Will 'Net speed up soon?
While new technology is easing the traffic jam, relief won't come in '98
January 15, 1998: 3:28 p.m. ET
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NEW YORK (CNNfn) - Just when Internet access became commonplace, so did phrases like the "World Wide Wait," illustrating frustrations over the Web's relative slowness.
<Picture>Modem makers and other technology companies instantly went to work on the problem, hoping to seize an opportunity to move more modems and high-speed data devices.
<Picture>Those efforts brought 56 kilobit per second modems to market and made other high-speed, digital alternatives like Integrated Services Digital Network, or ISDN, more commonplace.
<Picture>On the horizon lie technologies with even greater potential, such as cable modems, broadband wireless offerings and speedier digital services using standard telephone lines. Still, one analyst believes it might be a while before Web surfers across the nation get much relief.
<Picture>Kinetic Strategies Inc., a Phoenix, Ariz., technology research firm, said in a December report that cable modem service had slightly more than 100,000 subscribers at the end of 1997 and was available in about 9 million homes in the United States and Canada, or 8.7 percent of all homes capable of receiving cable.
<Picture>Michael Harris, the firm's president, said cable modem service could be available to 20 million homes by the end of 1998, but he still believes this will be a year of transition.
<Picture>"The lack of widespread upgraded cable plants is the major factor for the lack of development in the cable modem segment. They have to upgrade the physical network structure by building local fiber to augment the existing network. They then have to deploy sophisticated routers, servers and things that an Internet provider uses.
<Picture>"If you look at the physical network and data network that has to be layered on top of that, that's a major hurdle," he said.
<Picture>Routers are the equipment responsible for moving information from servers and ultimately to computers in homes and businesses.
<Picture>Cable companies so far have been the first out of the gate to serve the high-speed data market. The largest of them have banded together in consortiums to share the cost of upgraded their facilities.
<Picture>Road Runner, a product offered by Time Warner Inc.'s cable division, and U.S. West Communications group's MediaOne Express recently joined forces to compete with @Home, the cable Internet service jointly owned by cable companies Tele-Communications Inc., Comcast Corp. and Cox Communications Inc. (Time Warner is the parent company of CNNfn.com.)
<Picture>That deal put them in the No. 1 spot in terms of subscribers. The companies say they joined forces to entice more cable operators to offer speedy Internet service, making it easier to turn a profit.
<Picture>Bob Benya, senior vice president of marketing for the Road Runner service, said currently 55 to 60 percent of the cable systems belonging to the consortium are capable of offering high-speed data service.
<Picture>Despite the cost of upgrading systems to offer the service -- which industry analysts put at between $150 and $200 per home -- Benya said the prospects for success look bright.
<Picture>"We know that at a reasonable penetration, this is an attractive business. We're making an incremental investment to our existing plants and the trends are favorable on the fixed-cost side as it pertains to getting the system ready. We're also seeing nice cost reductions from cable modem manufacturers," Benya said.
<Picture>Harris said cable operators eventually will offer a wider range of services to different segments, some focusing on the television and others delivered to the PC. He said the number of offerings should increase in 1999.
<Picture>As cable modem makers agree on standards that will allow modems to work on any cable system, Benya believes that will push the devices onto store shelves within the next two years. That will mean that eventually subscribers will buy those devices instead of leasing them from the cable companies.
<Picture>Benya said it's possible for the service to do well in even mid-size markets. He cites Portland, Me., as an example, saying more than 5 percent of eligible subscribers there have signed up in the eight months the service has been offered. He said that's double original projections.
<Picture>Prices for Road Runner and other cable services typically range from $35 to $45 a month. Since cable modem subscribers are always physically connected to the network, there's no time restriction on access. Speed can approach several megabits per second, whereas ISDN can offer only slightly more than one-tenth of a megabit.
<Picture>Harris said cable operators will initially be selling value because they currently are the only ones with a high-speed product that's approaching wide availability.
<Picture>Not to be outdone, regional telephone companies now are testing the Asymmetrical Digital Subscriber Line, the much faster successor to ISDN, which also offers multi-megabit per second connections. US West, which serves several Western states, already has rolled out the service and others, including Bell Atlantic, are testing it.
<Picture>Sources tell CNNfn that ADSL could hit the New York City area by late spring, Bell Atlantic officials confirmed that they hope to roll out the service somewhere in their territory -- which ranges from Maine to Virginia -- by the spring, but refused to elaborate on specific cities.
<Picture>Harris said cable providers probably will go after the residential market while ADSL and other digital derivatives will be targeted to businesses.
<Picture>"I think we're just getting out of the gate on a long race. [Phone companies] will be players, but cable operators have caught them flat footed and were quick out of the gate," he said.
<Picture>-- from staff writer Cyrus Afzali |
