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Video Telecom Gets More Buyer-Friendly

Trends: As prices plummet and more of the MTV-fed enter the work force, the hype is taking on a more plausible tone.


Since AT&T Corp. unveiled its futuristic Picturephone at the 1963-64 New York World's Fair, the promise of video phones has been reminiscent of the old diplomatic joke about any developing country: It has a promising future. And it always will.

Two-way video communication, long foreseen by engineers and marketers as the inevitable offspring of the telephone and television, has never really taken off.

For more than 20 years, industry boosters have touted video teleconferencing as just around the corner, but hefty price tags and slow, fuzzy video transmission have long stalled its wide-scale adoption in offices and homes.

Yet the hype has recently taken on a more plausible aura. Video telecommunications have breached what has long been their most daunting obstacle: price.

In the last two years, the cost of the digital cameras, telecom connections and software that constitute an operable video teleconferencing system has plummeted.

The cost of creating a site usable for group video teleconferencing can be as little as $2,500, compared with $70,000 just 10 years ago. That outlay will outfit a conference room with a video camera, screen and sound. High-speed data and video connections, which are indispensable, and online connection charges are extra. (The more sites outfitted, the lower the per-site cost.)

Meanwhile, systems designed to give desktop personal computers the capability for video communications come as low as $200 per PC. That figure covers a small camera, a video card to be installed in the machine and software; again, connection and time charges are extra, and such a low-end system will not produce anything resembling broadcast-quality video.

Booming sales of video teleconferencing equipment indicate that the technology may finally be on the verge of coming into its own. Four years ago, barely $20 million worth of video teleconferencing equipment for PCs was sold in the U.S. This year the figure is expected to hit $132 million, according to TeleSpan Publishing Corp., an industry market-tracking service in Altadena.

The technology has also been given a push by the entry of a number of respected and well-heeled backers, including Intel Corp., PictureTel Corp. and Connectix Corp., which introduced a well-received $249 videophone software and hardware bundle earlier this year.

At the same time, many large customers such as Bank of America are making large-scale investments in video teleconferencing technology. The health-care, financial and manufacturing industries are among those that have been quick to adopt the new systems.

But the day when video telecommunications are as commonplace as e-mail is still far off, industry watchers caution.

"For 10 years, people have been saying video teleconferencing is right around the corner," said Jeff Charles, a director of emerging technologies at the Institute for the Future in Menlo Park, Calif. "Nothing has happened, which is the reason a lot of people are skeptical. Though the prices of certain products have dropped precipitously, they just have not dropped to commodity prices. Until we have reached that level, we just won't have ubiquitous video teleconferencing."

The quality and utility of the technology also remain questionable.

Charles, who advises large corporations on video teleconferencing technology, does not expect the technology to become pervasive for at least four or five years.

But some analysts who follow the technology counter that video teleconferencing will pick up adherents as today's MTV-fed youth enter the work force and demand the convenience of two-way video communication.

Video teleconferencing, in fact, has already captured the imagination of teens at the Heart of Los Angeles, a nonprofit arts and athletic center for inner-city youths on Wilshire Avenue near downtown.

Using an inexpensive video system, a theater program at the center recently gave its members the opportunity to collaborate on writing a play in real time with youths in similar urban environments who live in Chicago and the Bronx.

"Sometimes the kids in L.A. feel they are the only ones who have to walk through gang turf," said Mitchell Moore, founder and executive director of Heart of Los Angeles. "This enables kids to stretch their horizons in a way not possible with just a phone or a movie."

Ilan Greenberg is an editor with InfoWorld magazine. He can be reached at


Read Their Lips

Videophones--those enduring but elusive symbols of futuristic telecommunications--may soon live up to their hype thanks to lower prices and improvements in technology. Industry leaders see two separate markets: video teleconferencing, which allows businesspeople and professionals to confer en masse, and desktop units.


(In thousands)


Video teleconferencing: 9.6

Desktop video: 45.7


(In millions)

Video teleconferencing: $608.1

Desktop video: $158.5


Source: TeleSpan Publishing Corp.

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