Towards the Third

Revolution of Television

Eli M. Noam

Professor of Finance and Economics

Director, Columbia Institute for Tele-Information

Bertelsmann Foundation

Gütersloh, Germany

December 1, 1995

Presented at the Symposium on Productive Regulation in the TV Market

I. Introduction

For several decades, television systems around the globe were stable, profitable, and predictable --a handful of channels, in America and Japan mostly private and in Europe mostly public. But this world is no more. And so the questions arise, what next? And what are the implications? Let’s look first at the TV of the future, and then investigate the fundamental assumptions for each stage. We will find that the traditional assumptions do not work anymore.

II. The Three Television Revolutions

It helps to understand that television evolves in several stages. The first two are well-understood, the third is rarely recognized. The first stage is privileged television, followed by the second stage, multichannel television. This is the presently emerging system, but it is not the end of evolution. The third stage is cyber-television, the television of the future. Many governments and established media organizations are still resisting the emergence of the second stage, when what they should do is to focus on the third revolution, which poses a much more fundamental threat.

(1) Privileged TV

This stage was characterized by a handful of channels, behaving in an oligopolistic way. Networks and stations, whether private or public, sought to protect their exclusive licenses by cultivating political goodwill, by engaging in community service, and by avoiding excessive controversy in programming. All channels provided a “full-service” range of programming. Commercial broadcasters, because there were so few, divided up the majority of the audience; they did not reach taste minorities. Under privileged TV, network programs in America required over 20% audience share to be viable, because of the Aopportunity cost@ of having less than a huge audience. Left to public TV in America were the intellectual elite and the bottom of the educational and income scale.

(2) Multichannel TV is presently emerging. It is characterized by greater commercialism, greater diversity, and greater specialization in channels. Open entry allowed the development of TV programming to increase dramatically. In the U.S., the number of satellite delivered channels has increased from 4 in 1976, 43 in 1983, to 99 in 1994. New networks attempted to enter at an accelerated pace: in 1992‑‑20; in 1993‑‑40; in 1994‑‑70.[1] The audience share of three major networks has dropped to 50%.

(3) Cyber-Television

It is tempting to believe that, as the trend in TV continues, we will move from multi-channel to mega-channel television. But this would be an incorrect extrapolation. Actually, the opposite will happen: We will move into distributed, decentralized cyber-television.

Key technologies for cyber-TV are being developed:

A. Video servers: computer based video storage devices that work like video jukeboxes, connected to the information highway, storing thousands of films, documentaries, and other kinds of programs. They could be owned and operated by as many companies as the market would support.

B. High Capacity Telecommunications Links: These do not necessarily have to be fiber or coax. Even the traditional copper lines can be tremendously improved in their capacity. The state of the art in 1995 is 62 megabits per second for a regular line, enough for multiple TV channels.

C. Broadband Switches and Routers: Viewers and operators of video servers would be connected in a flexible way to many networks. (Like the present Internet).

D. Navigational Agents, Personalized Menus: These software based devices will enable viewers to access multiple servers, find programming that interests them and download them.

E. Intelligent Home Display Terminals: combining the display functions of a TV set with the computer=s ability to store, access, send, and process information.

The growth trend in intelligent terminals is rapid, as the following numbers demonstrate:

Personal computers per 100 people U.S.: ..........................28.1

Japan:...........................7.8

Europe:.........................9.6

U. S. Households with PCS in 1995:...................................................32 million

Expected in 1998:................................................................................60 million

Year sales of computers surpassed those of color television in U. S.:...........1993

Year U.S. sales of encyclopedias in CD-ROM surpassed those on paper:....1993

Many companies will operate these video servers, charging a varying mix of usage fees, subscription charges, transaction fees, advertising charges, and sales commissions. These servers will be interconnected through phone and cable in the way that the Internet today links computers and their databases. This means an extraordinary choice of program options.

Viewers will simplify the selection task by "navigators" and personalized menus. Channels will disappear, or rather become a "virtual" individualized "me-TV" channel, ("canal moi", "Kanal Ich") based on a viewer's expressed interest, his past viewing habits, recommendations from critics he trusts, of delegated selection agents, and a bit of built-in randomness.

Viewers will see what they want to see when they want to see it, except for a few programs where synchronous viewing is essential, such as live sports. There will be no dominant entry points or dominant gatekeepers.

This is why the future will not be one of 50, 500 or 5,000 channels, the TV-opponents' nightmare. Much worse. It will be a future of only one channel, a personalized channel for each individual. The simultaneous mass medium experience will be replaced by individualized experience. This is not just narrow-casting. It is custom-casting.

Privileged TV: Only a handful of channels are needed, desired, and sustainable.

Multichannel TV: The future will be one of 500 channels.

Cyber-TV: The future will be the 1-channel world, the customized "Me" channel.

This new world of Cyber-TV may not be quite around the corner, but it certainly is around two corners. And as it arrives, it will shake up the new old order of multichannel TV, which becomes the new traditionalist establishment even before it has had much time to enjoy its ascendancy. Reality is rarely blac and white, and there is likely to be some co-existence of multi-channel TV and cyber TV. The old assumptions give way to the new ones. This will be discussed in the rest of the paper.

III. Media Structure

1. Media Conglomerates

Privileged TV: Media firms= size must be contained to limit their influence.

Multichannel TV: Media companies of the future, in order to survive, must be huge conglomerates and combine conduit and content functions.

Cyber-TV: Media firms will have to focus and self-divest in order to succeed.

As a result of the media mergers in the >90s, some media companies are indeed giants compared to twenty years ago. However, the huge conglomerate media empires will not be the most efficient form of operation. The conglomerate firm structure is based upon an only partly open market structure. There, it made sense to try to extend market power from one segment into others. But as restrictions to entry disappear, the traditional problems of conglomerates and of vertical integration will assert themselves.

Different divisions of the same company will have competing objectives. Part of the company is harmed by another part competing against its best customers. Each segment must buy, sell, or joint-venture with companies competing with its parent company, if the rival offers better terms. For example, in a competitive market, Disney does not need ABC to air its winners, and forcing its lemons on ABC would only hurt the combined company. This creates major centrifugal forces inside the organization which in time will make coherent strategies difficult, and which must inevitably lead to a separation of a conglomerate into independent business units, or, more radically, to a breakup of the company[2].

The other exception is where major Asynergies@ exist. But these synergies have been more asserted than shown. In announcing its mega-merger, Disney CEO Michael Eisner invoked the word not less than five times in four consecutive sentences, like a mantra. Twenty years ago, CBS bought the New York Yankees baseball team and the big publisher Simon & Schuster, all to achieve those same vaunted synergies. Nothing came of it. In Time Warner's case, the claimed synergies may never be realized; today, the company is a collection of feuding fiefdoms. Time Warner's investment in cable distribution, a capital intensive business, has put a drag on the rest of the company. Some large shareholders believe it should unload its cable TV distribution networks to focus on content, just as Viacom has done. Time Warner=s music record business chose provocative music to attract rebellious youths, but what made sense to the music division ended up affecting the entire company=s brand identity and reputation. So it had to get rid of part of the record business.

While everyone hypes those vaunted synergies, few count the costs. Just as with individuals, a group has upper limits for information processing. As organizations grow, control mechanisms require more information which lead to organizational complexity. The result are organizational pathologies, such as tensions between the field and the center; depersonalized leadership; fragmented goals and strategies; bureaucratized procedures; and a slow decision process. For Peter Drucker, the First Law of information theory is that: "every relay doubles the noise and cuts the message in half."[3]

In consequence, the future will likely see a much greater separation of the different functions of media firms. AT&T showed the way in its 1995 self-divestiture into three companies. In particular, content and conduit functions are likely to be much more separate than many expect today. Conduit services are likely to be offered by hardware oriented organizations, like network providers. Telephone companies, for example, will remain focused on distribution, not content, despite their present efforts to integrate beyond their core competence. Content providers, on the other hand, will offer programs to audiences via many routes, but mostly stay out of the transmission business. Some companies may follow a "systems integration" approach, in which they do not own or operate the various activities of production and transmission, but rather select optimal elements in terms of price and performance, package them together, manage the bundles and offer it to the customer on a one-stop basis. This is a promising strategy, but it can only be successful if it is unsentimental about showing no preference to media operations under the same corporate roof, always assuming competition.

2. Advertising

Privileged TV: TV means common denominator programming and advertising.

Multichannel TV: Large common denominator channels will continue to be the mainstay of TV, even in the presence of specialized channels, because advertisers need national mass audiences.

Cyber-TV: The economic rationale of mass audience channels will be greatly diminished, because advertising will be separated from direct content linkage and be directly targeted to viewers.

The commercial broadcaster=s job was to attract an audience which was then sold to advertisers. Multichannel TV did not significantly change this economic foundation of TV, though it split-off part of the audience to rival channels, most of them specialized for brand identity. But in the future, Aleast common denominator@ programming to attract audiences will be much less necessary. Cyber-TV audiences can be reached independently of which actual programs they watch. Two individuals watching the same program can receive different advertising, if they have different demographics or interests. Conversely, individuals of similar characteristics who watch different programs could get the same ad. Target audiences can be pinpointed (Apoint-casted@) by advertisers, instead of being crudely amassed by addressing the audience for a program. This Asmart@ advertising allows great customization.

Thus mass-audience programs become unnecessary as vehicles for mass

advertising. The primary relevance will not attach to WHAT people are watching but to WHO is watching. This is much more a micro-marketing function than the traditional aggregate advertising approach.

Viewers will have some control over the display of ads on their terminal, so as not to allow an ad=s access without consent. Some advertisers will in effect, pay for viewers to watch, by giving viewers program discounts, coupons, free connect time, etc. Others may be highly informative, like catalogs, and linked to valuable databases, and may require payment to watch.

Advertising will be multi-leveled Ahyper-text@, more informative, more interactive and more integrated into transactions. Consumers may view an initial spot which is often likely to be an attention grabbing Abarker spot@. Once drawn in, they can then draw up more information on product, performance, price etc. Advertisements will be linked to transactions such as order and payment systems, so consumers can purchase goods instantaneously. They aim not just to persuade, but to Aclose@ and consummate a deal.

3. Licensing

Privileged TV: TV licenses are allocated politically.

Multichannel TV: TV licenses are allocated economically by auctions.

Cyber-TV: There will be no TV licenses. Spectrum access will be open, but not free.

The traditional system of spectrum allocation by government has been grudging and politicized. Licensing is part of the stage of privileged TV; indeed it is its primary enforcement tool. Government picks entities for a spectrum allocation, thereby conveying a major financial benefit upon them. This system is often based upon politics, influence and favoritism. It also leads to cautious programming, whether by private or public broadcasters, in order not to jeopardize the valuable franchise. Licensed broadcasters tend to oppose further licensing of other stations. This is particularly ironic, since in many European countries commercial broadcasting emerged only after unlicensed radio pirates paved the way. This helps create an oligopolistic market structure, a dependent electronic press, and a lack of program diversity.

For half a century, economists, led by Nobel laureate Ronald Coase[4], have argued that it would be more efficient to sell spectrum to the highest bidders by auction. In America, by now, almost anyone, it seems, loves auctions: many liberals, because it makes business pay its way and generates government revenues; most conservatives, because it substitutes market mechanisms for government controls; and all budget makers, because it reduces the budget deficit.

But there are some who oppose auctions:

1) existing stakeholders, in particular commercial broadcasters, and various government departments who rather not let it be known how much of a valuable commodity they are occupying. Licensed broadcasters argue that due to their public service obligations, auctions should not extend to them, and that they have often already paid for their license once by buying it in the private after-market.

2) well-connected entrants who believe they will get a better deal through politics.

3) those who view spectrum as a public sphere subject to public goals, and outside the market. They fear a decline in regulatory power over TV in behalf of public interest goals if renewable licenses were replaced by permanent property rights. They also argue that an allocation to the highest bidder would raise barriers to small entrants and reduce diversity, and squeeze out free public access and non-profit educational activities.[5]

4)In America , this debate is heating up because auctions for mobile telephones have raised a lot of money, which predictably got every budget planner greedy for more. In the process, the FCC is being transformed into the Federal Cash Cow. This has led to some calls for auctioning of additional spectrum given to broadcasters, such as for digital TV and HDTV, especially if not all of it would be used for free TV.

Will spectrum become irrelevant to the Cyber-TV age? Hardly. The integration of TV into telecommunications and computer networks will lead to a frequent use of wireless transmission for the ubiquitous last mile. And satellite will still be important for reaching one-way widely dispersed audiences.

The present system -- licensing or auction, is based upon a real-estate model. One owns or leases a slice of the rainbow. But this is based on a certain technology. The fixed nature of frequency usage derived from a primitive state of technology in which information was coded (modulated) onto a single carrier wave frequency and others were excluded from that frequency, to prevent interference. Tomorrow, with spread spectrum, digital packets, and smart receivers, this system will not be necessary. Different users and uses can coexist on the same band, like different traffic flows on a highway.

A more efficient system can be created based upon access, rather than ownership. Spectrum use will not be in the form of exclusive ownership, but instead of multiple access to a band. No one will control any particular frequency and anyone can enter. There will be no license, and therefore no up-front spectrum auction. But this does not mean that access is free. Instead, users of spectrum band will pay an access fee that is continuously determined by the demand and supply conditions at the time, i.e. by the existing congestion in the frequency band. The system would be run by a clearinghouse of users that administered the spectrum endowment made by the government.[6]

Is this system practical? Although the technological components necessary to provide open spectrum are not currently available, they are near at hand, with digital and spread-spectrum technology available for cordless phones. In America, this open access concept continues a move towards Unlicensed Personal Communications (U-PCS).[7] The next step is to add a pricing mechanism to open-spectrum access.

Of course, some users need certainty. Just as in other industries, they can assure critical inputs through futures contracts and other arrangements. Most gas stations do not own oil wells, and still manage to have supplies at hand.

IV. Media Content

4. Bottlenecks

Privileged TV: Channels are king.

Multichannel TV: Content is king.

Cyber-TV: Attention is king.

In the early days of television, the limited number of channels exercised a gatekeeper function for much of the media production of society. This meant enormous institutional power and wealth and personal influence. Control over TV was therefore important. Later, as channels became plentiful, the supply of attractive programs did not grow as fast. This led to the view that content would be permanently scarce and thus exercise the power which distribution had lost. The view that a society and world cannot generate enough information to keep its viewers interested and entertained is peculiar in light of the enormous expansion of world-wide video production that vastly exceeds the ability of anyone to absorb it. The short-sightedness of this view is reminiscent of Sweden until the early 50s, when the government argued that to create a second radio channel would be too much of a burden for the country=s cultural resources to fill. It changed its mind only when low-budget pirates entered.

Today, the problem is becoming a different one.: The more information technology we have and the more knowledge we produce, the more problems we have in coping with information.

The information process consists, to simplify considerably, of three interacting segments: production, distribution and processing. In the past, the three elements of information grew slowly and more or less in tandem. By sometime following World War II, the parallel trends diverged, and things have never been the same. The production of information in the US economy rose at a rate of about 6%, and the growth rate is itself increasing. Distribution is growing even faster, by an estimated 10% and more. The rate of increase in processing capacity needs to keep up with that. To reach a similar growth rate is very hard, and is not being achieved. It is hard, because of the limited capacity of processing channels of individuals and organizations, and the difficulty of increasing it.

This bottleneck on the level of the information recipients has serious implications. Virtually all aspects of society are changing due to an attempt to adjust individual and social processing rates of information to the demands that growth in the other stages have put on them. Politics, to name just one example, has moved to the media event, the sound bite, the simplistic message, the confrontational style -- all in order to punch through the clutter and get attention. Similar transformations take place everywhere.The real issue for future information technology therefore does not appear to be production of information, and certainly not transmission, but rather processing.

Screening technologies are in their infancy and any control over their parameters would create major new focus of bottleneck power.

5. National Culture

Privileged TV: TV serves national culture.

Multichannel TV: Hollywood will dominate in national culture.

Cyber-TV: Hollywood’s strength is not based on long-term economic advantages, and will fade away.

Privileged TV, usually controlled by governmental institutions, was devoted to extending and protecting national culture. This became much harder with the opening of TV. Media critics therefore fear that open TV means American culture taking over national culture everywhere. Often, they postulate a kind of "iron law" of TV, according to which a TV broadcast institution, when deciding how to fill its time slots, would substitute for Hollywood programs that have already been produced.

This argument is wrong, for several reasons. Some of them are:

1. US and non-US content are all part of a distribution sequence. Comparing the incremental cost of distributing US content overseas and the total cost of production of non-US content is comparing apples and oranges. It=s always cheaper to rent a cab than to buy a car. Even so, it often makes sense to buy a car, especially if its use can be resold and rented to others in a distribution sequence. Other countries need to join

international distribution sequences, and thereby gain the same low marginal costs.

2. The "iron law" of Hollywood dominance disregards the structure of demand. Where a multichannel environment exists in a country, with channels competing for attractive programs, the price for imported US content would be bid up far above the current low marginal cost.

The sad truth of public television is that the attractive quality of its own programs was partly subsidized by the despises Hollywood. Countless program hours were acquired for broadcasting at the minimal prices a purchase monopsony can command. In most countries, programs for which American networks paid millions were acquired only months later for large audiences at a price of only thousands. Whenever an American audience endured another commercial message, it made it economically more possible for a European audience to watch the same program without the advertising. Every time a program could be acquired for a trivial compensation based on market power rather than audience demand, American creative talent was in fact being undescompensated.

In the future, many foreign nations will greatly expand their own production capacities. First, multichannel TV requires more content production. Domestic programs are closest to viewers, and commercial channels respond. Second, as foreign markets grow and as the means of global distribution become simple and powerful, domestic production can be put into an international distribution sequence. But as this happens, the content itself will be altered. In cyber‑TV, the emphasis will move from Anational culture@ productions to those of global appeal. The same forces will also move Hollywood producers as international TV markets become still more importatant to them, to become less American in content articulation and more Amid-Atlantic@ and Amid-Pacific@.

6. Format

Privileged TV: Print is the past.

Multichannel TV: TV is in the future.

Cyber-TV: The future is the hyper-medium, combining the best elements of text, image, and video.

Privileged TV displaced print as the primary medium of influence on the general public, to the unceasing resentment of traditional print media. However, the mass-audience nature of limited TV also meant that it did not particularly address the specialized audience interests. Multichannel TV can remedy this partly by moving, to analogize, from the format of ALIFE@ magazine to that of AAviation Week@. Television, however, is limited in terms of transmitting abstract information and concepts, which is why print publishing has remained dominant in the world of ideas. But nothing is sacrosanct. According to the Nobel laureate and information theorist Herbert Simon, the "least cost-efficient thing you can do" is to read a daily newspaper. He recommends instead reading The World Almanac once a year.

Will the expanding video medium push print out to a secondary role? Not really. With rising information inflows, different modes of communication will incresingly be used in a parallel fashion to create the most effective access to attention in a given time frame. This multi‑channel coding will lead to innovative Amulti-media@ forms of communications. More symbols will be used.The abstraction of written language is combined with the speed of visual messages, and the use of symbols increases because this can speed up the absorption process. The format of information display in the future could be then the comic strip. Or rather, a 'hyper' comic strip: pages of panels of text, still pictures and symbols for easy scanning, that will go into deeper detail and connect with other text, like hyper-text. some of them moving like film when one touches the screen. There will be sound, and even smell. One can skim this hyper-comic strip or navigate in it, moving video and sound when one touches the screen. This will be on flat and light displayed tablets one holds like a book. One can write notes on it, store it, and send it to other locations. Thus, video and print will converge, create an entirely new medium and form of expression, and deeply affect the way we express ourselves, and thereby change culture itself.

7. Access

Privileged TV: No access rights.

Multichannel TV: More access diversity, but many voices will continue to lack the political, financial or technological ability to gain access.

Cyber-TV: Anyone can make available any video information to anyone, either for free or charge.

It is easy to see that in a server-based video system, everyone with access to some computer storage could be a Avideo publisher@ and could be accessed by just about anybody. The Internet is a model. Obviously, some program provider would be much more popular and sought after than others. But assuring access rights to content providers should not be confused with guaranteeing them audiences. Big media firms will still exist, though the ease of entry would make it difficult to be dominant.

Even so, access to storage servers is only part of the equation. The other is access to distribution networks, and it is here that market power could occur and be leveraged into power in the program provision.

In limited TV, there were few access rights to the transmission medium, and admission was controlled by the few gatekeepers. In telephony networks, on the other hand, where market power in transmission traditionally existed by way of legal monopoly, there were access rights through Acommon carriage@ obligations so that carriers could selectively pick content or users.

The emergence of multiple carrier networks will likely result in the doom of common carriage as we know it. Common carriers face challenges from contract carriers which could pick and choose customers and differentiate in their prices as they see fit. Therefore, the common carriage obligation is likely to be shed to achieve parity.[8] The primary problem of a contract carrier based network system, is that it may reduce openness to networks to a wide diversity of voices in comparison to a common carriage system, if residual power remains in parts of the network. But this problem may be dealt with fairly simply by way of assuring arbitrage. A solution to ensure information diversity and flow would be to replace the principle of common carriage by a new principle of neutral interconnection. Neutral interconnection means that while a private carrier can be selective in its direct customers, whether they are end users or content providers, it cannot be selective in what it accepts from another interconnected carrier.

V. Media Society

8. Universal connectivity

Privileged TV: Cross-subsidization is necessary to assure widespread reach of TV and telecommunications.

Multichannel TV: Competition will eliminate the need to publicly supported connectivity.

Cyber-TV: Support of universal connectivity will be more important than ever.

In telephony, monopoly telephone systems traditionally supported a universal reach by overcharging their more lucrative business and metropolitan customers and subsidizing rural and poor users. Similarly, in broadcast and cable television, service to outlying areas was provided as part of a social and political obligation. In broadcasting, commercial television was Afree,@ thus permitting viewing regardless of income.

The advent of multichannel competition and pay-media undermines the monopoly and its ability (and obligation) to maintain this policy. This leads to the view that such support is either untenable or that it becomes unnecessary since competition raises efficiency.

But this confuses production efficiencies with allocative issues. Allocative decisions are political decisions, and the more important communication become, the more politically important they are.

Since the TV of the future will be more essential than ever to society -- not just for entertainment, but for information, education, social services, work and participation in society and the economy -- the increased value to society from having all its members connected is more important than ever. Even as we resolve distribution of the traditional services, the definition of what and who will receive universal service support will change even faster.

In Cyber-TV, universal service access therefore will remain politically popular. Observe the near-total support universal service has in the U.S. Congress, even among conservative Republicans.

What would be supported? There are basically three elements to communications cost -- content access, conduit connection and terminal equipment. The cost of content access, as will be argued in the next section, will be no major issue. Furthermore, the subsidization of access to all content, including the Ecstasy channel and the Nazi server, is not likely to be politically feasible or desirable; and the selective subsidization of some Ameritorious@ content access will only lead to unending constitutional battles.

Terminal equipment may at times be supported, à la French Minitel, or through school and library facilities. On the whole, however, electronic home equipment does not lend itself well to support schemes. Nor is it clearly necessary. Many intelligent functions can be accomplished in the network itself, as Sun Microsystem=s Hot Java demonstrates. Additionally, equipment that is yesterday=s model is fairly inexpensive, at a price not much more than a decent TV set. A used 486-type microcomputer can be bought for about $500. The same price was anticipated by the computer maker Oracle for its networked and disk-less computer. The company calculated its cost at $344.

This would leave network connectivity as the main focus. Much of it is a fixed cost and hence a flat charge rather than a usage-based fee.

It is not necessary to have a monopoly system to support connectivity. There are various ways to fund any universal connectivity system within competition. One way would be value-added charges levied against revenues of all carriers. The important thing is that consumers who are to be benefitted are being supported, rather than carriers. Those consumers are given Avirtual vouchers@ allowing them choice in selecting their connecting carriers.[9]

9. Information Poor

Privileged TV: Everyone shares in the same limited TV.

Multichannel TV: Pay media create a class of information poor based on income.

Cyber-TV: The information poor will be those lacking advanced processing capability. Income will be an indirect factor only.

The advent of multichannel TV has been accompanied by fears that society will be broken into a class of >haves@ and Ahave nots,@ based upon income.

But in cyber-TV, income will not be the direct reason for information poverty. First, because the incremental cost of providing content is so low, it is cheap to extend service to the poor. Therefore, as long as those with the ability to pay are connected first, the remainder can be added with minimum expense. Such price discrimination makes business sense for content providers, and has been traditional in all media. The trick is to prevent arbitrage.

Another bulwark against creation of the information poor are societal institutions that exist and will continue to be access points to information, such as public libraries and schools. New types of cyber-institutions may be formed.

A bottleneck, however, remains. It is the ability of the Ainformation have-nots@ to navigate, find and process the information available to them on the video media of the future. Distributed TV requires greater skills than the past. And choice always requires some knowledge.

Less educated and older people, in particular, have problems with computer based technology. The elderly middle-class housewives might almost be as disconnected as poor ones. Young people may be cash-poor but information-rich. This clearly is a problem for our educational system to address. Our educational philosophy has traditionally been to Afront-load@ instruction in literacy and information handling into a person=s early years, and coast on that foundation for the rest of one=s life. A rapidly changing information environment makes it imperative to treat public education as a life-long Amaintenance contract@, rather than an initial investment.

10. Public Broadcasting:

Privileged TV: Public TV is essential.

Multichannel TV: Public Broadcasting will decline financially or its audiences will be served by specialized commercial providers.

Cyber-TV: Traditional public broadcasting institutions will continue to decline. But non-profit and cultural TV will flourish.

Commercial channels meet some of the needs of the audience once served by public broadcasting. In the United States, the Discovery, the History Channels, Arts & Entertainment, Bravo, the Travel Channnel, The Learning Channel, The Mind Extension University Channel, and others erode the essentiality of public TV. There are, however, negative distributional impacts for those who do not have the ability to afford specialized narrowcasts. And there are further pressures on the funding of public TV.

In Cyber-TV, commercialization will be supplemented by a vast amount of non-profit programming freely available. The present Internet system, in which much information is freely shared, is the model. Those offering the programs will be individuals, groups, educational institutions, charitable organizations, government agencies, as well as public broadcasters. The latter will play an important role, but not as central or essential as today in many countries. And, importantly, their funding may have to be shared with other non-profit program providers. Such non-profit competition will be a major challenge to the public broadcasters= strategy and creativity.

11. Group Fragmentation

Privileged TV: Shared television experiences create a common bond.

Multichannel TV: Fragmented TV splits society apart.

Cyber-TV: New communications create new communities.

In the future, the electronic hearth around which entire societies congregated will be no more. This communal experience of constant information sharing, which did not exist before broadcasting and is fading now, will prove to be only an ephemeral episode in the history of mankind. There is no reason to romanticize this period. What is so great about half of a nation=s population watching at precisely the same time precisely the same program? The electronic hearth clashes with a more individualistic media past and a more information‑rich future. It is a system based on scarcity of content production and scarcity of conduits.

Now, as it becomes cheaper and easier to communicate in new ways, it becomes relatively more expensive and cumbersome to communicate in the traditional ways. This means that the evolution in communications will impact traditional communities negatively. As one gathers distant electronic friends, local and territorial bounds weaken, but at the same time, new groups evolve. These groups could be all over the country, and indeed the world.

New Atele-communities@ will emerge and become a new social environment. By their nature, the tele-communities will probably be specialized. This will tend to generate narrow groups of people who share interest and views, with less of the averaging that goes on in the physical world. In time, the tele‑communities assume aspects of quasi jurisdiction. They mediate among their members, assign cost shares for the activities, contest control, hold elections, accept members, expel others, etc.

12. Privacy

Privileged TV: Electronics threatens privacy.

Multichannel TV: Electronics threaten privacy even more, requiring regulation.

Cyber-TV: Electronics can be used to protect privacy.

It is true that electronic technology makes it easier to collect, match, access, and distribute information about an individual and their transactions. Such threats will only get worse. For example, interconnected billing requires the exchange of information regarding users and their calls. Two-way mobile systems require monitoring of user location, and indeed could be matched with the location of other persons. Smart cards create records of individual consumption. Video servers generate records of programs watched. Videophones produce video records of conversations. Intrusive telemarketing lists may be generated based on caller-ID information. Undesired content may be available in viewers' homes and accessible to their children.

Today, with computer media in ascendance, they are being blamed for many problems. In the 1950s and 1960s, many believed that computers would surely create a 1984-like state devoid of privacy. Data protection laws, based on that "Big Brother" image of the technology, were passed just as computers became "distributed" rather than centralized. But when the real year 1984 rolled around, the fear had become that 14-year-olds would use computers to start a nuclear war on their own.

Today, when computer usage is becoming democratic and when computers are becoming a communications device, the Cassandra industry is in full force, and an avalanche of neo-luddite literature is rolling in. Today's fears are the usual suspects in new garb: Impressionable children. Sex. Violence. Crime. Alienation. Anti-authority. Extremist potential. Isolation. Information Poverty. Commercialization. Games. Idleness. Alienation. Anti-authority. Poor countries. Poor manners. Poor grammar. Poor attitude.

This is not to belittle these concerns, or to give credence to the Polyannas, but rather to observe that it seems that the new media kid on the block seems to be held to higher standards than his elder media.