What the info superhighway means for business.

The evolution of communications technologies is a history of business opportunity. Whenever people are presented with a richer means to stay in touch, they tend to seize it. In 1924, the age of radio opened. That year, one-third of all dollars spent in this country for furniture were used to buy radios. In 1951, stores that sold and serviced televisions opened at the rate of 1,000 per week. Meanwhile, the telephone already served virtually all businesses and was climbing rapidly toward today's 95 percent of U.S. households. The first cellular phone system went into operation in 1983. Now there are 1,600, subscribership is climbing at the rate of 45 percent per year, and the worldwide wired network will grow by 100 million new lines this year. The record is clear: Faster, easier, more content-rich communication is, by virtually universal consensus, a "better mousetrap." Marrying Technologies Now, we stand on the front porch of the next major development, popularly known as the communications superhighway. The term defies simple description. Convergence is the word often used to suggest its genesis - a marriage of computer, telecommunications, and video technologies. But that falls short of explaining just what this hybrid will offer those who use it. Short answer: Today your telephone can reach any of one billion people worldwide, quickly and easily. When the network has been upgraded to superhighway capacity, vast numbers of computer data bases and video libraries will be added to the telephone directory, accessible as readily as one dials a call. In addition, the common phone call will be enriched, offering callers the option of sharing pictures and computer data as they speak. It won't come all at once, but pieces of it are added every day now. Hospitals are already installing digital data lines in doctors' homes so they can study such images as CAT scans and MRIs at home without the delay of driving to the hospital. Students are using computers to tap the files of the great libraries. Engineers in different parts of the country are starting to hover over a single set of blueprints, as though they were seated at the same table. But these and myriad other pioneering superhighway applications all require terminal equipment that is more sophisticated than a simple telephone. Many require phone lines that have a much greater capacity than the conventional copper wires that serve most customers. All of the needed new technology has been developed, but upgrading the entire U.S. telecommunications infrastructure to superhighway muscularity will take capital investment on the order of $200 billion. And that's just for the "roadway" piece. Eventually, we also will need to develop new information appliances that accommodate the easy transmission of video and images. Tomorrow's Telephone Some foresee the telephone of the future as a further evolved personal computer that includes voice and video transmission capabilities. Others envision it as an advanced television set, with something that looks like today's cable TV control box - which would amount to a disguised personal computer, with the hand-held remote serving as the keyboard. Both will probably emerge, to be used in different settings, just as many office telephones are different from home sets. All of this investment will significantly strengthen the country's economic infrastructure. Already, 70 percent of American business is conducted electronically. However, we're talking a lot of money here. Consumers will have to be sure they are getting more for their money. And investors will demand convincing evidence that a commensurate return lies ahead. The industry has been running the financial numbers on a superhighway concept for years, and only now are the economics beginning to come out right. Why now? Two things have happened. The driving development is a landmark crossover on the cost side, owing to five decades of improvement in electronics technology that has been both steady and spectacular - two components that rarely go together. Consider this: You can buy a 486-class personal computer today for about $1,000. Your purchase amounts to the processing power of 100 million transistors. As Silicon Valley's Michael Malone has pointed out, "You can't buy 100 million of anything for $1,000." Even a hundred million sheets of toilet paper would cost you $100,000 - to cite Malone's bottom line comparison. The point is that computer power has become about the cheapest thing on earth, and its performance-to-price ratio continues to double every 18 months. But declining costs, by themselves, aren't enough to justify a large investment. There also must be useful applications that customers want. And that takes us to the second major development: Cheap processing power spawned the home computer. At first, most of these machines were used as glorified typewriters, but a small slice of the market-self-described nerds-pioneered the use of PCs as communication devices. They showed how a PC, hooked via modem to the telephone network, became a powerful means to "reach out and touch someone." Telephones do that, too, of course - but there's a big difference. By social convention, we use the telephone to call people who expect to hear from us: personal acquaintances, businesses, public agencies. We do not, however, call strangers hoping to find some area of mutual interest. To do so would constitute an alarming affront. And yet that is precisely what PC networkers do - by mutual agreement. They electronically browse the chat rooms and bulletin boards of cyberspace, exchanging comments on thousands of topics from parenting to fine wines, from motorcycles to health care reform. The early denizens of this new dimension pursued their networking with quiet zeal; for years, few of us knew anything about them. Then, with almost overnight suddenness, millions followed the nerds, providing investors an enormous volume of evidence that the long-heralded Information Age had finally burst into full bloom. Upon reflection, none of us who have spent our careers servicing the market's unquenchable thirst for more powerful means of communicating should have been surprised. But-to be candid-most of us were. What has happened in the last three years is nothing like ordinary growth. It is rather, in Toffler's words, a "paradigm shift" of historic proportions. What the Explosion Wrought The Internet and all that it stands for came like a comet out of the blue. The credit for the telephone industry's reasonably fast reaction goes to our own "nerds" who for years have struggled with a certain frustration at having been considered a bit ahead of the game. Well, they were ahead of the game - in the truest sense of the term. Events have proved them right; of that, there now is ample evidence. Consider just a short list:

* The Internet-the prototype of the communications superhighway-continues to add 750,000 new users each month, even though it is notoriously hard to use. At that growth rate, every human on the planet would be connected by the year 2001.

* The home PC market is growing at 21 percent per year, more than twice the rate of the business computer market.

* IBM receives 9,000 calls to its PC help line per day, up from 2,000 per day in 1992.

* More than 50 percent of households with teenagers have PCs. Do teenagers enjoy chatting electronically? That hardly merits a dime's worth of research. But here's a clue...

* Prodigy saw postings to its "chat" bulletin boards grow by 500 percent in 1992.

* Combined revenue for the 10 leading on-line services in 1993 - $500 million.

* Ziff Publishing's fastest growing magazine ever is Computer Life, a publication about PCs in family life.

* The most successful mass circulation magazine start-up in a generation is WIRED, often characterized as the Rolling Stone of information technology.

* About 25 percent of home PCs purchased in the first quarter of this year were second computers for the household, not new or replacement machines.