Digital oases in a dial-up world

In a subdivision in Houston, a company called ClearWorks Technologies is connecting newly built homes to a fiber optic network that will give residents access to an unprecedented number of broadband services.

By late spring, when the ClearWorks system is scheduled to turn on, residents will have Internet access with speeds of up to 100 megabytes per second, as well as digital cable TV, video-on-demand services, a neighborhood intranet, and a slew of other high-tech bells and whistles.

This small neighborhood is on the leading edge of a national telecommunications movement toward bundling consumer Net services, cable TV, telephone, and other communications functions through a single pipe.

The system is being rolled out as part of a neighborhood-wide technology development plan, and will cost residents only about $100 a month--not much more than the average price of telephone, cable TV, and dial-up Net access combined.

The close of the merger between AT&T and Tele-Communications Incorporated is expected to bring bundled services to the market on a large scale.

Where ClearWorks has invested in laying fiber optic cable directly to every home, the vast majority of other broadband options work through cable TV or ordinary telephone copper cable, which provide much lower capacity.

In time, AT&T will use TCI's cable network to offer telephone, cable TV, and high-speed Net access that averages speeds of about 1.5 to 3 megabytes per second, according to the company's merger plans.

This isn't quite up to what ClearWorks will be able to offer. But analysts say that most home broadband connections--at least for the next decade or so--will be closer to AT&T's speed than to the speeds offered by ClearWorks.

"Is there a need for more than that? No," said Yankee Group analyst Jim Wahl. "Maybe 10 years from now."

Old and new networks ClearWorks has the advantage of starting entirely from scratch, building a communications network while homes are still being built, analysts note.

"[AT&T and other companies] have an existing plant," says ClearWorks chief executive Michael McClere. "We've got the luxury of going in and designing something from the ground up, without building over earlier networks."

But the cable upgrades being performed by AT&T, Cox Communications, and other smaller companies are nevertheless more efficient, Wahl said. Fiber to the home requires a substantial investment for each house--a reasonable alternative in communities that are planned around a broadband infrastructure, but just not feasible for the mass market.

"If you just take $20 phone service, then you've got a huge waste," Wahl noted. "I think the current cable design is extremely flexible and a more economic architecture."

Meanwhile, analysts note that most consumers still use dial-up Net connections, and are not yet driving demand for super high-speed networks in the home.

Nevertheless, communications oases like the ClearWorks neighborhood in Houston will pop up with growing frequency as new communities are built with technology in mind, analysts say. The entry price for some of these areas may even be affordable compared to the tight housing markets in well-wired areas like San Francisco and Silicon Valley.

In the Houston subdivision, which will ultimately support about 1,200 homes, the average housing price will fall between $100,000 to $300,000, McClere said.

After finishing this project, the company plans to wire planned communities in Atlanta, Phoenix, Arizona, Las Vegas, Nevada, as well as in Tennessee and South Dakota, McClere said.