Despite concerns about pricing and reliability, high-speed Net access via cable is continuing to catch on.
In addition, sources said that Jones Intercable and Hybrid Networks may soon announce a deal to use Hybrid's cable modems and head-end systems to expand Jones's Net access service. Jones is planning to add another city in suburban Washington, D.C.--Dale City, Virginia--to its roster this fall. Neither company would comment.
These developments come in the wake of a highly successful initial public offering by @Home (ATHM) last week. @Home is jointly owned by Tele-Communications Incorporated, Cox Communications, and Comcast. @Home closed today at 24-1/2, up 2-3/16; it went public on Friday at an IPO price of $10.50.
Road Runner's milestone "underscores the viability of the cable modem business in very disparate areas of the country," said Tim Evard, president of the Excalibur Group, which developed Road Runner. "We plan on continuing our aggressive approach to launching this business throughout the year and anticipate that our numbers will grow accordingly."
Some Road Runner subscribers, however, have complained about slower-than-promised speeds, lost email, and installation problems. The company says it is trying to work out the glitches. By year's end, the company estimates that Road Runner will be up and running in 14 cities, passing 2.4 million homes.
Cable modem makers also will benefit from the higher demand. A deal with Jones Intercable would be a big customer win for Hybrid, a start-up that has been successful with wireless modems. In January 1996, the company recruited a top AT&T executive, Carl Ledbetter, as its chief executive officer. Sources said the company is negotiating other cable modem deals with large cable companies.
This spring, Hybrid teamed up with Warp Drive Networks to offer high-speed Net access over low-power television frequencies. The service is being rolled out along the West Coast.
Despite the low current penetration, a study by industry consulting firm Kinetic Strategies predicts that the high-speed Net access via cable systems will have 197,000 modem customers by early next year, 1.6 million in 2000, and 3.2 million in 2002.
Cable modem makers will ship 192,000 two-way modems this year, growing to 1 million per year by 1999, the study said.
There are hurdles, however, the study observed. Only ten percent of U.S. households have access to two-way cable systems, and some cable operators are reluctant to pay the $200 to $250 per-subscriber investment in upgrading their systems.