Two of the country's biggest cable companies have thrown their weight behind the @Home cable modem service despite delays in the rollout and analysts' warnings that the cable modem industry faces serious competition from other high-bandwidth technologies.
Cox Communications, which has 3.2 million cable customers, and Comcast, with 3.4 million subscribers, have each taken equity positions of about 14 percent in @Home, which will become the exclusive distributor of high-speed data services to the companies' cable subscribers.
Cable giantTele-Communications Incorporated is already a principal investor in @Home, and after today's deal, the service have 40 percent of America's cabled homes in its pocket.
But the announcement comes as welcome news to @Home, which has had to push back the rollout of its much-publicized service by six months to late 1996.
Many industry observers believe that cable modems are set to become the dominant delivery mechanism for high-bandwidth Net access, but at least one of the technology's most prominent promoters--Intel's chief Andy Grove--has admitted doubt about whether cable modems will compete successfully with XDSL (also known as ADSL). XDSL runs over regular phone lines and delivers data to the home over existing telephone lines at about 1.5 mbps, compared to a cable modem's top speed of about 10 mbps.
Research firm Dataquest has also predicted that cable modem vendors will face fierce competition from XDSL vendors, even though the company projects that cable modem shipments will grow significantly through 1997.