Broadcom Puts Cable-Modem Circuitry On Single Chip, a Leap for the Industry
September 21, 1998
By FREDERICK ROSE
Staff Reporter of THE WALL STREET JOURNAL
LOS ANGELES -- Broadcom Corp., in a major boost for Internet access
through television cables, announced a single computer chip that contains
the complicated circuitry needed for home connections.
By packing the circuitry for meshing TV signals and computer data onto
one chip instead of three, Broadcom is expected to sharply cut the cost of
home equipment for an emerging market, according to people in the
industry.
Faster-than-expected miniaturization of complex circuitry also could hasten
the connection of phones and other devices to TV cable, technology
analysts said. "This could have quite an impact," said Andrew Fuertes, a
senior analyst at Allied Business Intelligence Inc., Oyster Bay, N.Y.
People familiar with Broadcom's new chip say it contains circuitry for
telephone connections through TV cable, a service cable companies hope
to offer in the future. Cable operators have been rushing to convert old
analog systems originally designed just to send TV signals into the home.
By connecting new switching to old wire, they can provide two-way,
digital-cable systems for Internet, television and telephone service.
But the cable companies have to cut costs to be more competitive with
telephone companies, which are pushing to offer similar services through
traditional phone wires. So far, cable companies have purchased modem
boxes costing as much as $500 each, renting them to consumers as part of
cable Internet service. But the companies have been anxious to sell these
boxes to consumers. Cheaper equipment "will really stimulate the market,"
said Richard Green, president and chief executive of Cable Television
Labs Inc., a Louisville, Colo., research consortium of the TV cable
industry.
Broadcom's new chips are expected to cost about $50 each in relatively
small lots, about the same as the current three-chip set, industry insiders
said. But prices for big orders might be half that and likely will decline
swiftly. Combined with production savings, assembled-modem prices are
expected to soon fall below $200, a level at which the cable devices likely
would become a standard retail product, much like today's modems for
telephone lines.
"That's where the business must go in order to work," said Allen
Leibovitch, a senior semiconductor analyst at the consulting firm
International Data Corp., Framingham, Mass.
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