Video Traveler

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."

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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.