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Intel partners on cable modem development

Intel, @Home, and Cisco will develop, test, and promote cable modems that use new, high-speed connection technologies just beginning to appear on PCs.

    Intel (INTC) announced today it will work with @Home Network (ATHM) to develop new cable modems in an effort to encourage the availability of high-speed Internet access.

    The announcement came on the same day that research firm Forward Concepts released a study predicting that cable modems will win the lion's share of the residential access market. (See related story)

    The companies will also collaborate with Cisco Systems (CSCO) on developing, testing, and promoting cable modems that use new connection technologies just beginning to appear on personal computers.

    USB (Universal Serial Bus) connections are becoming standard on an increasing number of PCs. Another connection technology called FireWire/1394 is also expected to become a standard way to connect peripheral devices in the future.

    USB and FireWire both eliminate the need to install cards into dedicated computer slots and reconfigure a PC when adding peripherals. Typically, installation of cable modems is a time-consuming and expensive process usually done by cable company employees, but with a USB-enabled cable modem, a consumer would theoretically be able to simply plug the cable modem into a PC, according to Intel.

    USB is available today but FireWire offers higher transfer speeds. Either technology will be suitable for connection cable modems, according to Intel. Cable modems are expected generally to run at about 10 mbps (megabits per second). USB can theoretically handle speeds of 12 mbps, while FireWire is expected to handle transfer rates of up to 400 mbps. Today's fastest telephone modems transfer data at 56 kbps (kilobits per second), a much slower rate.

    Intel says it will base its cable modems on Cisco's cable modem reference design, and that the two companies will also work on integrating USB capabilities.

    "We're not talking about supplying cable modems ourselves...We expect these will be provided by a number of vendors because the specification is open to all," said an Intel spokesperson. Last year, Intel canceled plans to make its own cable modems and sell them through retail outlets. The company later announced plans to still sell equipment to cable companies and OEMs directly.

    Intel and @Home will extend their efforts into the area of Internet telephony, including voice and videoconferencing as well as home networking. "We think there will be a spectrum of devices that will exist in the home. Computer use will expand beyond just the den or home office to include the entertainment center," said an Intel spokesperson. With multiple computers and peripherals in the home, hooking the devices together through a small LAN (local area network) will be necessary, he added.

    Intel's latest cable modem initiative follows closely on the news that the company is working on a proposal for a new generation of cable set-top boxes along with Network Computer Inc. (NCI), a firm that is majority-owned by Oracle and other members of Cable Labs, a research and development consortium.

    These next-generation boxes would replace the converter boxes on top of television sets that today do little more than unscramble TV signals sent by the cable companies. So called "digital" set-top boxes would offer services such as Internet access and on-demand delivery of multimedia content.

    Of course, what interests Intel is getting itself into the business of supplying processors for these boxes. "Intel is trying to figure out where trends are moving and build their chips into the best thing [for these markets]," says Maribel Lopez, an analyst with Forrester Research. "Intel isn't wrong in choosing that approach. They will place a few bets, and a good number of them won't pan out," she says.

    This also appears to be turning into fertile ground for competition with Microsoft. "The deal with @Home is an indication that they want to be major player too. Intel wanted to be a competitor to Microsoft, and a lot of major players [in the cable industry] have that view," says Cynthia Brumfield, an analyst with media research firm Paul Kagan Associates.

    Microsoft, which doesn't use Intel chips in its set-top boxes, has made no secret of its hopes for getting the Windows operating system into digital set-top boxes, starting with the Web browser devices designed by WebTV (which Microsoft has purchased). But getting cable companies to use Microsoft technology has not been easy, even with Microsoft willing to pay up to $200 of the estimated $400 cost of the digital set-top boxes, according to industry sources.

    In related news, Intel announced that it will receive a warrant from @Home, still subject to approval, for the purchase of shares in @Home at an unspecified price. Intel previously disclosed that it already made a "non-material" investment in the company.

    Intel is an investor in CNET: The Computer Network.