FiberTel-TCI2, a division of Tele-Communications Incorporated and the largest cable provider in Latin America, has tapped 3Com's U.S. Robotics division to provide cable modems for a new cable Internet access service the company has started to deploy. FiberTel currently boasts 750,000 cable subscribers out of an available cable-ready base of 1.7 million in the Buenos Aires area.
Initially, subscribers will receive outside transmissions via cable, but send outgoing messages across telephone lines, according to the companies. The companies, however, are working toward building two-way transmission. The number of potential subscribers make this the largest high speed project in Latin America to date, according to 3Com.
The deal highlights the growing proliferation of cable as a medium for Internet access. Approximately 300,000 customers access the Web through cable in the U.S. and Canada, according to Michael Harris, president of Kinetic Strategies, a figure that is expected to grow to 500,000 by the end of the year and hit 1 million by the middle of 1999.
Cable has been gaining popularity in Europe, Asia, and Australia as well. In Latin America, a Colombian carrier recently announced a similar alliance with Motorola to bring cable access to that nation's capital, Bogotá.
"They know how to do it now. It is more a question of execution," Harris said.
Latin America will also likely prove to be a strong market for high speed Net access, although commercial circumstances will make the adoption slower than in other regions. Discretionary income is generally lower in Latin America than in North America or Europe. South America also lacks an equal level of Internet infrastructure, which can mean slower access to servers.
Due in part to the relative newness of cable access, most of the revenue opportunities for modem makers continue to come from these large alliances, added Harris. A secondary market, where customers buy cable modems with their computers or at a computer retailer, will emerge in the future. For now, however, the primary sales vehicle will be the providers.