Statement of John Marselle.
Re: Senate Antitrust Subcommittee Hearing on Convergence and Consolidation in the Entertainment and Information Industries.
Date: July 7, 1998.
Source: This document was created by scanning a photocopy of the original paper copy, and converting to HTML.

Statement of John Marselle
President of Sun Federal, Sun Microsystems, Inc.
before
The Senate Subcommittee on Antitrust, Business Rights and Competition
July 7, 1998

Hearing on Convergence and Consolidation in the Entertainment and Information Industries

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I. Introduction

Mr. Chairman, and distinguished Members of the Committee, I appreciate the invitation to testify before you today to discuss the issue of convergence and consolidation in the entertainment and information industries, and the need to ensure that convergence results in a competitive marketplace which fosters and encourages innovation. As technologies used to create, store and convey information in a variety of forms become meshed in the digital environment the prospects for increased convenience, utility, and capability of the user increase exponentially. However, the practical realities of this convergence also present the potential for the counterproductive concentration of power in a few hands -- an outcome that would ultimately deny the public at large of the full benefits of the digital revolution. Before discussing these issues more at length I would like to first briefly discuss the history of Sun Microsystems, Inc. ("Sun") because it demonstrates a longterm commitment to open systems, innovation and success in forging new technologies for the information age.

H. Sun's history and vision

Sun Microsystems, Inc. ("Sun") is an American success story. Founded over sixteen years ago, Sun has been challenging the "mainstream" computer industry and forging new technologies ever since. Sun was started by four individuals in their mid-twenties who envisioned a powerful desktop computer, meeting the requirements of the technical community, at a fraction of the cost of much larger machines. Sun's founders believed the computers the company produced should be based on open standards. This then-unique approach would allow customers to mix and match Sun systems with products made by other vendors. Customers would be freed from a proprietary lock-in to one company. Open interfaces support competition and encourage innovation. With interfaces open and available, virtually anyone can develop new and different implementations. The consumer decides which products are best. Since the company was founded in 1982, many changes have occurred in the information industry, and, in many respects Sun is a different, improved company today. Whereas our first products were network ready technical workstations, today we offer products and support services to enterprises of all sizes as they move forward in an era of the internet and network-centric computing. However, our corporate vision, to make the maximum computing power available to a broad user base through open technologies, remains unchanged. For over ten years, our slogan has been, "The network is the computer." Our vision is to provide access to information by anyone, from anywhere, at anytime, on anything. Sun's Java technology, one of our more recent commitments to open network computing, enables the 21st century equivalent of the dial tone, called the "webtone." I will elaborate on this webtone concept in a moment.

III. Convergence: Basis of the Future

Today, convergence is generally discussed in terms of the technologies which are used in the creation, distribution, display and storage of information comprised of text, visuals or sound. They include the technologies being used in computers, television, telephony and also apply to publishing, photography, consumer electronics, appliances, radio, and many others. All of these mediums are either using or planning to use digital technology. In the past we have separated the world into digital and analog, into telephone and cable, into television and radio, into cellular and wireline, into long distance and local telephone, and into local area network and wide area network. Information was created by individual [begin page 3] appliances and transmitted via discreet pipelines to specific appliances. As convergence occurs and the digital revolution unfolds, these distinctions will no longer be meaningful because the digital world allows multiple forms of information to travel multiple pathways to the user - and offers the user multiple choices by which to receive that information. Once the information is converted to streams of Os and Is (digital bits) it becomes readable, seeable, and hearable worldwide via networks, including the internet. Once digitized, content of one form or another becomes transportable. So today we are witnessing the the continued rapid growth of the Internet and network-centric computing in industry, governments and the military. Corporations, industries and technologies are converging and consolidating to offer more and different information through what were once divergent communications channels.

In this fashion the digital revolution continues to alter our personal and business lives as much as the industrial revolution did before. New digital technologies have already changed the communications and information industries significantly. However, there are precautions we must take to ensure the healthy development of the new digital society. We will need strong, exportable encryption to secure and protect information in the global marketplace. We must also have free and open competition among the companies that will provide access to the digital environment and the means to make use of it. It is inevitable that some companies may attempt to control all the levers in this new paradigm, and to thus pull all the strings of the future users. No single company can do it all. Any model premised on one giant company trying to capture all the business is ultimately harmful to consumers. Finally, we must make sure that we preserve the open systems nature of the Internet by safeguarding the open interfaces that permit interoperability -- the ability of one system or program to work seamlessly with another. It is only through these open systems that we can build and maintain the channels through which the vast entertainment and information content can travel.

IV. Java, WebTone and Ubiquitous Computing - Key Concepts

WebTone is a prime example of a new digital technology that can foster innovation and competition in the face of this inevitable convergence. From the earliest days of computing until the mid nineteen eighties, computing was the province of trained and skilled professionals. Even the invention of timesharing, while it gave the expert user a small share of a large computer from the convenience of his workplace, did little to simplify things or make computers more usable to the average person.

It was the technical workstation from companies like Sun and the personal computer or PC from IBM that brought real computing to the desktop, and early networks made possible simple connections through which to move files from machine to machine. With the advent of the Graphical User Interface (or GUI) on PCs and workstations, the desktop computer became a useful and even essential tool in the hands of the computer user. But it was the Internet that caused the focus of computing technology to shift from being merely a way to run programs to a fundamentally new, intuitive, point-and-click way to access information and services, and launched the industry into a period of unprecedented growth.

The modern Internet is the fortuitous result of the marriage of the ARPAnet with the document browser. But it is the standard protocols or rules operating beneath the surface that makes the World-Wide Web work. The TCP/IP protocol makes possible reliable, error-free transmission of data over network connections. HTML defines the way text and graphics are represented on a web page. HTTP supports web page movement from web servers to the desktop and makes the static information in a web page available to the browser.

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Other techniques were developed to do simple animation and make rudimentary services available from web page servers. Along with easy access to information and simple services came good search tools and improved electronic mail (or email). Then Java changed everything. Growing out of Sun's sixteen years of experience with network computing, Java combines the concept of the WebTone -- namely highly reliable ubiquitous network computing -- with a universal software platform.

Java stands for "Write Once, Run Anywhere" -- truly portable, vendor- and machine-independent software. Reusable, object-oriented software for building snap-together applications. Reduced software costs combined with reduced system administration and management costs are resulting in a greatly reduced cost-of-ownership. Put simply, Java is helping to bring the power of network computing to the general public. Java makes the prospect of robust, complex, sophisticated, distributed services available to a variety of devices including PCs, NCs or network computers (sometimes called "thin-client" computers), kiosks, smart TVs and digital set-top boxes, home networks, web telephones, cellular telephones and pagers.

WebTone is what ties all this together. It is the 21st century Internet equivalent of today's dial tone for data and network services: simple-to-use, always there, accessible from any device, anytime, anywhere. Truly ubiquitous computing employing everything from high-speed broadband communications networks to shared bandwidth, wireless connections are made available through the "web tone."

WebTone is essential to providing users and customers with services such as e-commerce, electronic mail, personal finance, pay-per-view, and personal "webtop" support.

The WebTone will make a user's personal webtop available from anywhere on a wide range of devices. Your entire electronic desktop including email, browser, calendar, productivity tools and enterprise applications will be available from a PC at home, your workstation in the office, your laptop on the road or in a conference room, or a smart TV in your hotel room. Even a subset of your webtop -- perhaps just your email or calendar or a simple browser -- will be available on your pager or cell phone or PDA (Personal Digital Assistant).

In the course of a day, you may unknowingly leave your local network and join others in the same way you leave one cellular phone "cell" and enter another. But your personal webtop, meaning all the services and information you have surrounded yourself with at that moment, will follow you as you go from place to place whether by foot, airplane, train, auto, ship or space shuttle. Wherever you go, wherever you stay, wherever you work.

If you think about individual devices like personal computers, wireless telephones and TVs, it might be difficult to imagine why you would want to connect them together. But suppose you're watching CNBC's financial news on your laptop while drafting a memo to your staff. You hear or see something about a stock you own or want to buy. You instantly look up and dial your broker's telephone number to get advice while you click on a button to send your memo via a combination of email, fax and pager, and then adjust your investment portfolio with the click of a mouse or the touch of a pointer to a screen. Highly integrated and productive people need highly integrated and productive tools.

JINI is a Java technology focused on distributed computing that exploits the ability to move Java code from machine to machine. In essence it provides interfaces that enable networked devices to be represented as "services" accessible by other devices connected to the network, You can think of it as " plug-and-play " for network-aware devices. It is Sun's model for large-scale distributed computing [begin page 5] built on principals of simplicity, flexibility and federation. It allows users of resources to share them in a simple, uniform way. JINI provides a natural bridge between entertainment, automation (lights, coffee makers, environment), and information services.

Some cars today have a GPS (Global Positioning System) connected to a small computer to give you directions as you drive. A few cars not only have GPS but tie it into the car's cellular telephone so if you have a problem on the road, the service center can easily locate you. Imagine every car being similarly equipped (perhaps as part of your AAA membership), and being part of a wide-area, satellite-based network wherever you go.

Such a network is not limited to providing directions or getting road service. It can be linked to a LAN running throughout the car into which all the sensors and instruments right down to the clock on the dashboard and the phone/fax in the armrest are connected. Your dealer could troubleshoot a problem from across the country.

News, sports, special reports would be available at the flick of a button. TV for the kids in the back seat. Heads-up displays on the dashboard. Your car might even serve as the hub your laptop or Palm Pilot PDA uses to send and receive information when you stop at a restaurant or rest stop. JINI is going to make it easy to construct these highly connected and productive networks.

The same innovative technology is going to make it possible for the U.S. Army to manage the dynamic battlefield of the future using available computing and communications technologies with WebTone reliability and Java flexibility.

It's all part of a cascading network of highly reliable and always available networks designed to keep us and our organizations and businesses as connected, informed and productive as we need to be going into the next century. To accomplish all this, we need to continue to promote and enforce open standards for Java and critical application programming interfaces (called APIs) such as those controlling network security.

Java-based technologies are removing barriers to competition and enabling the computer, communications, entertainment financial services, health care, transportation and other industries to reach markets and offer new products and services unimaginable just a short while ago. Java is spawning a multibillion-dollar industry which will innovate and compete to provide services and content without bottlenecks to millions and ultimately billions of customers world-wide. A principal concern, however, is perhaps best expressed from an article written in the December 97 Red Herring Magazine. They said, "Java potentially strikes at the heart of Microsoft business by offering an alternative platform to Windows, and Microsoft has seen fit to retaliate in every way possible by creating Windows only extensions to Java and by threatening not to ship the updated version of Java." This type of anticompetitive behavior corrupts the ability of Java to function fully as a cross-platform technology, and will leave consumers locked in to the old proprietary standards of the PC era of computing.

V. Policy Recommendations

Instead of allowing this sort of squelching of innovation to take place, we must ensure that markets work properly and that competition based on innovation is vibrant. I thus urge the Committee to continue to monitor the state of competition in high technology industries. While antitrust enforcement agencies should not micromanage the economy, they should nevertheless act rapidly and vigorously to prevent [begin page 6] the maintenance of monopoly power through exclusionary practices such as the erection of artificial barriers or anti-competitive acquisitions designed to block efforts by would-be entrants to offer innovative technologies. When a decision to bring enforcement action is made, it is crucial to act vigorously and quickly.

Antitrust enforcers should be particularly vigilant of the following exclusionary practices: (1) efforts to replace emerging open standards with existing dominant standards; (2) efforts to leverage dominance into related markets through exclusionary practices; (3) efforts to prevent access to OEMs and ultimately to the PC desktops of consumers; and (4) efforts to forestall innovation through anti competitive acquisitions of innovative start-up firms.

In addition, balanced intellectual property protection is another essential facet to maintaining a competitive environment in the US hi-tech sector. As a firm that invests millions annually in research and development, much of which is in software development, Sun has interests both in legal protection for software under copyright as well as in the principle of interoperability, both of which are fundamental to the growth and continuing health of the industry. Such a balanced policy will benefit users, increase innovation, competition, consumer choice and lower prices in the marketplace.

In conclusion, I would like to again thank the Committee for providing me an opportunity to express my views on convergence and consolidation in the entertainment and information industries. The future ahead seems brighter by the day. We must all work together to help make sure the promise of this bright future does not stray down the wrong path.