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1 INTRODUCTION AND SUMMARY
Pages 3-26

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From page 3...
... That question motivated the NII 2000 project, which sought to characterize the technology deployment, market expectations, and proposed activities of communications and information facilities and service providers over the next 5 to 7 years. Perspectives provided directly by these suppliers drawn from multiple industrieswere complemented by inputs from a cross section of users in industry, private nonprofit organizations, and the public sector.
From page 4...
... History tells us that systems as complex as a nation's information infrastructure evolve incrementally, driven by private investment in the pursuit of unrealized opportunities, consensus-based public needs, and countless entrepreneurs testing the system for natural niches, for unique sources of customer value. Given that future plans are marked by diversity of vision and action, is the NII itself a paradigm that is losing its lustre?
From page 5...
... He Bernet is a critical component of may of He business plans of ~dus~ial conb~utors to this project Ad
From page 6...
... Like the rest of the report, it draws on inputs gathered via a workshop, forum, white papers, and a variety of consultations and secondary source materials. It relates technological capabilities to evolving plans for business strategy, competition, and structure, characterizing private sector views and stated plans to illuminate opportunities for the public sector.
From page 7...
... As a result, the business plans of many established communications and information service suppliers appear to center on extending existing high-revenue business offerings such as telephony and video delivery, upgrading the underlying facilities, and hoping to be properly positioned if and when new applications mature. (De~regulation permitting, cable TV will be able to deliver interactive services and voice telephony.
From page 8...
... The business models associated with such embedded service delivery ultimately may bring far greater resources to the NII than will the direct user fees that support the current infrastructure. But that supposition is difficult to quantify, given the difficulties various industry sectors experience in characterizing their future infrastructure service requirements.
From page 9...
... l~-yIlll! lllI11 ~ ~ ~111 PacHides providers are st~ied by Me prospect of f~anc~g an inLastruc~re Mat gig be characterized increasingly by low marginal costs for use but large fixed costs for facHibes deployment, a problem Mat regulatory ream gig not solemn ~ di~culdes gig just Meshed are most serious for providers of access circuits to individual residences and smaN businesses.
From page 10...
... It was further noted in the project's workshop, forum, and white papers that an important role for research and development in this context is to explore network and information access technologies that would alter costs and capabilities over the long term. Reducing per-home access costs by a factor of two, a cost reduction that (for constant function)
From page 11...
... . The fates of these models may help to determine which businesses and industries endure or advance in the information infrastructure marketplace and, given their different capacities for generating returns on investment, how quickly underlying facilities are enhanced.
From page 12...
... The economics of telecommunications facilities deployment contrasts markedly with that of the Internet, whose current state reflects a unique set of economic conditions: tremendous market access has been achievable with a very small initial investment, an advantage that has led to a wide range of experimentation and innovation. Combining low barriers to entry with unusually high potential for growth in usage volume, the Internet has been an extraordinary platform for innovation, one that is perhaps unique in human history.
From page 13...
... Those standards processes and the associated architectural principles embodied in the Internet derive from the long-term involvement of a relatively small community of computer scientists, funded largely by the federal government, who saw the Internet as a collaborative enterprise in which they served as designers, developers, and users. They understood that the large number of alternative paths for technological evolution meant that standards must be open to technological change, anticipate future innovations, and either accommodate them or minimize the cost of accommodating them later.8 The current Internet standards development process is subject to a number of stresses that are a source of concern.
From page 14...
... As a Vehicle for New Market Structures The Internet is but one example of the transformation now occuring in the marketplace, a transition arising from the ability of new service providers as well as existing infrastructure providers to make new services available by layering them on top of existing communications infrastructure. Innovation in services layered over physical (and virtual)
From page 15...
... Some of these involve aspects of the current structure that are inadequate and need to be fixed (for instance, current Internet protocol addresses are too short) ; some involve the need to add new features for which possible approaches are well understood (for instance, end-to-end security)
From page 16...
... REALIZING THE NII'S POTENTIAL THE USER PERSPECTIVE Enthusiasm about the NII is tempered by concerns about the difficulty of realizing its promised benefits in large application domains such as health care or education, let alone in the more diffuse context of individual citizens seeking access from their homes. After hearing several presentations by infrastructure facilities providers, emergency response expert Lois Clark McCoy observed: "I didn't hear the word 'user,' and I didn't hear, 'What does the user want?
From page 17...
... Consequently, even niche markets need communication access to other parts of the economy, and niche market providers will probably use general-purpose network capabilities and standards for achieving that access. Thus, infrastructure providers may have a greater interest in domain-specific circumstances than may appear obvious.
From page 18...
... As regards this reality, the spokespersons for the various business domains, the infrastructure providers, and the visionaries on behalf of a new con sumer were all equally frustrated. DEPLOYMENT OF INFRASTRUCTURE TECHNOLOGY In 10 to 15 years cheaper and more powerful microprocessor-based devices, broadband connections to and from homes and businesses, and other enhancements to the fundamental technology infrastructure of the economy will be widely available for a great variety of uses.
From page 19...
... Different industry sectors appear to be responding to these circumstances in different ways. The cable television industry, with its current base of coaxial cable, seems primarily to be planning a technology upgrade of that infrastructure to a configuration called hybrid fiber coaxial cable (hybrid fiber coax; HFC)
From page 20...
... However, the need for interoperation does not imply that open and interoperable systems must be mandated as a part of new technology deployment. If the underlying physical infrastructure at the level of circuits and switches is engineered to support adaptability in a flexible manner, and if protocols and software can themselves evolve as markets mature, then the degree of service interoperability achieved at any given time need not be a major concern, because it can be changed later as the market requires.
From page 21...
... The importance of the television is its ubiquity and familiarity. Its drawbacks are its limited functionality, with low screen resolution, no useful input modes, and no computing power.
From page 22...
... The alternative would be for the consumer to purchase and control the device.~4 PUBLIC VERSUS PRIVATE OBJECTIVES The competitive drive of private industry will dominate the process by which the NII evolves. Private firms will build it; their business plans must justify the investments; and competition and the desire for new markets, not pursuit of abstract visions or societal goals, will define and shape it.
From page 23...
... Through the funding of network and applications research, its own visionary use of NII capabilities to better serve the public, encouragement of public-private partnerships in specific NII development and use situations, and the convening of the involved parties to discuss the importance of keeping technological options open, the government can favorably influence the coherence of physical information infrastructure and associated services. In the eyes of many from industry, practical government leadership will involve new ways of doing business as well as pursuing such proven models as those represented by the fostering of the Internet and related technologies.
From page 24...
... Despite the many challenges confronting the private and public sectors in advancing the information infrastructure, it is important to remember that the problems discussed in this report are problems of success, not of failure. ORGANIZATION OF THIS REPORT This report is divided into chapters that present inputs collected from the NII 2000 project's many contributors.
From page 25...
... In some cases the market model is relatively easy to understand, but we just do not know which technologies will win. The combination of high levels of infrastructure investment, low marginal costs for use, and competing suppliers is one for which economic theory provides only limited and ambiguous insight, which is one reason that predicting the future is difficult.
From page 26...
... 14. If, however, custom network interfaces for the different networks that enter the home have to be attached to such a device, then its final form, if it matures, will be in two parts, with the basic unit belonging to the consumer, and featuring attachment sockets or slots into which different network interfaces can be inserted.


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