Alok Gupta, Carlson School Professor of Information and Decision Sciences and academic director of the Carlson Consulting Enterprise, shares his thoughts with Insights @ Carlson School on where the next-generation of the Internet is headed. Gupta has been researching Internet technologies for several years and was one of the first to research how the Internet should be priced.


What are we going to see with the next generation of the Internet?

As you know, Internet and web technologies were developed in universities throughout the country. The University of Minnesota developed the first network browser, the Gopher. Today, more than 200 universities, in partnership with industry and government, are working to develop Internet2, which is a series of advanced network applications and technologies. Many of these will be commercialized and used by the general public.

One of the projects, the 100 x 100 Project, is a collaborative attempt to rebuild the nation's Internet architecture to support speeds of 100 megabytes to individual homes and small businesses.


The Internet keeps getting faster and faster. Will we ever move to user fees?

Overuse of a resource deteriorates its quality. In some ways, this is what we are now seeing with the Internet. Email functions are devalued by spam, as an example. On the other hand, many people are seeing a great value from the services they get from their network, such as video conferencing and online shopping.

This has prompted some people to think we should charge for the Internet based on how much bandwidth a user is using. Right now, people pay a flat monthly fee for Internet access, but most people don't realize that they are paying too much. They are using it for minimal data transfer, by browsing the net and sending simple emails. In essence, they are subsidizing the usage of those who are transferring huge amounts of data.

In my research, I look at this issue and argue that we need to start charging for usage rather than flat fees. We are not charging in an economic way, which fosters a society in which some people can afford the Internet and others cannot. Internet service providers tend to extend their infrastructure in higher paying communities, while others get left behind.


There is so much overlap between services. We can make phone calls from our computer and watch TV over the Internet. Will we ditch our local phone service, or sell our televisions in the future?

Well, some of these services are getting very popular and are quite clear in delivery. Take Skype, for example. This is a Voice Over Internet Protocol (VoIP) service that allows you to download software to your personal computer, dial a friend or relative from your computer, and have a long-distance phone conversation for pennies. If you each have a webcam, it's even better because you can see each other while you're talking. Grandparents love this.

The average consumer doesn't know this, but many phone companies that sell phone cards transfer our calls from the phone to the Internet and back to the phone lines. It's cheaper for them to operate this way. The technology is getting better every day, to the point where problems are imperceptible to consumers.

Many consumers are seriously considering where they are getting their services and are making switches from phone to computer providers, for example, based on their personal preferences. ABC News recently announced that it will offer episodes of four current shows online as an experiment for viewers.


Who's going to win the war for consumers—Internet service providers, cable companies, or telecommunications providers?

We're seeing a lot of consolidation in the industry. Digital technologies that allow all kinds of data to be transferred using the Internet opens the market for phone and cable services to anyone who can provide the best services to their customers. That's why companies are scrambling to merge, so they can have the biggest, fastest data networks. You see all sorts of providers bundling their services—phone, mobile phone, Internet, and digital TV. Qwest is a perfect example of this.


What about social networking groups that get together on websites like MySpace and Facebook? Are online communities a fad, or here to stay?

We've had online social networks for some time. Any website that allows you to share photos, hold video meetings, or exchange blogs is an online social networking site. Classmates.com is one that many of us are familiar with because it seeks to put us in touch with former classmates and gives us information about reunions.

The more interesting part of this whole movement is the use of social networks in consumer settings. There is a growing number of "seller rings," is which sellers create a consortium and offer product critiques of other sellers. They also offer referrals to local stores, where sellers can get a particular product that they're looking for, such as jewelry, from a reputable seller. These sellers then sell this recommended jewelry to others, either through a traditional store or an online store.

If you look at eBay, the buying power is currently disconnected. Imagine if groups of buyers could come together and have a true rating system for the goods that are being sold. Right now, you go to buy a product, and each seller has pages and pages of individualized ratings. No one is going to take the time to read all of these. But if there was a social network on the site that offered reputable ratings and product recommendations, that would change the way bulk buying and selling was done.


Where is online shopping headed? Is it still seen as a complement to brick-and-mortar stores, or will it replace them?

I think one of the exciting areas of online shopping is the ability for consumers to get commodity goods for the very best prices available. This includes airline tickets and hotel bookings, for example. The travel industry is already squeezed in terms of its profit margins, and has been turning to sites like Priceline.com. These sites, in turn, are asking how they can better build customer loyalty. You'll see that many of them are providing more information for consumers to make their bids. Priceline offers a matrix that shows customers all of the different price options for any given flight pattern, rather than customers just entering a random bid and hoping that their bid is accepted and that they got the best deal possible. This is how these sites used to operate.