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Can cable, phone giants go home again?

As the high-speed Net market goes mainstream, phone and cable companies begin to see the budding home-network market as a major source of new profits.

So you've got a new cable modem, a few computers in your house, and you want to hook up the entire system to the high-speed Internet. Where do you turn?

Right now, the major cable operators or phone companies can't help. But as the high-speed Net market goes mainstream, communications carriers are looking increasingly toward the budding home-network market as a largely untapped font of new profits.

The move is a significant departure for these companies, which have

traditionally concerned themselves only with the wires outside the home. Today, as many of them attempt to provide voice, video, and data, it makes sense to link PCs, TVs, and telephones on a single network.

"Home networking, or the lack of the ability to install home networking, is going to limit our success," said Glenn Edens, vice president for broadband technology at AT&T Labs. "If consumers can't get the services they want, then it doesn't help that we can deliver service to the side of the house."

It's still early in the home-networking game, and most of the telephone and cable companies are still barely figuring what is possible in the field. So far, most don't have any definitive plans.

All of the big cable companies are interested in the market, Edens said. AT&T is trying out new home networking technologies and is active in industry standards bodies. Other firms are jumping on the bandwagon and talking closely to home networking companies.

But several of the Baby Bells are picking up the pace.

Pacific Bell and US West have plans to roll out some version of home networking products later this year. Neither is talking specifics, but Pac Bell says it is likely to partner with others to provide the services to their high-speed DSL subscribers.

"This is the logical next step in the communications environment," said Evelyn Cassidy, a Pac Bell spokeswoman. "Especially in California, given that there are lots of multiple PC households around the state, it makes sense for us to go in that direction."

Nascent demand in a new market
More than 17 million U.S. households, or 37 percent of homes with PCs, are interested in home networking, according to the Yankee Group.

Of those interested, 35 percent want their network professionally installed, while 38 percent wanted to do it themselves. Consumers who wanted to hire professional installers ranked network installers, phone companies, and cable providers as their top three choices, the study found.

Yankee Group analyst Karuna Uppal said telcos and cable companies realize that home networking is going to explode but haven't put much effort into it because they've focused all their resources on high-speed Internet access.

"Everyone is focusing on the last-mile issue. Home networking brings in the last 100 yards. It completes the picture to the PCs and forthcoming intelligent appliances," added Cyrus Namazi, president and chair of the Home Phoneline Networking Alliance, a consortium of more than 100 companies that creates home-networking standards.

Uppal expects phone and cable companies to introduce home-networking services in 18 months to two years as they battle for customers. Modem makers are already eyeing this date and are building home-networking technology into their next-generation DSL and cable modems.

"Consumers will have a lot of choices, so cable and phone providers will ask themselves, 'How will I hang onto my customers? What new services and packages can I offer that my competitors' can't?'" Uppal said.

Gearing up
Bell Atlantic has jumped out in front in joining the industry associations but doesn't have immediate plans for a product. "Right now we're just getting our feet wet," said John Grady, product manager for Bell Atlantic's ADSL consumer services division. "We're at the early stage of technical evaluation."

GTE will start market trials in the second quarter of year 2000 and hopes to offer services by the end of the year through partnerships with service providers, such as Radio Shack, or home automation firms, said Bruce King, group manager of GTE's Concept Research Center.

New services GTE hopes to offer includes Internet phone service, music in MP3 format played over a home's wireless speakers, or unified messaging services that would allow consumers to check email, voice mail, and faxes simultaneously. GTE also plans to offer a home portal Web site, giving busy family members a central place to coordinate meetings and appointments, King said.

AT&T is one of the farthest along, with field trials of wireless home technology being tested alongside its high-speed wireless access project, and lab tests of wireless and home phone line systems ongoing.

"We think in the long term this is going to be a good business," Edens said. "It's not clear that that AT&T should do it. It's not clear that we shouldn't. We just don't know yet."

A little help from friends
Most of the big companies aren't ready to launch their own home-network divisions, even if they want to be able to help their high-speed Net customers set up internal networks.

Telcos and cable companies worry about a deluge of customer calls resulting from home-networking services. "Every time they do a truck roll, it costs money," Uppal said. "They're afraid their customer support lines will be jammed with, 'My PC doesn't work--what can you do about it?'"

To this end, most are looking for partners who can handle the actual installation and maintenance of the home networks.

Radio Shack aims to become one of the service providers that will offer broadband access and networking in the home.

Radio Shack technicians will come to customer's homes, install their DSL and cable service and connect PCs, audio-visual equipment, and other appliances using a mix of wireless, phone, and power line technology, said David Martella, Radio Shack's vice president of business development and emerging technologies.

The consumer electronics company has already inked deals with DSL providers Sprint, NorthPoint Communications, and cable provider MediaOne and plans to sign on more.

Other familiar names in the retail electronics field are planning to follow Radio Shack into the market, analysts and others say.

"We anticipate becoming the network administrator for a customer," Martella said.