Telecoms should feed the hand of consumer electronics: the stimulus and synergy that the consumer electronic sector has so long provided to telecoms can no longer be depended upon

While the consumer electronics industry does not transform itself annually, it changes with sufficient frequency that the annual events, like last week's Consumer Electronics Show in Las Vegas, form convenient milestones.

Unlike many shows, this one had an unmistakable theme. The industry is clearly betting on home networking as the technology that will drive sales and absorb a major portion of the dollars generated by the economic recovery of last year.

Down this road before

Home networks have been pushed before with varying and mostly disappointing results. As early as the 1980s, long forgotten companies like Butler in a Box were marketing whole house control systems for integrating lighting, climate control and home entertainment, but such home automation systems never expanded much beyond a niche market of well-heeled conspicuous consumers. Control systems confined to entertainment media such as distributed audio and home theater media rooms did better, but were still largely confined to the carriage trade. Home LANs, on the other hand, have proven a solid success, especially those based upon 802.11 wireless connections.

This year the industry is having another go at selling distributed media feeds rather than data networking. Intel and Microsoft have both endorsed the notion, as have a multitude of large Asian manufacturers including Samsung, Onkyo, Philips, Thomson and Panasonic, as well as a multitude of smaller specialized companies such as Netgear, Linksys, D-Link, Entropic Communications and Digital Deck. Intel refers to the media servers and distribution systems made by such companies as DMAs (digital media adapters), though the term has yet to become common parlance.

The favored approach today is to send out everything over IP. Where the companies diverge is in the physical they favor. Some are medium agnostic, while others variously favor 802.11, HomePlug powerline carrier technology or the emerging Multimedia over Coax standard. Of these standards, HomePlug alone has built-in QoS, and so the degree to which the current wave of home networking products will provide essentially loss-less transmissions remains to be determined.

A countervailing approach is represented by a new generation of multimedia computers with huge, high-resolution LCD or plasma screens and upgraded audio systems. An echo of this trend is to be found in the fairly large number of multimedia mobile phones displayed, incorporating MP3 players and sometimes FM radio receivers as well. Coincidental with the emphasis on multimedia distribution in the home and on one's person is an increase in the number of products for storing and editing video files, particularly portable devices.

So what does all this portend for broadband access providers or the larger high-tech manufacturing sector?

Hardly anyone remembers that previous attempts--indeed, attempts made as recently as three years ago--to sell media distribution systems to the general public have all failed. One who did remember--an executive I won't name to save him embarrassment--dismissed the earlier failures with the words, "The buzz is so much louder now that it has to happen this time."

Creating demand

It's easy to see the appeal of media distribution systems to the power retailers that are the largest group of attendees at these shows. If someone buys such a system, he or she also has to buy all kinds of extra loudspeakers, amplifiers and video displays to reproduce the audio and video information in the feeds. So, what you're really asking the consumer to do is not simply to spend a few hundred dollars on a video server but to pop for mini systems all over the house.

Will all those economic recovery dollars go for that purpose? Beats me, but I wouldn't bet my life on it or my business.

And even if it happens, the effects on telecom may not be very great because the multimedia feeds only drive internal bandwidth, not bandwidth in the MAN or in the WAN. Maybe somebody can figure out a way to place a surcharge on redistributed material, but it seems unlikely.

Within the last 20 some odd years, the consumer electronics industry has successively spat out the VCR, the PC, the compact disc, the mobile phone, the personal fax, the home theater system, the IP modem, the flat panel display, DVD, hard disc video recording and the video camera, categories that were either transformational in their effects on everyday life or at least runaway commercial successes.

We are now into the fourth year of the new decade and nothing has arisen that is remotely equivalent in importance. To me that is suggestive that the stimulus and synergy that the consumer electronic sector has so long provided to telecoms directly or indirectly can no longer be depended upon, and that the tail from hence forward must wag the dog. Telecommunications must now foster applications and service offerings that demand new hardware--that simple.