From the July 1997 issue of Entrepreneur

Imagine the ease of conducting meetings with customers in distant cities right from your computer. You'd be able to see who you're talking to, demonstrate products and show visual concepts--all without paying for the air fare, hotel rooms, taxis and meals of a business trip. And think of the time you'd save.

That's the promise of PC desktop videoconferencing, which allows you to have video phone calls with one or more people located anywhere in the world. In addition, many systems even allow you to collaborate using the same software at the same time in multiple locations. So it's not surprising that projections for this market show high growth. In fact, Multimedia Research Group Inc., a market research firm in Sunnyvale, California, predicts the videoconferencing marketplace will grow from about $125 million in 1996 to $2.5 billion by the year 2000.

Working Out The Bugs

Videoconferencing has experienced some glitches that haven't yet been ironed out. The major problems have been in the areas of standards, performance and setup.

Standards: Lack of industrywide standards has prevented companies with videoconferencing technology from contacting other firms with different technology. For large companies that want to use the systems for internal communications, this hasn't been a problem. But entrepreneurs who want to use the technology to communicate with outside suppliers or clients are finding silence on the other end of the line. But relief is in sight as standards begin to take form.

Performance: Slow transmission and jerky images continue to plague videoconferencing. As with movies, television and animated films, videoconferencing images are flashed across a screen at a speed so fast that they appear to move. The standard speed for movies is 30 frames per second (fps). Videoconferencing systems, however, range from 5fps to about 20fps, making them jerky and out of sync at best and virtually unusable at worst. While unsteady transmission may be fine for an in-house meeting, it's unprofessional--if not indecipherable--for a conference between companies analyzing charts and graphs.

With Intel's new MMX technology, this situation promises to improve. As videoconferencing products become available to support the MMX chip, compression and decompression should get faster, allowing images to be transmitted more quickly (see June's "Business Bytes" for more on MMX technology). Processing speed should also improve, allowing for faster display on each machine.

Setup: Videoconferencing systems are tricky to set up because of the great deal of equipment you need to add to your computer system. All require you to install a video capture board, a video camera, a modem and videoconferencing software. If your system supports multipoint conferencing, which allows several locations to participate in a conference rather than simple two-way conferencing, you'll also need a multipoint control unit (MCU) or service from a multipoint service provider. A partial list of multipoint service providers includes AT&T WorldWorx Conferencing, Bell Canada Advantage Conferencing, IBM Global Network, networkMCI Conferencing, and Deutsche Telekom TeamWorld Services.

Getting Connected

There are four types of videoconferencing technologies, which vary according to the communications connection: analog phone, known as plain old telephone service (POTS); digital phone (ISDN); Internet-based; and local area network-based (LAN). (This column will not cover LAN-based systems because they are far better suited to large corporations with installed local or wide area networks already in place.)

Analog phone (POTS): Many entry-level videoconferencing systems, such as Creative Labs' ShareVision PC3000 ($449.99), use POTS to send voice and video signals.

Videoconferencing systems based on POTS transmission are by far the least expensive. You can purchase them for as little as $500 per user (referred to as a seat). This is a savings of at least $1,000 per user over ISDN-based systems, which multiplies quickly when several users are involved.

Analog phone line service is also inexpensive. Basic business service averages about $60 per month per line, plus toll charges. In contrast, ISDN monthly service costs as much as $85 per line, with installation charges costing as much as $250.

POTS is easy to set up because analog phone service is already available in virtually every business--so you don't have to worry about installing a new communications pipeline. The omnipresence of analog phone lines also means you can set up conferences with participants virtually anywhere in the world.

The big drawback of POTS systems is transmission speeds. With today's 28.8 and 36.6 Kbps modems, most POTS systems reach only about 5 to 8fps in real-time use (though some vendors claim rates as high as 15fps). As modem speeds inch up to 56.6 Kbps and beyond, that should improve. But for now, video transmitted by POTS can look as bad as stop-frame action.

Digital phone (ISDN): Videoconferencing applications that run over ISDN lines are perhaps the most effective videoconferencing systems for small businesses. Systems that run on ISDN include Intel's ProShare Conferencing Video System 200, which costs about $1,499 per seat, and PictureTel's $1,495 Live 200.

Digital videoconferencing systems can send and receive data at 10 to 15fps, which gives the images some visible jerkiness and less than perfect colors compared with television and movies, but it's usable and getting better every day.

In addition to simple videoconferencing packages, ISDN-based systems like the Intel ProShare and PictureTel Live 200 also offer multipoint conferencing and application sharing. This feature allows conference participants to exchange word processing, spreadsheet and other files on screen and even edit them during the videoconference. As a result, all conference participants can literally be on the same page and review documents easily and simultaneously. The Intel ProShare even includes a video voice-mail answering machine that plays a video greeting and allows callers to leave you a video message. It also allows you to record video conferences and play them back later.

In addition to being more pricey than POTS, ISDN is more difficult to set up. First, you need to make sure your hardware will support the ISDN service in your area, and keep in mind that ISDN service isn't available in all locations. It can be difficult to install the system, and reliability isn't always up to snuff. "The RBOCs [Regional Bell Operating Companies] haven't really been committed to providing ISDN," says Gary Schultz, president of Multimedia Research Group. "It's an old technology, and they're waiting on some of the newer technologies, such as ADSL" (see April's "Tech Smarts" for more on ADSL).

Internet-based systems: The good news with Web-based systems is that there are no communications charges: You can place a conference for as long as you want anywhere in the world without having to pay long-distance charges. The bad news is your use of Internet bandwidth competes with that of everyone else using the Internet. As a result, video frames may arrive in the wrong order, snippets of audio may disappear, your message may get bungled, and delays are common. The industry is working to correct these performance problems with so-called quality of service (QOS) initiatives that promise to guarantee the necessary bandwidth to run a videoconference without the glitches. Names of these initiatives include RTP (real-time protocol) and RSVP (resource reservation protocol). But these are still far from full implementation.

The Web-based CU-SeeMe software from White Pine Software ($99 retail; $69 off the Web) allows both Windows and Macintosh machines to participate in videoconferencing. With the WhitePineBoard module, users can share documents, graphs and an electronic whiteboard.

Ibid from MicroTouch Systems ($499) allows users to share drawings and text on a whiteboard and incorporate them into Windows-based e-mail, presentation and word-processing applications; real-time data conferencing over the Internet is possible when used with Microsoft NetMeeting 2.0.

Unlike the other systems mentioned, CU-SeeMe and Ibid are software only. You'll need to purchase and install a video camera, standard video boards and a microphone. You'll also need a Web browser, a 28.8 Kbps or higher modem, and an ISDN link.

White Pine also offers a software package that runs on a server called Reflector which, for $1,995 (including CU-SeeMe software), allows 10 users (it costs more for additional users) to call in for a multiport conference. You'll need a Windows- or UNIX-based server to run Reflector and an ISDN or higher communications line.

With today's videoconferencing software, you can see poor to adequate video images on screen. But as image quality continues to improve and systems become easier to install, entrepreneurs should consider this technology as a way to reduce the cost of travel for meetings--and still meet with others face to face.