Background

Multimedia services and products are a reality today because of the synergy between telecommunications, information technology, consumer electronics, and content providers. The convergence of these traditionally independent sectors is creating the multimedia market and providing users with new tools and services unrealizable only a few years ago. The foundation for multimedia services is the availability and economic viability of technologies, such as video compression, reliable digital storage devices with high capacity and faster access times, and current improvements in access and backbone technologies.

The clean definition of multimedia is the use of text, audio, graphics, video, virtual reality, and other technologies and media to deliver communications, information, or entertainment; however, multimedia often has different meanings for different sectors. For example, in the entertainment industry, multimedia means new delivery channels (satellite, cable, and video games) through which products can be sold or licensed, while the PC industry seems satisfied for the moment with disk-based applications that feature interactivity, sound, and animation.

These different meanings are not as disconnected as they at first appear. They all define an industry-specific view of one small piece of the same process. Digital technologies are breaking down the barriers within which individual business sectors have been built. And once something has become digital, it leaves the analog world and can be connected to every other digital device. So TV screens can appear on PCs, film channels can travel down telephone lines, cable TV (CATV) networks can handle telephone access, and compact music disks can be adapted into computer storage devices.

From the perspective of a technology user--whether a business or an individual--multimedia is a trend that allows different information, communications, or entertainment media to become available through a single system or user device. The formerly separate disciplines of creating text, video, and sound can then be combined within a single product. From both the provider’s and the user’s end of the telescope, multimedia seems to threaten--or promise--a revolution in the way information and communications are shared.

Although business leaders and industry gurus recognize the change, no one can be sure of the outcome.

• Will television disappear, or will the TV set be the integrating device?
• Will the PC absorb television?
• Or will the new media be experienced through a completely new type of device?
• Will telecom companies become major players in the programming business, or will a layer of intermediaries emerge?
• What of the applications themselves?
  

To all of us on the receiving side of the screen (the residential consumer, small to medium-size businesses, and global corporations), multimedia promises to end the constraints that artificially segregated the way we have received or distributed information online. The most efficient way of communicating is to engage all the senses and make the communication interactive--the way we do it when we physically meet. In this sense, multimedia is not a gimmick; finally a man-made media is nearing complete communication.

For the user, the hope is that the new capabilities will lead to the development of a rich medium offering all the advantages of animation mixed with text and sound, tied to an ability to interact in complex and individual ways with the source material. The challenge is to learn how to exploit it. For the industry sectors involved, multimedia threatens to overturn existing businesses and business practices. Content providers, transport providers, program distributors, stored media providers and distributors are developing new relationships with each other and their customers. The end result and the time within which the changes will take place are vague, but the enormity of the challenges and opportunities are readily accepted.

Bandwidth and Access

After content, multimedia requires bandwidth. In fact, most bandwidth problems are really access difficulties, with problems in the local loop and not in the backbone. To solve this in the short term, multimedia has adopted the compact disk-read only memory (CD-ROM) and its new, higher capacity cousin, the digital versatile disk-ROM (DVD-ROM) and cut the local access loop out of the equation. These two products have the capacity to store large amounts of graphics using motion picture experts group (MPEG) compression to accommodate video sequences. PC multimedia is already a substantial and fast-growing market, and notebook computers are now being offered with DVD-ROM drives that can read both CD- and DVD-ROM variants. Many consumers’ first experience of multimedia will be via a CD-ROM disk drive attached to their television or personal computer.

Because high-density storage technology has arrived before affordable high bandwidth, telecom services and applications are limited since the data source must be coupled directly to the computer, either locally or across a local area network (LAN). But there are several reasons--including interactivity, ease of updating material, and economics--that suggest data will ultimately reside remote from the user and the public network will be able to deliver it. Fiber-optic networks or upgraded copper networks as an interim solution are key here. Fiber would be much more preferable since it can deliver vast amounts of data, but new network switching equipment designs are needed because the existing time-division channel switching methods are not suited for multi-gigabit fiber speeds.

Asynchronous transfer mode (ATM) is ideally suited to switching data across a network of high-speed circuits, and it is also capable of carrying different types of traffic (computer, voice, and video) without compromising their specific transmission requirements. ATM has now been adopted by the general information technology industry as the basis for the next generation of high-speed networks, both public and private.

Although the physical medium is standard, multimedia systems are not. Multimedia users today are faced with competing standards, although this endemic problem is to some extent alleviated by programming in all of the systems. Many manufacturers now include software drivers for both Windows and Macintosh systems on the same disk.

Increased bandwidth and the remote storage and management of data are the outcome favored by the network operators. They see multimedia as a broadband network application, rather than as a computer application requiring increased public network bandwidth, but there are signs that it is not an either/or choice. It is possible to envisage a scenario that uses a hybrid of the two.

Multimedia Markets

All of the following technologies will play a role in the delivery of multimedia services:

• ATM,
• transport control protocol/Internet protocol (TCP/IP),
• local multipoint distribution system (LMDS),
• multichannel multipoint distribution system (MMDS),
• direct broadcast satellite (DBS),
• wireless multimedia,
• broadband network infrastructure,
• mass storage devices,
• MPEG compression,
• the digital subscriber lines, asymmetrical and generic ADSL and xDSL,
• set top boxes,
• switches, and
• servers.

The market for this equipment and the associated network management and billing systems driven by multimedia applications was $6.3 billion in 1997, and it is expected to grow to $23.7 billion in 2003.

Insight estimates that the US market for multimedia services relying on these technologies is currently $21 billion annually and that it should grow to $74 billion in 2003.

One of the primary drivers for the growth of multimedia services and network equipment is the residential consumer. Of particular importance is the increase of PCs with Internet connections. The use of video telephony, competitive interactive games, and other applications requiring bilateral communications will expand rapidly once a critical mass of smart-terminal households is connected to the network. With leading PC vendors bundling leased home PCs and unlimited Internet access for under $50 per month, networked multimedia services will be within reach of most of the households that can afford cable TV. (A fuller discussion and study of the consumer interest in broadband studies can be found in Insight’s soon to be released study, Consumer Demand for Broadband Services.)

Video-on-demand’s major market is home entertainment, so the challenge is to bring real-time digital audio and video into millions of homes.

At the moment, VOD systems support a limited number of users and user interactions. Any future success depends on the cost of service, information contents, compatibility, and security. VOD delivery systems use existing telephone lines and cables as much as possible because direct fiber to the home (FTTH) is still an expensive proposition.

The limited bandwidth and inefficient circuit-switched communication of telephone lines limit the possibility of using one network to provide both on-demand and voice applications. Currently, several networks are needed to supply a home with telephone service, cable TV, access to the Internet, and the videophone facilities of the future. When the time comes to have one network capable of providing all these applications, the network is likely to be based on a mixed network strategy. Hybrid fiber coax (HFC) network architectures, synchronous optical network (SONET) rings, and ATM switching and concentration are moving fiber closer to the end-user. At these shorter distances, the fiber technologies can be mated with less expensive, high-bandwidth wireless and copper technologies, such LMDS and ADSL.

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