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To: NickSE who wrote (46256)	6/4/1998 8:55:00 AM
From: rudedog	Read Replies (2) \| Respond to of 176387

OT Cable Modems OT There's a study which says in 2002 there will be 4+ million on cable and 400+ thousand on xDSL. Yes I've seen those studies. CPQ was big on cable modem a couple of years ago, until they got a good look at the underlying issues with the cable infrastructure. The study is factual but misleading - cable has had an initial lead in marketing, and the studies were mostly done when the RBOCs were firmly opposed to DSL. The network diagram actually shows exactly the problem I was outlining with the wire infrastructure. If a given cable leg, which was installed to service 1-way continuous links for a few thousand users, now has to do on-demand transmission as well, some of the current bandwidth needs to be used for that. Also they can not service more than a handful of users without running more cable, and running the cable in the first place was a multi-billion dollar investment that the cable companies have not gotten out from under even after ten years. There is no value proposition to run more cable for this use, it uses more bandwidth for much less money than cable subscribers. Looks like they provide the services you mention here Here again they can do it in some cases when there are 1 or 2 users on a trunk but not if the service takes off. The problem is that the existing cable has very limited back-channel capability, which limits the ability to do 2-way handshaking. More than a third of the cable infrastructure has less than 1% back channel, and only the newest installations have the ability to support variable bandwidth back channel information. changing that requires changing out all of the line amplifiers (those things you see hanging on the cable every couple of houses apart), and also the trunk and head end gear. Given that there are 70 million cable subscribers, the cable companies could maybe get to 4 million users if the distribution was 'just right', and if they are able to combine the existing channels into about 1/5 of the current bandwidth using MPEG compression to free up space for digital subscribers. but those 4 million would be getting service that is only a little better than ISDN, not the hot response you see today. This is a drive by the cable companies to justify new equity investment from people who don't know the underlying issues. If they can build this Ponzi scheme and get a new multi-billion dollar equity investment, and string a lot of new technology (essentially replicating the fiber infrastructure, not current coaxial cable technology) then maybe they could compete. Not a good bet IMHO. I will say again - look at the underlying debt load and cash flow of the cable companies, look at the financial and ownership structure of the companies that have been put together to go after this market, and you will come to the same conclusions. This industry can not fund the development needed to make this a reality, and they are hoping to drive equity investment in some pretty unusual arrangements of ownership before the general public figures that out. The reason TCI did not fund any of these initiatives directly is that they can't get the money on the equity market directly.