Editor’s note: Charles Davidson, who covers the Atlanta tech scene for Local tech Wire, will be reporting daily from Supercomm. Intel Chief Executive Craig Barrett says that the telecommunications and information technology industries are in the throes of a turbulent consolidation period that in past industrial cycles has taken 10 years to play out.

At the same time, he offered an optimistic long-term view for the industry, saying opportunities will abound but perhaps not for another year to three years.

‘We’re seeing 10 years of consolidation in normal conditions take place over about 12 months,” Barrett said during a keynote speech Tuesday morning at Supercomm, the international telecoms trade show that will draw some 50,000 people.

Barrett said the information revolution is following the same path as other industrial epochs in history, including those launched by canal building in Europe, the invention of the locomotive, the automobile and electricity. The dawn of the new industry, Barrett told about 3,000 listeners, is historically followed by rapid growth, excess exuberance and investment, turbulence then finally a slower but sustained period of growth.

The IT and telecoms industries are in the turbulent time, Barrett said. To underscore his point, he cited statistics showing that at seven big telecoms and IT companies, employment and research and development spending have been slashed by 50 percent over roughly the past year.

At Lucent, Nortel, Motorola, Ericsson, Marconi, Alcatel and Cisco, combined employment has dipped to about 400,000 from 800,000 while R&D investment plummeted to $15 billion from $30 billion, Barrett said.

That reflects what he termed “an interesting mess” in the telecom industry. This mess has resulted in part because all manner of players — wireless carriers, cable TV firms, big local exchange and long-distance carriers, Internet service providers, etc. — are chasing the same customers. That has created excess investment in infrastructure, more than $1 trillion worth in the past few years, Barrett said.

The massive investments have not created new applications and services that consumers and business are willing to pay for, the Intel CEO reported. Consequently, telecoms carriers, those that survive, are digging out from under staggering debt and have stopped investing in new services and equipment, Barrett related.

What the industry needs, he continued, is moderate levels of investment. This can only happen if various devices — desktop PCs, hand-held computers, mobile phones, laptops — all access the Internet in similar ways. Interoperability, the ability of devices and networks from different vendors to all work together, is crucial to allowing industry-wide innovation, instead of innovation at just a handful of companies, Barrett said.

The underlying conditions for that sort of innovation and for long-term growth are there, he said. “The opportunities are bright, but you have to look out one to three years to see them.”

Barrett sees those opportunities in both developing countries, which want to rapidly build the information infrastructure that’s critical in a knowledge-based economy, and in developed countries, which he thinks must continue advancing their own telecoms and IT systems to remain competitive.

He reeled off several more statistics that add up to a continually expanding information universe:

  • Hundreds of billions of dollars in Internet commerce growing to $5 or $6 trillion in a few years
  • 500 million Internet-enabled devices now increasing to “a few billion” later this decade
  • 120,000 terabits a day of Internet traffic rising to 800,000 in 2005 and 1.6 million terabits by 2006

All that growth in communications will produce business opportunities, but only if companies focus on what customers actually want. “For too long our industry has focused on blind capabilities — ‘Give ’em bandwidth and they will come,’ ” Barrett said. “We’ve been too much focused just on the infrastructure.”

A substantial future opportunity will be the creation and moving of rich digital content, such as real-time video. To make that happen, Barrett said, the United States and other countries need regulatory reform to ensure copyright protection, fair use for consumers and the ability to create business models that give customers what they want — such as the ability to buy one song instead of an entire compact disc.

Look ma, no wires

Some two thirds of cable modem and DSL, or digital subscriber line, users are unaware that they can get similarly fast Internet service wirelessly, said Alastair Westgarth, CEO of Navini Networks, which makes wireless broadband gear. Westgarth was citing a study by the consulting firm Strategis.

Wireless broadband has been a hot topic in the industry. At the end of 2001, only 338,000 residential subscriber used a wireless broadband connection, according to In-Stat/MDR, a research firm in Scottsdale, Ariz. But In-Stat/MDR figures that number will grow to 3.1 million by the end of 2006, with services using unlicensed spectrum accounting for the bulk of that growth.