National information infrastructure



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Tables and Figures

Table 1. Federal Investment in Information Infrastructure

Estimated Spending in Millionsa



Category 1992 1993 1994 1995
Research and Development $666 $1379 $1609 $

Government Applications 44 96 156

Support of Users 75

Other Support 156 173 165

(FCC, NTIA, NIST/CSL)

Totals $866 $1650 $2005 $



aExcludes any military spending. Approximately $1 billion additional is spent annually for Networks and Services by the Federal Government.

Source: Constructed from Baer, 1995:187.


Table 2. Deregulation and industry concentration

ProductionDistribution



















Disney/ABC TelevisionDisney film divisionABC television network

















1994 revenues:ESPN, Lifetime Television,8 television stations



















Arts & Entertainment21 radio stations



















Television, Disney Channel300 Disney stores



















Book publishing, magazines,

7 daily newspapers, music, recordsDisney theme parks in U.S., Tokyo, France





































Time-Warner/Turner

BroadcastingWarner Brothers film studios,

Atlantic Recording Corp., TBS Superstation, Cartoon

Network, CNN



















1994 revenues: $18.7 billionTime, Entertainment Weekly,

People, Sports Illustrated



















Castle Rock Entertainment,

Hanna Barbera Cartoons





















Atlanta Braves, Atlanta Hawks





































Westinghouse/CBSCBS Television NetworkCBS Television Network

















1994 revenues:13 television stations



















39 radio stations



















Source: Sterngold, 1995

Table 3. Major On-line information service providers
America Online

AOL is the fastest-growing on-line service with about 3 million subscribers, and a reputation for being easy to use. It has aggressively marketed its product with a blizzard of free software disks distributed through direct mail, magazines, and requests.


CompuServe

H& R Block’s CompuServe was the first on-line commercial service in the U.S. having been started in 1979. It currently has about 3 million subscribers and the largest number (about 3,000) of content providers, ranging from United Airlines to all major computer hardware and software companies. It has a strong presence overseas where it is available in 150 countries.


Prodigy

Prodigy, a joint venture of IBM and Sears Roebuck & Company, has about 1.6 million subscribers and a new user interface designed to make it easier to use and more appealing graphically.



Table 4. Penetration of current NII-related services in the U.S.a

Local and long distance voice via 2-way and multiparty communication

94% of U.S. households have telephones.

20 million Americans, mostly business people, use cellular phones.

11 million Americans use 900 numbers each month, 50% of which are for erotica.

2% of the U.S. workforce telecommutes, working at home several days a week.
Entertainment via television and cable

85% have a videocassette recorder.

65% are connected to cable TV.
Text data access via computer networks

34.7 million households (22%) have a personal computer.a

6.3 million households are connected to on-line computer services (e.g., CompuServe, Prodigy, America Online), growing at 40% annually.c

20 million Americans use the Internet, growing at estimated 40,000 monthly.

6000 bulletin boards exist on the Internet where people can exchange information.

aU.S. population = 240 million people in 160 million households.

bPew Center survey of home computer ownership, 1995.

cThe 1995 Pew Center survey estimates 12 million.

Table 5. Time for diffusion of technologies

Years

Telephone diffused to 50% of households 70

TV diffused to nearly all households 34

VCRs diffused to 65% of households 13

PCs diffused to 30% of households 20

On-line services diffused to 50% of households ?



Table 6. Players in the NII

Providers

Conduit

Long distance telephone companies (AT&T, MCI, Sprint)

Local telephone companies (RBOCs, GTE)

Cable companies (TCI, Cablevision, Cox Cable, Comcast Corp., Continental Cablevision Inc.)

Cellular phone companies (McGaw, Bell Atlantic)

Satellite communications companies (COMSAT, Hughes)



Information devices

Computer hardware companies (IBM and clonemakers, DEC, HP, Fujitsu, Apple, Compaq, Silicon Graphics)

Systems Software companies (Microsoft, IBM, Apple, AT&T)

TV and electronics companies (RCA, Sony, Panasonic, Samsung)



Content

Broadcast television and radio (NBC, CBS, ABC, Fox)

Cable companies (CNN, TCI)

Movie studios (Disney, Universal, Sony)

Publishers—newspapers, books, magazines

Online data services—credit (TRW), legal (Mead Data), brokerage (Quotron), commodities (Reuters), general (Prodigy, CompuServe, America Online )


Users

Corporations

Federal, state and local governments

Education institutions

Households and individuals

Regulators

Federal Communications Commission

Department of Commerce

National Telecommunications and Information Administration (NTIA)

National Institute of Standards and Technology (NIST)

State Public Utilities Commissions




Table 7. Stakes in the NII—Transfer of markets
Markets Billions of Dollars

(1995)
Catalog shopping $55

Cable TV 20

Video games 15

Video rental 12

Consumer on-line services 1

Business on-line services 9


Local telephone 96

Long distance telephone 76

Cellular phone 14
Source: The Economist, January 10, 1996.
Table 8. Estimates of current & future market for NII services in U.S.

Market Estimates Actual Market

crica 2000 1995

Shopping

Catalog shopping (phone & mail) a $55.0 billion


Electronic home shoppinga $7 billion $ 0.35 billion


Entertainment

Hollywood box office $ 5.2 billion b

Video rentals $12.0 billionc

Cable TV $20.0 billionc



Multimedia, including VOD $30 billion (1998)b $15.0 billionc

Video games



Interactive video games $8.8 billionb

On-line services via computer networks

Printing, publishing $xx billion

Consumer on-line services $1.0 billion

(Prodigy, CompuServe, America Online)

Business on-line services $9.0 billion

(stockbroking, credit & financial information)



Internet business $0.1billiond

Local telephone $96.0 billion

Long distance telephone $235.0 billion (2005)e $76.0 billion

Cellular phone $



aForrester Research quoted by Kim, 1995; also McKinsey & Company ($4-5 billion in 2003) quoted in The
Economist, February 25, 1995.

bTV
Digest, October 1993

cFortune, August 22, 1994

dThe Economist, September 10, 1994

eForrester Research, quoted in The Economist, January 20, 1996.


Table 9. Potential revenue per subscriber household from NII applications


Hong Kong United States

Potential monthly revenue $41 $44


Sources of revenue

Games 4% 14%

Information 10 10

Shopping 12 26

Education 24 10

Video-on-demand 20 28

Basic access fee 30 12
Total 100% 100%

Source: ITU, 1994, quoted in The Economist, November 4, 1995.


Figure 1. Growth of the Internet in the U.S., 1991-1994


Figure 2. The expansion of networking





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