CEOs list broadband as top issue for 2001

Broadband connectivity is the most significant factor in determining the way customers will experience communications and use technology over the next few years, a joint study by Ernst & Young and its consulting and integration arm Cap Gemini has found.

The study, Business Redefined: Connecting Content, Applications and Customers, was based on 128 in-depth interviews with CEOs from the communications, multimedia and technology enabling industries worldwide.

About 50 per cent of respondents were from North America, 30 per cent from Europe and 20 per cent from Australia and the Asia-Pacific region.

Companies represented included AT&T, Telstra, Sony, DoComo, Microsoft, Vodafone and Time Warner.

According to the study, widespread broadband connectivity among businesses was imminent, with 64 per cent of executives saying their organisation will connect to broadband applications in the next three to five years.

"Broadband access is taking over dial-up access, "said Stuart Hartley, vice-president in Cap Gemini Ernst & Young's telecom media network group.

"And broadband will be everywhere - reliable, available and low cost - and found in wireless, on demand content and in intelligent applications."

According to Mick Hall, EY's national director of technology, communications and entertainment, enterprise consumption of broadband will increase by 20 per cent over the next year.

DSL and cable connections will grow neck and neck this year resulting in 20 million new access lines to users by 2004, Hartley said.

Nearly two-thirds of CEOs surveyed said broadband connectivity would have the greatest impact on the future of the telecommunications, Internet content and media distribution industries.

Network distributors will survive by placing their bets on new value-added services, Hartley said.

"There's a commoditisation of traditional network services, and voice and data are slowing down. With voice and data, the question is what do you offer, and how do you differentiate yourself from competitors?"

"With services revenue growing at 68 per cent a year, wide-ranging applications and services are really the key to success - network solutions, hosting and custom application development like unified messaging, for instance."

CEOs surveyed said that selling large quantities of bandwidth alone will not be a differentiator for providers, and the broadband's explosion will virtually eliminate revenues from circuit-switched products such as long-distance.

But the road to exploiting Internet revenues from increased broadband access was no easy feat for CEOs, according to Hartley.

"CEOs tremble at the idea of how to execute their strategy," he said.

From a marketing perspective, he said they were unsure of what applications they needed to develop to create opportunity in the broadband industry."

Other headaches they struggled with, he said, are the ongoing battle for talent, corporate agility in a globalised industry, instilling an organisation-wide customer focus, and improving operational support systems.

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