TCI buying cable modems

Tele-Communications Incorporated subsidiary TCI.Net is boosting efforts to make cable modems as ubiquitous and easy to use as dial-up modems by announcing it will purchase interoperable equipment from 3Com and Bay Networks, among other vendors.

TCI becomes one of the first cable companies to detail its plans for buying standards-based equipment, an event which portends the availability of high-speed Internet access by simply purchasing a cable modem at a retail store. If consumers are to use cable modem products, Internet service providers like TCI.Net must have compatible products so that the devices that can "talk" to one another.

Since last year, leading cable equipment vendors have been working on making cable modems and equipment used by ISPs compliant with the DOCSIS (Data Over Cable Service Interface Specifications) industry specification. The standardization effort is being headed up by CableLabs, a cable industry consortium.

Once certified, DOCSIS-compliant modems could be purchased by consumers and used with any service provider's equipment. At the moment, some stores in limited areas of the United States carry cable modems for sale, but generally they can be used only with an ISP in that region.

In the meanwhile, TCI is spurring the move to standards-based cable modems with the purchase of central site equipment for use by local cable operators as well as the modems themselves.

Financial terms of the deal were not disclosed, but analysts note that TCI is the largest cable operator in the United States, with some 15.7 million customers. Currently 500,000 of those customers have access to high-speed Internet access through cable modems, but TCI has stated its goal of offering service to all of those customers through TCI.Net. TCI.Net is a subsidiary of Englewood, Colorado, company that provides Internet service through the @Home Network.

The announcement is good news for 3Com and Bay not only because of the size of the order, but because they are providing key equipment at the center of TCI's network, said Michael Harris, president of Kinetic Strategies.

"Bay and 3Com definitely come out as big winners [in this deal]. They will have strong sales as TCI outfits [central site equipment] to offer standards-based services; then they will have ongoing business from upgrades," he said.

"Bay and 3Com are positioned to play a role in TCI's overall 'convergence' plans. Any [Internet protocol-based] service such as Internet telephony or Internet on TV that TCI delivers to home has to be transmitted through these head-end gear," Harris said. Convergence refers to the growing similarities among electronic appliances, personal computers, and Internet technologies.

General Instrument and Thomson Electronics, which sells products through the RCA brand name, will supply the cable modems to TCI, along with 3Com. While there will be a large initial order for modems, vendors will eventually be competing for business on retail shelves, where 3Com will likely do well because of its well-known U.S. Robotics brand name.

By June, Harris expects CableLabs to start certifying modems as DOCSIS-compliant. TCI is expected to start rolling out services that use the new equipment later this fall.