunications executives, analysts and even some representatives of traditional information providers concede that Greene’s action sets the stage for a potential upheaval in the entertainment, publishing, telecommunications and electronics industries.
“Nothing will happen tomorrow, but this is a landmark event,” said William Davidson, a business professor at USC. “There is a mega-industry waiting to happen here; information services is the opportunity of the moment.”
Although such pronouncements have been heard for years as experts forecast the dawning of the Electronic Age, Davidson argued that Greene’s decision for the first time allows local phone companies profit from this new era.
And, armed with that incentive, Davidson said, the phone companies will now spend the money to make improvements to the nation’s telecommunications network and phone equipment that these new information services require.
Executives of several regional telephone companies said Friday they are considering extending the reach of their fiber-optic lines and installing additional equipment to ease the transfer of information over the phone network.
At the same time, these companies said that they will accelerate efforts to develop “telephones of the future” to allow consumers to easily tap into the enhanced network. Early versions of these smart phones, which come equipped with a small screen to view information, are set to hit the market early next year.
But it remains to be seen whether telephones will be the equipment of choice. Some experts argue that personal computers are likely to benefit from the enhanced phone network and that the advent of new information services--offered at affordable prices--will finally prove to be the event that creates the need for a home PC.
The communications equipment of the future isn’t the only big question.
Experts say they are equally unsure about what kinds of information consumers are not only willing to pay for--but to change their habits to get.
However, telephone companies say they have some early ideas for services--many of which resemble information programs already available from such computerized data bank pioneers as Prodigy and CompuServe and “900” pay-per-call audio-text programs currently available over the phone networks.
Pacific Telesis said it is exploring the possibility of launching an “electronic Yellow Pages” service far beyond that now offered in its traditional bound volume.
The new service, the company said, would contain the traditional telephone numbers and addresses of businesses. However, it would also allow businesses to post special sales, offer maps to customers trying to find the business and allow customers to shop, make restaurant or airline reservations and hairdresser appointments via the phone. In addition, the electronic Yellow Pages would be routinely updated to provide current information.
Furthermore--and this is the point that rankles newspaper publishers fearing for the future of their advertising revenues--these new electronic Yellow Pages could be routinely updated to provide current business information.
Other services likely to appear first include customized news services. These programs would allow consumers to receive regular, tailor-made updates of whatever news and information they wanted. This also poses direct competition to traditional newspapers.
“These services are going to be damaging to newspapers’ efforts to become more valuable to their customers by offering their own telephone-based services,” said Terry Maguire, legal counsel for the American Assn. of Newspaper Publishers, the newspaper industry’s chief trade group, which has promised to appeal Greene’s decision. “It will be very difficult for competitors to deliver better phone-based services than the telephone companies.”
But some phone companies say that they plan to become partners with newspapers and other information providers and will not strike out on their own into territory dominated by large, established businesses.
Telephone and newspaper companies are already experimenting with using the telephone to bring news and information directly to the customer over phone lines. However, in these trials, phone companies have been allowed to provide only basic telephone transmission service and have been prohibited from getting involved with the basic information. This prohibition would be dropped if Greene’s ruling remains intact.
Although many business interests are ready to take the plunge, consumer acceptance remains unclear.
Early videotex services were offered several years ago by Knight-Ridder Inc. and Times Mirror Co. but were closed amid much red ink. Prodigy, the 3-year-old service from IBM and Sears, Roebuck & Co., has more than 1 million subscribers, but it is still not profitable.
One model, the government-owned telephone company in France, has successfully promoted a home computer information service called Minitel that provides airline and rail reservations and other services. But analysts say the service isn’t profitable.
Telephones of the Future?
What new programs might be offered by telephone companies if they are free to enter the information services business? Phone companies offered the following examples:
Home security system: Using the telephone network, a home would be hooked into a 24-hour centralized monitoring bureau.
Electronic Yellow Pages: Like their written counterparts, these would provide basic information about businesses. But they would also contain information about special sales and could allow customers to make purchases directly over the phone.
Services for the disabled: Voice-dialing and other speech-recognition capabilities would help the hearing impaired.
Education: New interactive voice, data and video services would provide new ways to teach students and reach remote sites.
Enhanced voice mail: In addition to phone messages, customers could get updated bulletins about news subjects of their choice.
Home banking/shopping: Customers would pay their bills via funds transferred electronically over phone lines and could shop from electronic catalogues.
