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C00002 00002	MONOPOLIES IN HOME COMPUTER SERVICES
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MONOPOLIES IN HOME COMPUTER SERVICES

\Cby John McCarthy


\J	A number of proposals have been made to provide home computer
and other information services using cable television facilities, and
the  FCC has required that cable television companies provide two-way
communication in order to facilitate this.  It seems to me  that  the
present  direction  of  thought  and  development  has  some  serious
defects, because it may promote monopoly in a new  field  in  which
monopoly is neither necessary nor desirable.

	Namely,  the  presumption  of all these proposals is that the
information services will be provided by the cable TV company.   This
will  have the consequence that only the services which the local cable
TV company chooses to provide will be available and at prices which
this  company  chooses  or  is  regulated  to charge.  This is bad in
general if avoidable, but in the case of home computer  services,  it
has the following specific disadvantages:

	1.  Home  information  services (take CAI as an example) will
require elaborate programs and will need to have national markets  to
repay the cost of programming them.

	2.  The  cost  of  providing  them will be determined by very
complex considerations, so that it will  be  very  difficult  to  say
which  changes justify which changes in price so that regulation will
be difficult.

	Contrast this with the following situation:

	Communication is provided by  a  common  carrier  which  will
allow  the  home  terminal  to  be  connected  with  anyone providing
computer services.  The terminals are sold  or  rented  by  competing
companies    and    meet   only   general   communication   interface
specifications.  The computer systems that run the  home  information
service programs are also public so that anyone who wants to sell the
services of a program  can  rent  file  storage  in  anyone  computer
service  center,  and  the center will collect from users whatever he
charges for the use of the program and charge him its standard  rates
for  the  resources  used.  Communication costs are such that service
centers can compete all over the country and, in fact, all  over  the
world.  At present, General Electric serves time-sharing customers in
Europe and Japan from a center in the U.S.

	In my opinion, providing free competition must be a  dominant
consideration  in  any  scheme  for  providing home computer services
imaginatively, rapidly, and economically.

	Therefore, plans should be  based  either  on  the  telephone
system  which is already a common carrier, or the CATV systems should
be developed into common carriers of the kind of information they are
suited   to   transmit.   The  former  seems  more  feasible  to  me.
Telephones already have high enough bandwidth for  most  contemplated
information  services,  and  the  bandwidth  required  to support the
proposed Picturephone facilities will be more than adequate.\.