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Cable modems grow but not a shoo-in

Cable modem shipments are booming, but the technology is not an automatic winner.

Cable modem shipments are expected to jump 92 percent this year, but the high-speed technology still faces stiff competition in winning over home Internet users, according to a report released today from market research firm Dataquest.

The cable modem market will grow to 25,000 units in 1996 and will surge 220 percent in 1997 when unit shipments are expected to reach 80,000 units, Dataquest said. "Cable modem vendors, teamed with cable operators, have a real opportunity to penetrate the consumer base of the remote LAN and Internet access market," Dataquest said.

Cable modems connect to existing TV cable lines and can offer access speeds to home users of 10 mbps--many times that of the typical 28.8-kbps modem now used in home PCs. Dataquest cautions, however, that competing technologies, notably XDSL technology, are also entering the market.

For example, it said, "XDSL runs on existing telephone lines and will be a real competition for cable. The most compelling reason to use a cable modem is speed, but speed alone won't be enough to win the battle."

XDSL is still in its infancy and companies are just now beginning to experiment with the technology, but it has the potential to offer T-1 rates of 1.5 mbps and higher on existing phone lines.

"Cable companies should take advantage of their unique situation of being a content provider and offer innovative new services in addition to basic Internet access," Dataquest said.