It can reduce the need for time-wasting and costly travel. So why has the appeal of videoconferencing been so limited - until now? Alan Burkitt explains.
Are you reading this in an airport lounge, one anxious eye on the departure board? Or perhaps, having set off early and driven for three hours, you are waiting in a customer's reception for a meeting which will last possibly an hour at the most? Or maybe you are in a train, returning from an extended afternoon with a client. Your seat may be comfortable, but, as British Rail's advertisement implies, it is more appropriate for slumber than work. You urgently need to talk about the meeting with colleagues, but your portable phone is intrusive and hardly confidential. That will have to wait until tomorrow, when your adrenalin will have subsided. Meanwhile, chances are fading of getting home in time for a civilised evening.
If that roughly describes your feelings, you are probably a prime target for the three or four companies now marketing plug-in, dial-up, videoconference equipment.
But you may have heard that before. Ian Young, a consultant who has been following the industry for 17 years, commented: "It's a technology that has been just about to break into widespread acceptance 'any time now' for so long that one is immediately suspicious of new claims."
Essentially, videoconference systems are live television links by which individuals or groups of people can conduct meetings. Terminals can be in a special studio, in a boardroom or in a conference room.
In a few years' time a video telephone could become a standard item on an executive's desk top, perhaps incorporated into a personal computer. The equipment and the specially installed telecommunications links which have been necessary until this year have been hugely expensive. But the cost is plummeting and new technology means that calls can be connected at only twice ordinary phone rates.
According to Michael Davis, chairman of Internet, which sells American-made videoconference systems in this country, the cheapest equipment is now around £30,000. Though admittedly a special case, he has one unit in his office in Marlow and another at the company's technical centre in Bristol. "I used to spend my days travelling to Bristol and back. Now a video meeting with staff can be set up instantly; both sides have all their files handy; and everyone gets back to their normal tasks as soon as the call is over. I still drive to Bristol every six weeks, but in between contact is vastly improved."
Others may be getting the message. "Now there is talk of video 'going cultural', in the way fax machines have done," says Young. In the mid-1970s most of the fax machines in use operated on private circuits, usually for well defined applications within companies, such as publishing, engineering design or transport scheduling. Transmission was slow and quality was poor. Because most machines were built to proprietary standards, the idea of dialling a number and sending a fax to a third party was almost unknown. Enthusiasts wrote articles about how they could simplify business life, but few took heed.
Then, in the mid-1980s, worldwide standards were adopted. For a time, machines were expensive, and British Telecom, The Post Office and other organisations set up fax bureaux. Now, even small businesses cannot afford to be without their cheap fax machines.
So with videoconferencing: the adoption of international standards in December 1990 is already bringing costs down and widening usage. BT has announced that by the end of this year all high streets and business centres would be within range of its new ISDN2 digital circuits, which have enough capacity to carry video calls. A normal phone link, even on a digital exchange, is not enough. Video needs one with twice the capacity. Phone companies around the developed world have introduced compatible circuits.
Then came the Gulf war. This gave videoconferencing an unexpected boost, as international companies grounded their staff. There was a surge in bookings for BT's and Mercury's rent-by-the-hour videoconference rooms. BT charges about £1,400 an hour for a London-New York conference. Mercury offers its conference room in the Inter-Continental, London, for £125 an hour and then charges up to £600 an hour for a one-way circuit to North America. Mercury's partner at the other end makes a broadly similar charge.
One of the companies which was suddenly converted to BT's videoconferencing suites as the bombers headed for Baghdad was the European end of the Californian mainframe computer maker Amdahl. "We use them if we want to get customers to talk to product specialists in Sunnyvale," says marketing communications manager Gillian Greening. "It takes an hour of everyone's time instead of two days."
Even the last generation of technology has had its supporters, among them ICI and Ford. "We have 14 studios in the UK and one at ICI America in Delaware," says David Doherty, voice services manager for the chemical giant. Managers in the chemicals and polymers division pioneered the technology four years ago when the team was split between the North-west and the North-east of England.
"There are obvious cost savings on travel," says Doherty. There were also safety considerations: executives were spending too many winter mornings and evenings crossing the Pennines on the M62. But management control and quality was the prime reason. With a dispersed management structure, the more often you communicate the better.
Ford, which has been using video since 1984, tells a similar story. It uses its studio at its design and engineering centre in Essex for 200 hours a month - mainly so that engineers can talk to colleagues in Cologne, where there are two further studios. "We also have access on Ford's private network to 44 other studios in North America, Portugal and Spain," said Doug Roberton, the videoconferencing specialist at Ford's European headquarters.
But, with the old pricing structure, there are still no more than a few thousand terminals worldwide. However, with changes in technology, the introduction of dial-up connections and the lingering effects of the Gulf war, the market is now doubling annually. Research group Frost and Sullivan believes that users in the United States will spend $1.3 billion on videoconferencing equipment and call charges this year, and $3.4 billion next year. BT thinks that equipment sales alone will reach £500 million a year in the UK by 1999 - "and the network revenue will be much higher than that", says Ken Bayley, general manager of BT Visual Services.
The crucial international standard is called H261, governing the operation of the codec (coder-decoder), which compresses a television picture into a narrow digital signal at one end and expands it back at the other. Internet's Davis admits: "Different standards have screwed up the market so far." But H261 has been adopted with varying degrees of enthusiasm by all major suppliers. One of the most committed is BT and its manufacturer, GPT, owned by GEC and Siemens. Japanese companies, expected universally to be ready to introduce equipment soon, are also firm H261 fans.
Two of the biggest suppliers in the US, Compression Labs Inc and PictureTel, take a less committed line. They both support the international standard but each also has its own proprietary software and executives like to imply that the resulting picture quality is better.
BT and GPT contest this. "We won an award for excellence at the International Teleconferencing Association's conference in Washington," says BT's Bayley. ITCA named the BT/GPT codec "the most significant new product in the past year".
One of the first users of dial-up services is insurance broker CT Bowring. Initially chief executives of the different divisions are using the unit to meet their opposite numbers in New York and Chicago at parent group Marsh and McLennan. "We think it's going to take off in a big way," says group communications supervisor Mike Tomlinson. "But we've only had it three months and we need a lot more people to use it before we have a clear idea where we should go."
And the Bar Council is hiring out its new DCE/PictureTel equipment to barristers and commercial concerns. "It's mainly used for case conferences," said David Farrer, QC, chairman of the Bar services committee. But judges may use it to hear evidence: "Some witnesses may be sensitive about coming into the jurisdiction." The Bar Council rents the equipment out at £130 per half hour and adds 25% to BT's call charge - which would make an all-in cost for an hour's meeting with the US about £370. Barristers are extra.
(Alan Burkitt is a freelance writer.)