Nice article from Computer Reseller News on the future of cable modems and the present demand for 56K modems:
Cable Providers Focus On WAN Access
Growing Sphere Of Influence
Cable Companies Are Increasing Their WAN And Internet Presence
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<Picture>US West MediaOne has 25,000 subscribers for its Internet service.
<Picture>Cox Communications developed services for the Omaha, Neb., area.
<Picture>Tele-Communications has customers in Illinois, Connecticut and California.
<Picture>BlazeNet now offers both download and upload services.
<Picture>By Paul Korzeniowski
San Mateo, Calif.
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Resellers soon may have another weapon to add to their WAN and Internet-access arsenal: cable modems and cable providers.
Although cable modems offer the promise of high bandwidth, it is too early to tell if an infrastructure can be put into place that will make cable a winner with businesses and telecommuters.
Traditionally, cable television suppliers have delivered closed systems to customers, bundling any needed hardware as part of their monthly service. But now, as they move into the red-hot, high-speed Internet-access market, these companies are changing their business models and are beginning to bring traditional resellers of computer and networking solutions into the picture.
It is, however, a little early to label the change widespread. To date, only a few cable-modem vendors and cable Internet-access providers have begun to work with resellers to test how customers want to purchase cable modems. These test results will determine what role the channel will play in moving cable modems.
At the moment, cable Internet-access suppliers have more pressing concerns, such as learning more about customer interest and increasing the reach of their coverage. These vendors are in a fierce battle with other technologies--asymmetric digital subscriber line (ADSL), dial-up modems and ISDN--to convince customers to use their services.
Cable Internet access has its advantages, proponents said. These services offer transmission speeds of 1.5 Mbits per second, approximately 25 percent faster than dial-up services. Cable TV suppliers have priced their services aggressively. A customer pays approximately $150 for the initial installation and then a recurring monthly charge of $40 to $50 for unlimited access.
The problem is these services are available in only a limited number of areas, and no cable provider is close to offering 100 percent service availability.
One of the first cable TV companies to jump into the Internet-access area, US West MediaOne Inc., Denver, has 25,000 subscribers, mainly in New England.
Meanwhile, Cox Communications Inc., Atlanta, developed Internet-access services for the Omaha, Neb., area and Tele-Communications Inc., Englewood, Colo., has customers in Arlington Heights, Ill., and Hartford, Conn., as well as Fremont, Calif., and Sunnyvale, Calif.
Because coverage is limited, there now are only about 100,000 to 150,00 cable Internet-access users in the United States, industry observers said.
Expanding the service area is not a straightforward proposition. In many locations, services are limited by the cable TV network infrastructure. The network equipment used to deliver cable TV services was built for one-way connectivity. So while users can download information from the Internet, they are not able to perform simple functions, such as sending E-mail.
Suppliers have come up with ways to work around the problem. For example, modem manufacturers developed products that enable users to download information at multimegabit speeds but then use dial-up telephone lines to upload information.
In April, BlazeNet Inc., a York, Pa.-based Internet service provider, started to offer such services to its customers.
How much interest these services will generate is unclear.
"The case to install a cable modem becomes most compelling when a user can work with a two-way system," said Kelly Ruebel, director of marketing and sales at US West MediaOne.
To support two-way communications, service providers need to upgrade their network infrastructures. William Markey, director of marketing for cable access at 3Com Corp.'s Skokie, Ill., office, estimated only 2 percent to 3 percent of the existing infrastructure supports two-way communications. Consequently, cable companies need to make huge infrastructure investments to offer Internet services.
Some, but not all, are taking on that challenge. US West MediaOne expects to have cable Internet services available to 40 percent to 50 percent of its 2 million customers by the end of the year.
Since such upgrades need capital, cable companies are interested in ways to increase cash flow, and resellers could help.
"Eventually, we would like to get cable-modem equipment costs off our books," said Ruebel.
Selling products through resellers rather than bundling them with Internet-access services would accomplish that goal. While interested in that possibility, US West MediaOne has determined it is a little early in the service life cycle to take that course.
Not all suppliers agree, however. BlazeNet, for example, has worked with its equipment supplier, 3Com, to convince resellers and retailers to supply its customers with cable modems.
Industy experts' opinions are split about how much of a hit cable modems will be.
"Last year, there were about 150,000 cable modems sold, compared with 11 million [56-Kbps] modems. In a couple of years, I could see vendors selling a few-hundred-thousand cable modems, but there is a long way to go before it becomes a mass market," said Ernie Raper, senior market analyst at VisionQuest 2000 Inc., a Moorpark, Calif., market-research firm.
3Com's Markey disagreed with this estimate, however.
"We've been surprised at the number of suppliers moving into the cable-modem market," he said. "Not only have our traditional competitors in the modem and network-equipment markets entered, but a number of consumer-electronics suppliers are interested in this space. To us, that means this area has a great deal of potential."
PAUL KORZENIOWSKI is a freelance writer in Sudbury, Mass. |
