All the Things You Want to Know about the Communications Revolution

Let's begin with the things we'll be able to do. In our business we call these "applications." On-line purchasing will soar during the next 10 years. Like so many other aspects of the Net, this important trend is in its infancy. It's true that in the U.S. consumer spending on the Net doubled from 1998 to 1999. But even in 1999 the dollars spent for on-line purchases amounted to less than half. of one per cent of all U.S. retail sales.

In the years ahead, on-line sales will rise sharply and we'll see new buying habits. Here are some of them.

- Sometime during the next decade we'll stop making trips to the video store. We'll simply rent movies on-line. We'll select the films that interest us, and download them in a matter of moments.

- We'll also stop going to stores to buy our CDs. It's much easier to transmit the music digitally to your home, where it can be stored on a card or disk. This change is already underway with the MP3 files now available on the Internet. The challenge for the music business will be to take charge of this process and to make it profitable.

- Another growth area is on-line food shopping. By the end of this decade--0r sooner-most of us will buy our groceries on-line. Once Web vendors convince us-as they will-that the process is easy, and that they provide quality, choice, and competitive prices, we'll change our habits. After all, who wants to lug bags of groceries in the cold?

- Indeed, shopping for anything on-line will be far more attractive than today. Instead of still pictures that are slow to load, we'll have informative videos about the appliances, cars, or computers that interest us. With Voice over Internet we'll be able to ask questions while we browse the catalogue.

These are a few-examples of what is commonly referred to as e-commerce, specifically business to consumer.

But e-commerce is also comprised of business-to-business transactions. For the next two to four years, business to business will outpace business to consumer by a factor of 10 in terms of infrastructure investment and operations expenditure. The bricks-and-mortar business model is rapidly giving way to Bricks and Clicks.

But e-commerce is not the only area of our lives that will be transformed by the communications revolution. Medical records, including X-rays, cat-scans, and all tests will be fully digitised. That advance will make consultations with specialists in distant cities commonplace. Remote communities will have access to high levels of expertise. Digitised records will also allow medical analysts to collect real-time data-tracking the spread of diseases or assessing the success of different treatments. Education is being transformed, with more and more interactive, on-line learning.

Mobile computing will provide the same high-speed connections we will have in our offices. The computer in your car will display traffic patterns and update you on the best route home. For that matter,_ expect more "smart highways" in the next 10 years.

This will be quite a wonderful, if topsy-turvey world. It will be a world with smart highways that drive your car; with computers that talk; with phones that think; with homes that welcome you when you arrive; with movies that come to you; with bankers who make electronic house calls; and with doctors that don't have to see you.

Our Bell Labs experts at Lucent predict that by the year 2025, the entire world will be encased in a communications skin. This skin, fed by a constant stream of information, will grow larger and more useful. This skin will consist of millions of electronic measuring devicesthermostats, pressure gauges, pollution detectors, cameras, microphones. All of these will transmit data directly into the network, just as our skin transmits a constant stream of sensory data to our brains.

Such systems might be used for anything from constantly monitoring the traffic on a local road, water level in a river, or the supply of food in a refrigerator. For example, your refrigerator will let your on-line shopping system know what to order to replenish supplies. Or your dishwasher will call its manufacturer when it's malfunctioning and remote diagnostics are run.

This is the world we'll live in during the next decades. The advances I've described will make our lives easier. And they'll be dependent on the completion of a true broadband network that ties together businesses, homes, and a variety of other users.

And that brings me to the second part of my talk-the remarkable advances in infrastructure that we must, and will, achieve during the next 10 years to make the world I've described a reality.

Today only 5 per cent of users have high speed access to the Net. In 10 years, the majority will, and they'll be connected at much greater speeds. Even the seemingly fast one-meg phone or cable modems we have today will appear painfully slow in the future.

Firms like Lucent Technologies that are constructing this new world will have four areas of challenge in the development of this infrastructure. I'll tell you about them. But since all these advances require broadband transmission, I'll start by defining what that means.

To explain broadband, I'll rely on a familiar analogy: the highway. All bits of data move at the same speed the speed of light. So imagine a highway system where every car moves at the same speed. And imagine as well that each car brings you one page from a 12-page article and those vehicles arrive a minute apart.

So if you have a one-lane highway, the complete article won't arrive for 12 minutes. With a six lane highway, that document arrives in only two minutes. Now real broadband would be a 12-lane highway. All the cars still travel at the same speed. But the complete document turns up as soon as the first car arrives, one minute after it leaves.

Building that 12-lane broadband network is the challenge that lies before us. It focuses much of our activity at Lucent Technologies. And it requires progress on several fronts. Let's look at four key areas where Lucent and other firms are directing their energies.

First, we have to create and improve our fibre optic network. How important are fibre optics? Right now a cable with these glass filaments is many times more costeffective than a copper cable. And that gap will widen.

I'd like to suggest the power of fibre optics. The typical fibre optic cable is about the size of a garden hose. It has a strong covering because it's usually buried underground or placed on the ocean floor.

Each of these cables has 144 strands of glass wrapped together. And each of those strands is about the thickness of a human hair.

Let's talk about one of those stands. We send 40 different colours of light over that strand. And each of those colours, or wavelengths, carries a considerable amount of information. Each colour can handle about 125,000 voice calls. So the hair-thin strand of glass fibre can handle five million simultaneous calls.

And the whole cable, which has 144 of those strands, can transmit the equivalent of 720 million calls at any one moment. That's a lot of talk. But of course if you're transmitting the contents of a CD or a movie you'll take up more space than an individual phone call. And when you're sending many of these items, and you want them to arrive very quickly, you begin to appreciate the capacity.

Building a fibre optic network is, in part, the challenge of putting these glass cables in place. But it's also a question of improving the technology so that more information can be transmitted over the same strands. At Lucent we're working hard on that problem. The 720 million calls a cable can now carry represent a five-fold increase over the capacity realisable just a year ago. Recently, we demonstrated that we could send 1,000 wavelengths (not 40) over a single strand. We have proven Terabit transmission (or a trillion bits per second). That's 500,000 movies over one fibre.

On average the amount of data any fibre optic cable can transmit has doubled every nine months. And we're determined to keep up that pace.

A second area where Lucent and other companies are working hard to create a broadband network is in the development of routers. If the fibre optic cables are like a multilane highway, then the routers are the traffic circles that allow cars to leave that highway and choose another route.

When someone in your Paris, France office sends you a Quick Time video about a new product, that message carries with it a code about its destination. The message has to leap from one cable to the next until it reaches your office. The routers are where those transfers are made.

Traditionally routers have been the bottlenecks in the fibre optics system. The light had to be changed into electrical impulses, switched to its new pathway, and changed back to light again. Those older routers are clunky affairs-some as big as buses. And they slow the flow of data.

Last year Lucent introduced the world's first highcapacity, all-optical router, a technology that was developed by Lucent's Bell Labs. All-optical routers are remarkable devices that use 256 tiny mirrors to direct and route optical signals from fibre to fibre in the network, without first converting them to electrical form as done today. When widely installed they will direct network traffic 16 times faster than electrical switches. We believe optics will be to the 21st century what electricity was to the 20th century.

There's a third area we're tackling to build a true broadband network-and that's uniting the voice and data networks. Today two worldwide parallel systems characterise global telecommunications. They both have shortcomings, but handle their particular set of tasks pretty well.

One is the voice network (or circuit-switched network). That's the one that comes into play when you call your aunt in Saskatoon or talk to a friend in London, England. It provides us with relatively inexpensive, highly reliable, quality voice communication. It's richly featured. If you want you can put call waiting, call display, or call forwarding on your line.

But the voice system is not terribly good at handling data. If you connect to your Internet provider through a

phone line, as most people do, you'll find it a painfully slow way of moving large files.

The other network handles data. Get past your home phone bottleneck, and you'll find we're doing a pretty good job of moving data around. Obviously, we're trying to expand its broadband capacity. But the basics are in place for moving the packets of information smoothly and efficiently.

However, the data network isn't very good yet in dealing with voice conversations. If you've ever tried one of the packages for Voice over Internet you'll find it's still a clunky approach. Much of the problem has to do with the way data is sent in packets rather than in continuous bursts of information.

The clear direction for all communications providers is improving both systems and bringing them together into one. That is happening quickly much to the benefit of both phone and data providers. It's starting by migrating voice to packet.

Both systems reflect large investments. Neither one will be abandoned overnight. At Lucent we have accelerated the evolution and merging of these two systems. We're helping them to harmonise their day-to-day functions with a new product line we call 7RE, the "R" standing for revolution and the "E" for evolution.

The fourth area that we're working on in building a true broadband infrastructure is what's called "The Last Mile." That's the connection from the high-speed network to your home. There may be a 12-lane expressway connecting Toronto and Montreal. But if the path from that expressway to your home is a single lane the data will still arrive slowly.

No one is sure what technology will dominate that Last Mile. So telecommunications suppliers, including Lucent, are exploring a number of possibilities.

Wiring your home for fibre optics is one alternative. A year ago that would have seemed far-fetched. We could hardly have put a bus-sized router in each neighborhood to direct the flow of light impulses. But as the system moves to small, all-optical routers the possibility of endto-end fibre is a real one. Some of our researchers are even imagining "a wavelength to the home." At Lucent we've developed a plastic optical cable that's ideal for the home. And as my comments make clear, nothing beats fibre for capacity. Imagine being able to download your favourite movie in a few seconds and watch it at your leisure. Stay tuned for that one.

But we are also exploring other possibilities. We're working with cable companies to transform what once were one-way lines for video signals into high-speed twoway channels for voice and data. Cable companies now have a head start in providing high-speed access to the Net. We have a trial with Comcast, a large U.S. cable company using Lucent and Motorola technology, where voice and data pass over the channels.

And no one is giving up on those ubiquitous copper wires that come into all our homes from the phone company. A variety of well-tested approaches can breathe new life into those lines, and provide one-megabyte speeds.

We're also examining various wireless links. These can be used both for mobile commuting and for home or office-based terminals. For example, our Bell Labs scientists have developed OpticAir. It's a laser transmitter that sends broadband signals through the air. Right now this technology is more for office buildings than homes. It makes possible high-speed transmission without the necessity of laying fibre optic cable.

I'll conclude by underscoring my message: the advances of the past 10 years are only the prelude to the dramatic changes in communications that will reshape our lives in the decade to come.

Few industries today are more exciting, more dynamic, or have more impact on our lives than communications. The technology is evolving rapidly. Many of the applications that will change our lives are in existence. They're tested and waiting for that true broadband network to come into existence. And it will.

You can also be sure whatever capacity is built in the next 10 years, it will only challenge scientists and entrepreneurs to come up with further advances and new applications-applications we can only dream of today.

At Lucent Technologies we are delighted to take the lead in creating these changes. But this is a fiercely competitive industry. Our 30,000 researchers at Bell Labs, as well as our managers and sales force know that we'll maintain our leadership only as long as we deliver for our customers.

That's a challenge and a mandate we're proud to take up. We look forward to an exciting decade. And we look forward to taking this journey with all of you. We're in it together!

The appreciation of the meeting was expressed by Jocelyne CoteO'Hara, Principal, C20 & Company and a Director, The Empire Club of Canada.