Are we heading for a new crash or a Faustian nightmare?

Citation

Blackman, C. (2007), "Are we heading for a new crash or a Faustian nightmare?", info, Vol. 9 No. 1. https://doi.org/10.1108/info.2007.27209aaa.001

Are we heading for a new crash or a Faustian nightmare?

The news that Google is paying $1.65 billion for YouTube looks very much like a deal that could have been done in the heady days before the dotcom crash. Why would anyone pay such an astronomical sum of money for a two-year old start-up video sharing web site with no profits? This latest deal begins to make the $580 million that Newscorp paid for MySpace look like a bargain and extraordinarily astute. Indeed, with Google paying MySpace $900 million over the next three and a half years for being its search provider, one analyst has valued MySpace at an incredible $15 billion (Lowry and Hof, 2006).

Peter Curwen, in his article on restructuring in the Telecoms-Media-Technology (TMT) sector in this issue of info, also finds indications of a return to the “good old, bad old days” with many more mergers and acquisitions over the past year or so. So are we heading for another crash? Curwen does not think so since, generally speaking, company valuations are much lower than in 2000 and are based on profits and cash flow rather than optimistic predictions of future growth. There are also other factors that are giving less cause for optimism, such as regulatory pressure on interconnection rates, stagnating penetration rates and the 3G damp squib.

Certainly there is more optimism and cash around than there has been for several years, but the memories of the dotcom boom and crash are still very vivid. Rather the purchase of YouTube mainly shows that Google has so much money that a couple of billion dollars is but a drop in its ocean. Google can afford to take a punt and at the same time prevent others from trying to do so. There isn’t really anyone else who can play by these rules.

Meanwhile we are all still wondering whether new information and entertainment services over the Internet and via mobile will ever take off. Two articles in this issue look at different aspects of this. In his paper on the emergence of the Internet for delivering video programming, John Meisel analyses the economic and regulatory issues. Similarly, Dong H. Shin investigates the case of IPTV in Korea from a technical, economic and regulatory perspective to understand how IPTV might develop within next generation network environments.

These kinds of developments mean that some policy issues that were “dealt with” a decade ago are back on the agenda. Universal service is a case in point. Does universal service need to be modified in the context of next generation networks? Should it be widened to include broadband or mobile, for instance? Patrick Xavier and Dimitri Ypsilanti review the evidence and, perhaps unsurprisingly, show that telecom operators are feeling the pinch with revenues falling and pressure to invest in NGN. Universal service will also be reviewed by the European Commission in tandem with its ongoing review of the regulatory framework for electronic communications, the consultation process for which has been characterized by special pleading from almost everyone with a stake.

In the meantime, the information society becomes ever more of a reality, as depicted by Lara Srivastava in her article on RFID, which she describes as being at the core of the “Internet of things” and a key enabler of the ubiquitous network society. Srivastava shows how RFID technology has the potential to ease life and to improve the human condition but she also adds a note of caution: ”Further innovation and industrial deployment of this technology should be done in parallel with a careful exploration of all related aspects” – otherwise we may be sleepwalking into a Faustian nightmare where individual privacy is no longer possible.

Colin Blackman

Colin Blackman is the Editor of info, and an Independent Consultant. He may be contacted at 13 High Street, Cottenham, Cambridge CB4 8SA, UK. colin.blackman@ntlworld.com