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Cable Modems Seek a Connection

-- by David Gabel

The biggest problem with the Internet may be that it is still inaccessible to many potential users. Although the standards that currently generate the most buzz are ISDN and ADSL (Asymmetrical Digital Subscriber Line), some observers are still surprised that cable modems-which run up to 80 times faster than ISDN or six times faster than a dedicated T1 line-aren't more popular. Two major obstacles are impeding their growth: high cost and a deficient connection infrastructure.

Making Deals

But prices may soon come more in line with those of their ISDN counterparts, thanks to a flurry of alliances. Hybrid Networks has reached an agreement with Sharp and Itochu to collaborate in the design, manufacture and distribution of these products. And through a separate agreement, Alcatel, an international communications equipment supplier, will also market, distribute and sell the modems.

The agreement with Sharp gives Hybrid manufacturing muscle, while Alcatel will integrate the modems into network solutions and Itochu will provide access to new distribution channels that might not otherwise be available. Net result: Cable modems should cost less.

For now, cable modems remain pricey. While most ISDN modems cost less than $500, cable modems cost $800 or so (these models also have routing capabilities and can handle multiple IP addresses). Hybrid estimates that once Sharp's manufacturing goes into high gear, prices for single-user modems could be sliced in half.

The infrastructure problem may be harder to solve. Several large-scale, but geographically limited, initiatives are now being launched. One, in the Akron-Canton, Ohio, area makes cable modems available to 350,000 residents, according to Motorola, which makes the modems. Time Warner initiated the operation through a group called Road Runner, which will offer access in a 6MHz cable-TV channel.

Still a High Fee

According to Motorola, the cable operators charge a $50-to-$100 installation fee on top of the cost of the modem, and service costs about $40 per month.

If such plans pan out, cable modems could give cable operators the leverage they need to wrest the data-communications network market away from the phone companies that currently rule it. First, however, standards have to be developed. (An IEEE committee should have one out this year.) The ballpark price that "everyone is shooting for," said Ed Lewis, marketing manager at Motorola, is $250 to $300.

Copyright (c) 1997 CMP Media Inc.

Windows Magazine, March 1997, page 54.

[ Go to March 1997 Table of Contents ]