The promise and the peril.

• Position: Panel dicussion on the information highway featuring information experts Barry Weintrob, David Dell, Philip R. Ladoucer, Matthew McGarvey and Ronald Parker - The Information Highway - Panel Discussion

Everybody's talking about the information highway. Who will be the players? How will we choose them? Who will be left behind? Will big companies fare better than small companies, or vice versa? How will firms on the highway relate to their clients, their suppliers, their banks, their employees? Would a healthy dose of fear do us all some good? Do we really need a highway?

Financial Executive talked about these and other issues with some of the primary drivers on the highway in a roundtable held this spring. The participants were:

* Barry Weintrob, the CFO of the Port Authority of New York and New Jersey, a member of FEI's Committee on Information Management and moderator of the panel discussion;

* David Dell, a director at Digital Products Corp. and also a member of FEI's CIM;

* Philip R. Ladouceur, president and CEO of Information Systems Management Corp. in Alberta, Canada, and a member of CIM;

* Matthew McGarvey, the director of financial infrastructure at Bell Atlantic; and

* Ronald Parker, the manager of human-resources information technology for IBM.

Here's the picture the group painted.

BARRY WEINTROB: Just what is the information highway?

MATTHEW MCGARVEY: I think the ultimate vision is a digital, end-to-end communications system with interactive broad-band capability, but that probably won't come about until after the turn of the century. Of course, that begs the question, how do we get there? How do we implement that vision? I think initially we have to look at existing and near-term conditions, and that's an interrelated, highly complex system of networks that will develop at different speeds to address different markets.

DAVID DELL: I believe part of the infrastructure will remain analog as far out as I can see. Universal digital is some time off. We haven't figured out how to expand high-quality digital communications over a mixed-media environment nationally, so how can we do it internationally?

MCGARVEY: That's a good point. In Delaware, we've filed publicly that by the year 2014 we'll be 100-percent digital. In 1998, we expect to have 100-percent digital switching there and 100-percent fiber in our office. But, of course, that's in the United States, not in an international territory.

WEINTROB: Will the highway add value ? Will it be cost-effective for its users?

RONALD PARKER: I think most small businesses view it as a tremendous opportunity to market their products. It also will add value in the education area.

PHILIP LADOUCEUR: It allows you to expand your markets, to do business internationally. It especially helps smaller businesses, but it also helps larger companies. It will affect the way we manage hospitals and health care, the kind of relationships we have and how we interface with the government.

DELL: In a way, it's not that the highway itself will add a lot of value, but rather that it will, through easy universal access, let people exploit the communication capability. To use the highway analogy, a lot of hotels and other businesses will go up alongside the highway at the intersections, or a whole string of industries will open up new territories, but the highway itself won't have a monopoly as the only place you can stop to get a hamburger.

MCGARVEY: Absolutely. The future is open, not closed, systems. Right now, customers are demanding such applications as video-on-demand, a $17-billion market in the continental United States. They want home shopping, where they'll get what they want when they want it, instead of calling and being placed in a queue. They want improved gaming, like state lotteries and reservation systems. And they want direct mail and direct response if it's truly interactive and multimedia. And, I think, in the near future they'll also demand telecommuting, medical applications such as remote medical screening and consultations and medical imaging, and educational applications such as distance learning. Consumers want more choice, more convenience and more control.

DELL: But to some extent other dedicated mechanisms can provide those. We don't need an all-purpose highway. On-demand video is a reality. In many hotels, you can choose from 40 available movies instantly, or you can block them out. I know the CFO of a cable industry company who understands the cost of the highway and who figures that videos starting every 15 minutes is close enough to "on demand."

The real question becomes one of economics: Is the highway the mechanism to deliver all of the functions? Or should we use some of the infrastructure we already have in place that's dedicated to delivering particular kinds of services?

MCGARVEY: The old way of building an infrastructure was to have a one-size-fits-all network, with high fixed costs, very low variable costs and low flexibility. But now we're completely changing that strategy to address the cost issues, theoretically matching incremental investment with incremental revenue. And we're investing only in those places we feel we can get customer control. We hope the strategy will result in capital efficiencies and make the cost unprohibitive.

DELL: But if you're going against the universality, building it in profit center by profit center, then instead of having a common highway, you'll specialize it in each area and take advantage of the revenues. I don't see how that's very different from the hodgepodge increase in capacity we have today. We don't seem to be really changing the way the highway is developing so far, except maybe increasing the intensity of the competition short term.

LADOUCEUR: I think the new technology enhances the delivery of data, video and voice. That's one of the reasons the telephone companies and cable television operators are introducing it, for improved delivery.

WEINTROB: In your own businesses, is the information highway changing your technological strategies dramatically or gradually?

LADOUCEUR: The combination of the highway, the technologies we have today, such as the Internet, and the new technologies that link us up to the highway is making us look at the way we operate our businesses. For example, we were able to reduce the staffing at our telephone operating company in Alberta from about 11,500 people to 8,500 while we increased our customer base. We had to drive it with new technology.

WEINTROB: That's a significant decrease. Which part of the technology helped do that?

LADOUCEUR: In converting new applications to client-server distributed...