Video Traveler

By Desa Philadelphia

Tony Markel, CEO of the Markel Corp., a specialty insurance firm, tried videoconferencing once before, to save money during the last recession, from 1990 to 1991. But "there were delays in the audio. We were stepping on each other's lines," says Markel, who demands strong communication and teamwork among his brokers in far-flung cities like Richmond, Va.; Toronto; Paris; and Sydney, Australia. Soon his employees were back on airplanes, and the expensive video hookups started gathering dust. So after the terror attacks last September, when travel delays were eating up the time of his employees, Markel thought videoconferencing would be a short-term solution at best. But he attended a demonstration of new equipment, tried it out and was so impressed that, as of Feb. 1, the company has a new travel policy: airfares and hotels will be authorized only if employees can show that a videoconferenced meeting would be insufficient.

That's going to be hard to do. The herky-jerky video and out-of-synch audio of 1991 is gone--thanks to superior hardware and software and broadband Internet connections. The most advanced videoconferencing setups can transmit participants' images with a 3-D-hologram quality reminiscent of Captain Kirk beaming down from the Starship Enterprise. And at every level of sophistication, videoconferencing systems cost a fraction of what they did in 1991. This time, users and industry experts agree, the technology is here to stay. Even after the recession ends and terror fears abate, says Jaclyn Kostner, a consultant who teaches long-distance teams to collaborate effectively, "business people are never going to travel as much as they did. Technology won't totally replace travel, but it will reduce travel."

Accounting giant Ernst & Young used videoconferencing before Sept. 11 but limited it to distance education for employees and for clients in remote locations in Latin America. In recent months, though, the firm has more than doubled its monthly videoconferencing, to replace just about every type of business trip, including client meetings. Software provider PeopleSoft has also doubled its use of videoconferencing among employees and customers around the globe.

Markel's company ordered seven $60,000 Tandberg 8000s--the Rolls-Royce of videoconferencing--which come equipped with 50-in. plasma screens for high-definition video. Presenters can just plug in their laptop to display data on one of the screens. The Tandberg can simultaneously connect to as many as 10 video sites and four additional audio sites. And the equipment will significantly reduce Markel's travel costs--almost $5 million last year within North America alone.

British Petroleum and HQ Global Workplaces are among the companies interested in a $30,000 system developed by the Dallas-based company Teleportec. That system allows video of a participant to be reflected onto a transparent screen to simulate a 3-D image that makes it seem as if the person is in the room. It's an optical illusion, says vice president Philip Barnett, but many who see the images forget that. He still chuckles at the memory of the executive who tried to hand a document to the colleague who was being "teleported" in.

To be sure, teleconferencing won't provide the satisfaction of closing a deal with a firm handshake. And it still makes sense to form new relationships in person, then use videoconferencing to maintain them. But grounded executives are finding that today's high-quality videoconferencing allows them to look clients in the eye and read body language--sometimes more clearly than they could in person. The technology is disarming because participants sometimes forget they're being watched.

The improved quality and lower prices of videoconferencing were attracting attention even before Sept. 11, as the tech recession and the beginnings of the slowdown elsewhere in the economy had companies searching for ways to save on travel. A conventional system like Polycom's ViewStation 512 can receive multiple video calls and allow data transmission with connections that look and sound like network television. In 1994 a less capable unit cost about $70,000. Today a corporation could equip four offices for less than $25,000.

Pharmaceutical giant Bristol-Myers Squibb has been using videoconferencing since 1991, when it paid $500,000 to build a special room with enough enhancements to ensure optimal quality. In recent years Bristol-Myers has used the technology to connect as many as 130 sites for one meeting, allowing scattered researchers to compare clinical data and discuss projects. "We use it in all aspects of our operations, from discovery to development to commercialization," says Mark Lamon, who oversees videoconferencing for the company's research-and-development unit.

Sales of videoconferencing hardware totaled $1.1 billion last year, according to Wainhouse Research, which tracks the industry. Auxiliary businesses also did well. Telecommunications companies like Verizon and Southwestern Bell, which provide the digital ISDN lines that are used for 80% of videoconferencing communication (at about 60[cents] per minute) posted more than $3.6 billion in videoconferencing-related sales last year. Bristol-Myers Squibb alone logged 2 million minutes in videoconferences (which in turn saved the company hundreds of millions of dollars in travel expenses). Wainhouse projects that revenues for connection services related to videoconferencing will top $8.6 billion in 2005.

FocusVision, a Stamford, Conn., company that runs videoconferencing facilities for focus-group market research, has expanded rapidly since 1997, after slow growth in the early '90s. Last year it landed several dream clients, including Coca-Cola and Colgate. "Once people try this, the comptroller won't let them travel anymore," says FocusVision president John Houlahan.

Before last spring, videoconferencing supplier Forgent was known as VTel and was one of the top sellers of hardware. But the company decided that it could do better in the burgeoning software business. Forgent software monitors video-call connections and allows IT managers to quickly diagnose failures in the system--including failures by phone companies.

Forgent's first customer for the software, Physicians Telehealth Network, a Columbus, Ohio, company that facilitates videoconferencing between medical institutions, is developing a global system to allow physicians to examine patients who might be a continent away. Since Sept. 11, PTN has seen a 300% increase in calls from companies and insurers seeking services like remote workmen's compensation examinations. Last month PTN pitched its system to Tom Ridge's Homeland Security office as a bioterrorism preparedness initiative. Should a virus like smallpox be unleashed, the doctors say they can use videoconferencing to help with diagnoses and treatments for patients quarantined in mobile hospitals.

PTN is deploying an Internet Protocol system that allows it to send video and data over a dedicated high-speed line--the same kind most companies use for Internet service. IP videoconferencing hasn't taken off yet because the bandwidth required to transmit streaming video would incapacitate most office networks. But once corporations have all the bandwidth they need, experts say, all videoconferencing will be done using IP. When videoconferencing gets to that level, "it will be operating on an easier platform," says Lou Gellos, spokesman for Terabeam, a Seattle-based firm that markets laser transmitters that can send up to a gigabit of video per second (600 times as fast as T-1 lines) between offices and the data network.

IP will also take videoconferencing out of the conference room, eliminating the need to schedule meeting time and reserve equipment. Polycom is working on a Web Office system, scheduled to debut within two years, that aims to improve the discontinuous picture grabs that now qualify as person-to-person Internet video calling. Ideally, most workers would eventually have a camera attached to their desktop or laptop computer, loaded with software that allows streaming-video calls to anyone, anywhere, at any time, without having to pay long-distance phone charges. When that happens, the travel industry may have even more cause to worry.

Barbara Leflein, president of Leflein Associates, a small market-research firm in Fort Lee, N.J., escorts clients like Coach leather goods and the Showtime cable channel around the country to promote their wares. Noting their continuing reluctance to fly, she recently began offering videoconferenced focus groups as a way to keep business. "The client can still get the visceral reactions of the group by watching it on a large-screen TV," says Leflein. "If you're a boutique firm, you really have to think outside of the box," she says. Or inside the box, as the case may be.

--With reporting by Julie Rawe/New York

With reporting by Julie Rawe/New York