Reaping the benefits of telecoms revolution

It could take two decades for it to become clear what we want from the technologies being developed

The first assumption to make about the way the new communications technologies develop over the next 20 years is that they will, within reason, do whatever we want of them.

The first assumption to make about the way the new communications technologies develop over the next 20 years is that they will, within reason, do whatever we want of them. The second is that it will be tough to make any money out of the business.

The plight of BT ­ and indeed so many of the other telecom giants ­ is that while they are at the core of one of the greatest growth markets of all time, they are also under great financial pressure. And so they will remain. Our lives will be changed utterly by the new technologies, just as our lives were transformed by the railways, but the railway companies were only marginally profitable. There will be great business success stories that spring out of the communications revolution, as there always are in periods of explosive growth. But most of those successes will be at the fringe of the industry, not at the core.

We already have, in broad outline, the communications kit that will dominate the next 20 years. For individuals the most important are the laptop, the mobile phone and the personal organiser. For companies they are infinite capacity on fibre-optic cables and the ability to connect different company systems together so the physical organisation of commerce becomes seamless.

All this exists now in embryonic form. For anyone who works on a computer, it is now theoretically possible to do one's job from just about anywhere. In Sweden 10 per cent of all adults do paid work from home. I filed a column in yesterday's paper from a laptop and a mobile phone in a Paris hotel room ­ sadly not a Caribbean beach, but that too is perfectly practical.

But what we have now is clunky. Battery life is poor; mobile phones are expensive; personal organisers are a fiddle to use. And linking the kit together, while do-able, is awkward. Technology generally moves in bursts, followed by periods where it is refined. We have just had a burst; the next couple of decades will be spent refining.

So in 20 years the clobber will be gone and everything will work beautifully. For people the limiting factors will be social, not physical. We may not chose to work from the beach because we need to talk to our colleagues ­ or maybe because we can think of better things to do on the beach. But that will be our choice: it will not be imposed on us by the limits of technology.

For companies too the equipment is already there. The problem is more one of software than hardware: getting company systems to link together so that once a system is set up human error (and cost) is eliminated. You can see an early example in automatic procure- ment. A company automatically puts out a request to its suppliers to tender for components when its production line signals that these are needed; the bids come in, and those that are accepted appear as orders on the suppliers' screens. They have to be delivered physically, of course, but the billing and payment can also be entirely automatic.

Of course the real world is not like this. I know of one famous internet business that has become a seriously slow payer. A couple of weeks ago, one of its suppliers only got an overdue account paid by the crudest of tactics. Its managing director went round on his motorbike and stood in reception in his leathers and refused to leave until he had the cheque in his hand. Hi-tech companies often run on low-tech systems.

But you see the point. Our lives, both at a personal and a corporate level, will not be limited by clunky hardware and badly connected software. But it will take a couple of decades to reap the benefits of telecommunications that are virtually unlimited and very cheap. It will take that time to figure out what we as individuals really want. Twenty years ago you might have thought that we would want videophones but not mobile ones. That was very wrong.

It will also take years for companies to figure out whether they should use the new technologies to co-operate and when they should compete. Automatic systems run by machines connecting to machines are fine, providing business partners trust each other. If they don't, humans (like the managing director in his leathers) have to intervene.

For the communications giants this is all tantalising, bewildering, frightening. The volume of signals they will carry around the world will soar. But competition will squeeze the rates for carrying those signals ever lower. The demand both from people and from companies for help in handling their communications will soar. But it is not clear that enough of the skills needed to provide that help reside in the telecom giants. Even if they do, extracting them and converting them into products is fiendishly difficult.

As individuals we want communications that work together, don't go wrong, are cheap and make life more fun. That will benefit the hardware manufacturers, who will make the equipment, though they will face a squeeze from ever-falling prices. It will benefit the people who create the products that people want to enjoy ­ actors, writers, sports stars. It will benefit the best of the organisations that pull this talent together ­ companies ranging from Manchester United to the BBC ­ though the more that the individuals can extract for themselves, the less will be left over for the co-ordinators.

But finding a profitable role for telephone companies is tough: sure, they have a billing relationship with millions of customers but I'm not sure that is much help. No one enjoys paying the phone bill. The Inland Revenue has a billing relationship with even more people, but you would not go there to buy high-value-added services.

Yes, individuals will buy more and more phone-based services, but I suspect that a shrinking proportion will come from the old phone monopolies.

At a corporate level there is more hope. The technical skills base in a firm like BT is enormous. Its labs out in Suffolk on a former Second World War fighter airbase have the most extraordinary array of products and competencies. There is everything from retina recognition (which may replace PIN numbers, and would be an effective way of replacing passports) to state-of-the art high-speed communications systems.

The "killer applications" that everyone is hunting for are in the heads of the boffins at BT, and its competitors like Deutsche Telekom and Lucent.

Companies are desperate to find ways of communicating with their customers more effectively. They know they appear disorganised, incompetent, often simply naff. At the moment it is companies like Accenture that are called on to sort out these problems. Expect them, and other more specialist consultants, to be the real winners from the communications revolution. But there ought to be some room for the phone giants too.

Companies need to know who their customers really are and want they really want. The more they know the more likely we are to be able to sit on the beach and write that long-awaited novel.