Bandwidth It’s Called, and It Means Change

If the landmark 1967 film “The Graduate” were remade today, the word of advice young Benjamin Braddock, played by Dustin Hoffman, would receive would be “bandwidth,” not “plastics.”

Bandwidth is the technical term for the capacity of communications channels. Fiber-optic lines have far more capacity than old-fashioned copper telephone wires; cable can deliver more channels of television than old-fashioned broadcast networks--although all that is about to change.

The news is that communications capacity is about to become, in effect, infinite. With the coming of digital television, the broadcast networks are gaining the ability to deliver five to 10 times the channel capacity they now have, which means they will be able to handle Internet traffic. Cable systems everywhere are being upgraded to carry two-way voice, data and video on the Internet. And new electronic processors are enabling traditional telephone lines to offer broad-band capability for the Internet.

The race to own such bandwidth is behind the deals you’ve seen recently. Last week Paul Allen, the billionaire co-founder of Microsoft, invested $4.6 billion to acquire cable company Charter Communications, just three months after he entered the cable field by purchasing Marcus Cable of Dallas.

Allen’s deal mirrors AT&T;’s agreement last month to acquire Tele-Communications, a leading cable firm.

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Television networks--ABC, CBS, NBC, Fox, Warner Bros. and Paramount--are wondering how best to exploit the bandwidth they have gained along with frequencies for digital channels. Analysts suggest the networks should seek partnerships with telecommunications companies that know how to bill customers for data services.

What it all adds up to is an explosion of bandwidth in the coming years, with profound implications for business in the decades ahead. Henry Nicholas, chairman of Broadcom, an Irvine-based developer of microchips that enable telephone and cable lines to connect to the Internet, says this technological shift is “comparable to mainframe computers giving way to the Intel- and Microsoft-powered desktop personal computers in the early ‘80s.”

The ultimate potential of increased bandwidth is that “it will bring Internet access to 100% of U.S. households, as today they have access to television,” says Geoffrey Yang, a partner in the venture capital firm Institutional Venture Partners of Menlo Park, Calif. Currently, about 18% of U.S. households have Internet access, although 45% have computers.

But this is not a signal for individuals to run out and buy Internet stocks or for businesses to acquire Internet companies.

It’s too soon to pick winners or even to predict the direction of the business. If the spread of bandwidth and the Internet were an athletic contest, we’d be in the pregame show.

However, some implications for business and investors can be discerned, mainly because they’re extensions of current trends.

Greater bandwidth will remove constraints on videoconferencing and allow people to truly collaborate in work, says Nicholas, “because the gestures, facial expressions and tones of voice will be captured much more clearly by improved video pictures.”

The growing trend of companies using Internet connections to buy from suppliers and sell to other businesses will increase greatly, reducing inventories and needs for warehousing and office space.

Broadcast television traffic, even with increased bandwidth, will still be largely one-way, Yang says. But there will be masses of it--stock prices, news and business information and sports scores that can be personalized. “Users might select Web sites of particular interest that would be automatically stored” on their computer systems, Yang says.

Greater bandwidth could bring personalized television. “You’ll swipe a card through your set-top box and the programming and commercials will be suited to your tastes. Each family member will have a personalized program,” predicts Stephen McKenna, entertainment and media sales director for Sun Microsystems.

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Advertising may well become seamless. One will see an object on a TV show and click onto a parallel channel for price information and purchase capability. McKenna of Sun, which develops computer languages allowing machines to communicate, sees the home being transformed within 18 months to two years. But most analysts see home markets emerging in seven years or more.

The impact of greater bandwidth will be felt much sooner by business. Computer-based networks for business are already sizable. Qwest Communications International, a Denver-based provider of such services, has grown to more than $700 million in revenue, with operations in 48 states, in just two years.

As bandwidth availability expands, Yang sees the Internet’s packet networks displacing traditional telephone networks--even for voice traffic. “Internet telephone calls are now one-tenth the cost of traditional phone calls and soon will be one-hundredth the cost,” he points out.

Such dramatic cost changes always accompany basic shifts in technology, with effects that are unpredictable--even for people close to the action. At a meeting of roughly 800 new-media entrepreneurs of the oddly named LAwNMoweR Group at Paramount Studios the other night, attendees expressed fears that opportunities for small companies to sell on the Internet would be limited once “the Web site of WalMart.com”--as one put it--came on the scene. Yet it’s more likely that the new environment will spur entirely different innovations.

So the effects of technology are unpredictable, but lest we fear that the world is spinning at random, we should reflect that the idea underlying bandwidth originated 54 years ago in the war effort. The great mathematician Claude Shannon made the discovery that communications frequencies could expand to hold more information--he called it “wave division multiplexing.” He may never have foreseen the spread of bandwidth and Internet commerce.

The Internet itself originated from the Arpanet, which was developed under a Defense Department contract in the early 1970s. The Pentagon wanted a decentralized communication system that would be less vulnerable to nuclear attack than centralized systems.

What it got was the decentralized communication phenomenon that, with the almost infinite capabilities emerging now, will transform the business of the world.

Remember the word: bandwidth.

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James Flanigan can be reached by e-mail at jim.flanigan@latimes.com.