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Technology Stocks : USRX

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To: Scrapps who wrote (17426)4/11/1997 12:34:00 PM
From: Jeffery E. Forrest   of 18024
 
56Kbps Modems Underrated

By Paul Merenbloom

Without wanting to sound like an apologist for the industry, I think 56Kbps modems
are getting a bad rap. Although we're still waiting for commercial delivery of the
Rockwell International Corp./Lucent Technologies flavor of 56Kbps, U.S. Robotics
Inc. has its product in early deployment. From what I've seen so far, I'm fairly
impressed and convinced that 56Kbps modems will come to be a solid foundation for
both remote and Internet access.

Many analysts and members of the press have skewered the new devices for being late
and not delivering true 56Kbps transmission speeds. And some customers seem
disappointed that 56Kbps modems aren't shaping up to be the alternative to ISDN that
they originally expected.

USR's product doesn't offer "true 56Kbps" transmission rates--the best is about
53Kbps. But is thatso bad? In my testing I've seenflat data rates of about 40Kbps to
42Kbps sustained. This is a significant improvement over the 26,400 connections
generally obtained with V.34 units.

I've seen World Wide Web data--both inbound ftp (File Transfer Protocol) and HTTP
(HyperText Transport Protocol)--deliv-ered with 50 percent to 100 percent
improvements in speed using the same 486 PC and analog phone line. America Online
Inc. is making substantial investments in x2 from USR as part of its field-network
expansion, and several major ISPs (Internet service providers) are following suit. The
pending merger of USR and 3COM Corp. could cement the presence, if not the
distribution, of x2 in the networking community for a long time to come.

If you have a user base that downloads significantly more than it uploads, then x2
technology is well worth a look. I expect we'll see pretty much the same type of
performance from the Flex56 offerings that are coming too.

No, those aren't ISDN speeds. If your remote users are uploading massive amounts of
data, then ISDN is the clear choice. But 56Kbps modems don't require waiting
periods for special phone lines, complicated setup routines, and hefty monthly charges.

And 56Kbps modems don't cost as much either. Although either of the 56Kbps
technologies will require some upgrade time or money to deploy, many users will be
able to upgrade their late-model modems to 56Kbps units.

How is that possible? 56Kbps technology is based, in large measure, on improvements
in telephone-company switching systems and the implementation of digital
infrastructures that exist in the telecommunications environment today. By using a
technique called trellising, 56Kbps modems create two channels, disproportionately
splitting the available bandwidth to favor a larger download channel.

This makes a lot of sense because most end users receive more data than they transmit.
If you have field organizations receiving E-mail or surfing internal or external Web
systems and sites and the like, my bet is that you'll be pleasantly surprised with 56Kbps
technology.

On the other hand, if you're using 56Kbps modems for server-to-server replication or
any other application in which the amount of data transmitted in both directions is
approximately equal, then 56Kbps isn't for you.

When you consider that 56Kbps modems are just a $60 software upgrade away for
many users, it's clear that this new technology plays an important role as a bridge
solution that can improve client-response time without massive changes in equipment or
costly requirements for technical support. That makes 56Kbps a winner to me.

Paul Merenbloom is vice president of technology research at Prudential
Securities in New York.
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