| BUSINESSWEEK ONLINE : DECEMBER 27, 1999 ISSUE | ||||||||
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| NEWS: ANALYSIS & COMMENTARY
What's on Cable? The Net Ultrafast hookups will be getting a lot easier to find Alfred Arroyo was fed up with the constant busy signals he got dialing into America Online (AOL). So in mid-November, the former bus driver paid $99 for a cable modem at The Wiz near his home in Wyandanch, N.Y. Arroyo spent 30 minutes connecting the box to his PC, then began cruising the Internet at 100 times the speed that he had hit over ordinary phone lines. He was so impressed that he bought a second cable modem three weeks later. ''I didn't want my wife tying up my PC,'' he says. Arroyo is one of first consumers to be able to buy a modem off the shelf--99% of cable modems today are sold or leased by cable operators. But by the end of 2000, analysts figure that more than half will be sold in stores. ''The industry is working through its issues, and it's going to happen next year--finally,'' says Leslie Ellis, a senior technology analyst at research firm Paul Kagan Associates Inc. Making cable modems as easy to buy as a VCR could significantly accelerate the use of cable as a high-speed Internet connection. And, in the process, the cable industry could change from a balkanized collection of closed networks and leased equipment to a system of standardized technologies. From there, cable operators can start offering consumers convenient packages of cable-TV, Internet, and phone services. The transition is crucial if cable is to stay ahead of telephone companies in the race to offer high-speed broadband service. Cable now is the most popular broadband pipe to consumers, with 1.35 million customers signed up, according to Kinetic Strategies Inc. in Tempe, Ariz. But phone companies are spending billions to develop digital subscriber line (DSL) broadband service, too. Broadband over cable got another potential boost over cable in early December when AT&T (T), now the nation's largest operator, announced it will open its network to multiple Internet service providers--not just @Home (ATHM), in which it's a major investor. ''This will speed the deployment of broadband,'' says the Federal Communications Commission's chief technologist, Stagg Newman. Next, in early 2000, PC modem cards, costing $200 to $300, will be widely available from manufacturers such as 3Com U.S. Robotics, Toshiba, and others. By the end of the year, many PCs are apt to come already equipped with modems. MONTHLY CUT? But reaching consumers like Arroyo is crucial: ''For cable to reach its numbers, there has to be a rapid snap over to retail distribution,'' says Richard Doherty, director of research at Envisioneering Group, a testing and research outfit in Seaford, N.Y. But even The Wiz, owned by cable operator Cablevision (CVC), has modems available in only a few stores so far. Other electronics chains are still negotiating deals for royalties from cable companies: They seek a monthly cut of the Net service fees, but cable companies only want to pay one-time commissions. ''Until there's an agreement, the cable-modem market will be a hard sell,'' says Sean Badding, a senior analyst at Carmel Group. For many cable operators, the delay won't hurt. They're still upgrading their networks to handle the broadband service. But they can't delay: In a couple of years, there will be a raft of competitors--including telephone and satellite-TV operators--vying to send data at broadband speeds. By Steven V. Brull in Los Angeles _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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