Reasonably priced, high-speed cable modems, built to meet an industry standard, should be offered by the middle of next year by three consumer-electronics heavyweights, providing what may be an attractive alternative to dial-up modems.
Networking hardware vendor Cisco Systems has joined Hayes, Samsung, and Thomson Consumer Electronics, to support a single industry standard for modems and advanced subscriber units.
The four companies will build equipment based on the Data Over Cable Interface Specification (DOCSIS). The DOCSIS is managed by Multimedia Cable Network System Partners Ltd., a group formed by four major cable television system operators. Lack of a single standard has hindered the cable modem market because equipment was not interoperable.
"It's significant for the cable industry," says Bob Schack, director of marketing, network-to-user business unit at Cisco. He says cable companies won't have to deal with providing the modems to customers, who will be able to purchase what they want in a competitive marketplace.
"It's good for everyone. ... Consumers will have a choice," he says, adding that cable modem prices will work on the "typical consumer electronics price curve," with the cost dropping as more companies offer products and consumer demand grows.
According to a report by research company Ovum. in February, the number of cable modem users globally will jump from 4.4 million in 2000 to more than 19 million by 2005. High-speed access is the big lure.
Cable modems use high-bandwidth delivery systems and offer transmission speeds of up to 10Mbit/s, so that a 500Kb image could be downloaded in about a second instead of the six to eight minutes needed with a 28.8Kbit/s dial-up modem. Although cable modem transmission has, thus far, been mostly a one-way street, companies are investing big bucks to upgrade networks for bi-directional use.
Time Warner Cable, for instance, is spending at least US$4 billion for upgrades and other companies also are following suit, according to a Jupiter Communications report on cable modems and the state of Internet access. Time Warner, Comcast Cable Communications Inc., Tele-Communications Inc. and Cox Communications formed the Multimedia Cable Network System Partners Ltd., which manages the DOCSIS standard. Rogers Cablesystems Ltd., MediaOne and Cable Television Laboratories Inc. (CableLabs) also support the standard.
The arrival of reasonably priced, readily available cable modems is expected to intensify the competition among the telecommunications industry, Internet access providers such as America Online, and cable companies.
But the Jupiter report points out potential cable modem pitfalls, including the cable industry's notoriously bad reputation for customer service, which might make consumers wary of logging on that way. The report predicted that "dial-up modems will prevail for the next few years because their capacity continually defies predictions," with 33.6Kbit/s modems becoming more common and 56Kbit/s expected to become the "standard" in the near feature.
Still, cable modems could potentially offer consumers Internet access and email service without the need for a home computer. Simple wireless keyboards already are available to provide access via the television, which may be a more comfortable outlet for technophobes who otherwise wouldn't venture into the online world.
Cable modems aren't like traditional dial-up modems, which convert digital signals to sound which is transmitted over telephone lines. Cable modems use a cable television channel to send and receive data. Most currently available cable modems use two connections - one linked to a computer and the other to a cable television wall socket.
While hardware and support issues must be overcome by cable providers entering the Internet access arena, the Jupiter report noted that 95% of US homes are wired for cable television with some 63% of those already receiving that service - a potentially ready-made market.
The vast number of cable subscribers actually is a commonly cited disadvantage because access could become difficult if a lot of people who live in one area are logged on at the same time. But Schack said that argument shows "a lack of understanding of the architecture."
Cable companies will follow an approach analogous to what cellular phone companies do when they add additional towers, increasing the number of available cells as more users enter an area.
"You just keep adding capacity," he says.