Here's an article from Briefing.com.
I'm sure everybody knows this info., but it'll be
good review....
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Raising the Internet Speed Limit
Currently the Internet is divided into two separate worlds: those with high
speed network connections (mostly at their place of work), and those with low
speed dial-in modems (mostly at home.) The Internet experience is very different,
depending upon which world you are in.
Over the next eighteen months, this will all change as new technologies are
deployed. Today's Stock Brief presents a short primer on the two principal
technologies that will make high speed Internet access more accessible and
affordable: Cable Modems, and Digital Subscriber Lines.
Cables Modems
Delivery of internet services over the existing cable infrastructure looked like the
only promising technology two years ago. Using the existing coaxial cable
wiring into your home, the Internet digital signal is superimposed over the cable
signal allowing both systems to be used at once. A splitter divides the cable into
two cables for attachment to your TV or VCR and for attachment to your cable
modem.
Cable modems currently require installation by a technician because few homes
have the splitter installed. From the splitter, a cable connects to the cable modem,
external to the PC, and the cable modem connects to an Ethernet card installed in
the PC. Most companies providing cable modems require that you use a specific
cable modem and they either sell it or lease it. In many ways, the business model
resembles the existing cable TV business model.
Cable Internet service generally costs approximately $30 to $50 per month with
an installation cost of $150. The cable modem can usually be rented or purchased.
Most cable Internet providers do not require that you also subscribe to cable TV,
though it is likely that most people do.
Cable modems provide an "always on" condition, meaning that you do not need
to dial in for access.
Cable modems provide speeds of up to 10 Megabits per second (Mbps) or
roughly the same speed as raw Ethernet transmissions. However, because of the
way that cable signals are distributed through neighborhoods, up to 500 homes at a
time may share the same entry point onto the Internet. Although it is unlikely that
this type of resource sharing would degrade transmission speeds for existing
Internet uses, it may be problem for future uses, such as on-demand video. Most
cable Internet providers quote maximum speeds of between 3 and 10 Mbps.
Cable modems generally provide data transmission of equal speed in both
directions (downloading and uploading.)
Two of the best known companies offering cable Internet access are @Home
(ATHM) and MediaOne (UMG). @Home is a company primarily funded by
cable giant TCI and venture capital giant Kleiner Perkins Caufield & Byers, along
with other cable companies. MediaOne is a subsidiary of US West, although US
West has a proposal before shareholders to make US West Communications and
MediaOne separate companies.
Digital Subscriber Lines
DSL stands for Digital Subscriber Line. DSL technology brings high speed
internet access across ordinary twisted-pair phone lines. Strictly speaking, the
term refers to the modem, and not the telephone line. Just as putting a 56K
modem on a phone line does not make it a "56K" line, putting DSL modems on a
line does not really change the line. Nevertheless, people think of DSL as "lines"
because the DSL technology is a point-to-point technology. There must be a DSL
transmitter on the originating end of the phone line. In addition, the provider
charges for each "DSL" line installed.
There are several variations of DSL technology, summarized below:
HDSL: High Speed Digitial Subscriber Line (two way high speed data
transmission)
ADSL: Asymmetric DSL (one way high speed data transmission)
VDSL: Very High Speed Digital Subscriber Line (two way faster speeds up
to 45 Mbps)
RADSL: Rate Adaptive Asymmetric Digital Subscriber Line (Variable rate
data transmission)
For the purposes of this discussion, we focus only on HDSL and ADSL. HDSL
can be thought of as the business DSL, while ADSL will be primarily used in
homes or at the consumer level.
HDSL allows bidirectional transmission of data at speeds up to 1.5 Mbps.
This is roughly the same speed as a T-1 data line. HDSL is primarily for the
business market because bidirectional transmission of data is generally only
needed when you are serving data to others on the Internet.
HDSL is an improvement over T-1's in implementation. The term T-1
actually refers to a transmission protocol, not the type of wire used. When T-1 is
implemented on ordinary phone lines, it requires two sets of lines and cannot be
used over distances of 3,000 feet, without installing repeaters. In addition, T-1
does not allow simultaneous use of the voice and data signal.
ADSL, the consumer implementation of DSL, allows download of data at
speeds up to 7 Mbps. Implementations of ADSL vary widely, with some offerings
having download speeds of only 1.5 Mpbs. (Higher download speeds are
accompanied with shorter distances from central offices.) However, in nearly all
cases uploading of data is limited to approximately 640 Kbps (still more than ten
times the speed of a 56K modem). Upload requests for most consumer applications
are not speed dependent, however, and this limitation may not matter.
One of the strong advantages of ADSL deployment is that it can use existing
phone lines. Since nearly all houses have phone lines, the potential for rapid
deployment is high. As soon as a telephone company installs DSL transmission
equipment in their central office, the technology is widely available.
All DSL modems provide an "always on" condition. You do not dial-in to
access the Internet. An additional pleasant feature is that phone conversation and
Internet transactions can occur at the same time.
It is important to note, however, that just as ISDN and T-1 lines can be provided
by other vendors, DSL lines can be offered directly by Internet Service
Providers.
Most ADSL subscribers require a splitter, as do cable modems, to separate the
voice and data signal. Generally, this means installation by a technician. However,
splitterless DSL, sometimes called DSL-Lite, gives up speed capability in
exchange for putting all of the analog/digital separation technology at the DSL
lines origination point.
A small company named Aware Inc. (NASDAQ: AWRE) in Bedford,
Massachusetts, has already developed firmware for a DSL-Lite chip. The
technology has been licensed by Lucent Technologies, who will produce DSL-Lite
modem chip-sets. This means DSL-Lite modems should be appearing soon. You
plug your DSL-Lite modem directly into the wall and then plug both your phone
and the PC into the modem. Then, just turn it on. This development is critical as it
will allow the individual consumer to simply call and order an ADSL line on one
of their existing phone lines in their house and then plug in the computer.
Although this technology limits the download speed to 1.5 Mbps, it is still more
than 25 times faster than a 56.6K modem.
There are disadvantages to the DSL technology, however. The biggest is that
you must be within 3 miles of a phone company central office. For densely
populated areas, this may not be a problem, however, on the outskirts of the
suburbs, DSL lines may not be available, unless the DSL provider installs well
located repeaters.
A second disadvantage is the DSL technology is not universally standardized.
Actual implementation varies by the provider. From a practical point of view the
only drawback is that this limits the type of modems that you must use to those
which are compatible with your provider.
Pricing of DSL services varies widely. US West offers ADSL-Lite in tiered
pricing, based upon the actual speed offered. For speeds of up to 256Kbps, a DSL
line costs about $40 month. Full ADSL service with speeds up to 7 Mbps costs
between $120 and $800 per month. GTE offers DSL-Lite (at 680 Kbps) service on
a limited basis in California for $125/month.
However, DSL technologies are much cheaper in other places. Optimum
Communications in Tampa, Florida is offering 3.2 Mbps ADSL and 1.2 Mbps
HDSL for $99/month. NETinc, in Canada, offers a full 7 Mbps implementation
ADSL in Hamilton, Ontario for only $50/month for residences and $200/month
for businesses.
It is likely that DSL services will decline sharply in price over the next twelve
months as more and more providers roll out the service.
Our Analysis
In examining technologies, it is tempting to look only at the the technical
differences. We make an effort to look for the business differences as well as the
technical differences. After all, Betamax was definitely better than VHS, but it
failed because of business reasons.
On the surface, both cable modems and the consumer ADSL technologies seem
to provide extremely similar capabilities. Both offer "always on" capability and
use existing infrastructures. Both have strong financial backers. Although prices
vary widely, some DSL offerings are comparable in price.
The only clear sustained advantage we can see goes to DSL technology, simply
because there is a possibility of more vendors to the consumer. DSL pricing can be
lowered, but cable modems can only be provided by your existing cable company,
either directly or through that company's relationship with an Internet vendor,
such as @Home.
Currently, cable modems have the price advantage. However, when it isn't
available, a price advantage doesn't matter. Cable modem access to the Internet is
extremely limited, with availablity mostly in limited areas in California. Whether
cable Internet providers can get everyone signed up before DSL technology
becomes widely available is unclear.
When will DSL technology become widely available? By this time next year,
DSL services will be widespread. Even America Online is working on providing
ADSL services directly to its customers.
In the consumer marketplace, splitterless DSL-Lite technology seems very
promising. The ease of installation alone is a factor that may make it succeed over
other technologies. Although slower than cable modems, the increased speed is
probably adequate for most users. However, lack of standardization means that
PCs will likely not be shipped with DSL modems preinstalled. Cable modems also
face this same problem however.
Whatever happens, it seems certain that the speed limit on the Internet will soon
be raised to very high levels. We will be watching both areas for developments
and looking for companies likely to benefit. So far, only US West seems to have a
stake in both technologies, with US West Communications offering DSL services
and MediaOne Group offering the cable Broadband service. |
