Gilder concludes that cable companies are now leading the way in deploying the wires that will ultimately be used for connecting the boxes. Such chips can substitute directly for a whole lot of new carrying capacity in the wires, whether supplied by television cable or telephone twisted pair. The economics favor the companies with brilliant chips over the companies with capacious wires. We have increased the carrying capacity of fiber optic cable a million-fold in the last 15 years, and this stunning technical achievement has proved tremendously valuable. But the retail end of the network, where wires are finally connected to homes and businesses, recabling is labor intensive.
Chips are a very attractive alternative.
But it is now plausible to expect that within this decade we will see a chip that can send full-motion color video down on ordinary analog telephone line. The picture is still small and jerky and the resolution poor, but the device will plug into an ordinary analog phone line. The dial tone is being moved, so to speak, out of the central-office switch and into the chip, the telecomputer itself. The market implications are staggering. The most advanced cable networks today boast 150 or so television channels.