Richard Poynder
Richard Poynder - Freelance Journalist
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Challenges of change


27th April 2000

Two things scare Janice Hughes. One is her memories of helping dissidents of the South African apartheid regime flee to Lesotho when she was a developmental economist in her twenties. The other is the possibility of advertising proving to be the only viable business model of the converging digital media.

The apartheid regime is history. But the possibility of advertising dominating the networked world remains. "There are things about it that I find quite scary," says Ms Hughes, "not least the whole ethical issue of kowtowing to the advertisers."

She is particularly concerned that, as television converges with the internet, broadcasting may adopt the web advertising model, and erode the traditional demarcation between programming and advertising. "Web banner advertising doesn't really separate the advertisement from the content," says Ms Hughes. "In television, on the other hand, we don't put the adverts inside the programmes."

If Ms Hughes is concerned, perhaps we should all worry. As co-founder and managing director of the London-based Spectrum Strategy Consultants, she spends her working life pondering the implications of convergence in the fusion of technology, media and communications. These efforts have gained her an enviable reputation as a new media and communications guru.

"Five years ago convergence was about different technologies interfacing," says Ms Hughes. "Today we are seeing actual physical convergence under way: television is becoming a conveyor of the internet, for example, and the telecoms network is becoming a conveyor of video and pictures. And remember, this is an ongoing communications revolution: we haven't even really seen broadband in action yet."

One unsettling characteristic of convergence, she points out, is that even the beneficiaries of the process are at the same time threatened by it. Thus, while seeing an explosive increase in traffic on their networks, telephone companies are concurrently experiencing rapidly falling prices.

The only solution, she says, is for carriers to develop new value-added services. Unfortunately, however, "telephone companies have never really been successful in building sufficient value-added services to compensate for the commoditisation of the networks."

Similarly, while a huge new audience is becoming available to content providers, many today are having to give their content away. "People are trying to buy customers," says Ms Hughes. "It is a land grab, with the aim eventually of weaning them into paying." But once content is free, it is hard to charge for it again. "That is worrying for writers, and for publishers," says Ms Hughes. "What happens if all information really does become free?"

Nor will broadcasters remain unscathed. "Broadband on the internet is set to have a bigger transformation on the broadcast sector than it probably realises today," says Ms Hughes. "Take scheduling at home, for instance: people will always want to watch scheduled channels, but they will also want to pick and choose programmes on demand. So broadcasters will need to archive material, effectively taking over from the VCR."

Having experienced a dramatic mid-career makeover, Ms Hughes understands the challenge of change. After returning home from Africa in the early 1980s, she took a job at the Economist Advisory Group, where she worked with Bryan Carsberg, the future UK chief telecommunications regulator. On his advice she began to specialise in telecoms, moving on to work for a number of consultancies including Booz Allen & Hamilton where she broadened her interests to include the media sector.

Spectrum was formed in 1994 with Kip Meek, a rival media consultant from Coopers & Lybrand, and a friend of her husband Stephen Taylor, an independent film producer.

In spite of the recent freefall in technology stocks, Ms Hughes is unconcerned about the so-called internet bubble. "This is just relative adjustment," she says. "The internet is not a bubble because there's a whole revolution going on, and we are still very much at the beginning. The web offers real value creation. It is creating facilities and channels that are changing the way we do business, the way we buy products, the way we sell products, and the way our economic models run."

The most exciting convergence development today, she says, is broadband wireless, particularly UMTS, the next-generation wireless technology that will bring very fast mobile access to the web, and for which the UK government is currently auctioning off licences. "The internet on the mobile phone will be a huge new industry," she says, adding: "What is great about wireless is that it is a rationed scarce resource, so it allows mobile operators to get away with charging higher prices."

For this reason, she adds, broadband wireless may resolve today's over-dependence on web advertising, and provide both new-style internet companies and traditional telecoms companies with a welcome new revenue stream. "Wireless will allow companies to start attaching value to internet services," she says. "So when, for instance, users are online checking the racing results, or the weather, they will be clocking up online charges. The resultant revenues can then be shared between service providers and mobile phone companies."

Ms Hughes says she would like to return to Africa, but with two small children it is impractical. "Communications is a real issue in Africa," she says "People are less exploited if they have the right information, so it can be a very, very important part of democratic development."

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