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The week's news: Cable modems seize the day

Excitement over cable modem technology, especially TV set-top boxes and Net access, crests as announcements abound in the cable industry.

Excitement over cable modem technology--especially TV set-top boxes and high-speed Net access--crested as announcements poured out of the Western Show. High-tech companies ranging from Scientific Atlanta (SA) and General Instrument (GI) to Microsoft see great promise in cable modems, which are far speedier than the conventional dial-up variety.

Rising use fuels plans
Cable advocates first were buoyed by good news: Worldwide shipments skyrocketed in the first half of 1998, shooting up 130 percent to 492,000 units.

Although analog modems retain 90 percent of the online market, increasing sales of cable modem-capable PCs and the anticipated popularity of set-top boxes should continue to boost growth, especially after 2000, analysts say.

Eyeing that trend, set-top giants GI and SA announced they are developing cable-based set-top devices that will serve as hubs for connecting a variety of forthcoming home electronics products.

@Home Network acquired Full Force Systems, a company that broadcasts localized content, in an effort to bolster its push into the interactive TV arena. The cable Net access company also said it will start a new business aimed at making its high-speed data service available to small and medium-sized cable operators, a move to expand the company's subscriber base and marketing clout.

Microsoft inked a deal with SA that will make its WebTV service available via cable for the first time, while also opening new doors for its Windows CE operating system. Under the agreement, Microsoft's WebTV service will be offered on SA's Explorer 2000, and the duo will cooperate in future set-top box development.

Separately, the software giant described a multipronged strategy of encouraging cable TV operators and broadband Internet service providers to install various forms of Windows in consumer set-top boxes and also corporate back-end systems. Microsoft has not previously marketed its back-end software to the wary cable industry.

Cable's ability to carry voice, video, and data could help insulate the industry from falling prices as telecom operators begin to offer more IP telephony services, cable companies say. But both digital broadcast satellite (DBS) and digital subscriber line (DSL) technologies pose real competition.

Telcos' legal tango
Meanwhile, telecommunication companies seemed to spend the week in court.

SBC Communications and GTE filed suit to overturn the way the U.S. government has implemented subsidies for rural telephone service and Internet connections for schools and libraries. The two companies are leading a charge against the federal universal service program, focusing on the "e-rate" discounts, which provide subsidized Internet connections for schools and libraries.

Bell Atlantic filed against the Maryland Public Service Commission, charging that regulators are illegally forcing the company to sell access to its networks to competitors at artificially low prices.

A House subcommittee is close to issuing a report saying the Federal Communications Commission threatened long distance companies to further political goals. The Commerce subcommittee has been investigating the FCC's conduct in charging phone companies for universal service, the federal program that helps subsidize telephone service for low-income and rural customers.

What price a month's salary?
America Online's head man offered employees at its newly acquired company, Netscape Communications, a month's salary as financial incentive to stay on board. Netscape cofounder Marc Andreessen said Steve Case was persuasive in saying Netscape's Silicon Valley entrepreneurial culture won't be scrapped, but revealed that he himself might relocate to AOL headquarters in Virginia because of the Silicon Dominion's potential.

Hewlett-Packard initially worried about the impact of AOL's acquisition, according to HP chief executive Lewis Platt, but was soon told that HP could continue selling computer hardware to AOL and reselling Netscape's software. Andreessen confirmed the arrangement.

Netscape also took on an infamous Net jokester, Dan Parisi, sending a cease-and-desist letter to the operator of the site and accusing him of misusing the company's trademark.

Microsoft's problem-plagued Chromeffects multimedia software will see the light of day after all--in bits and pieces. Responding to protests that it would not conform to Web standards, Microsoft had previously decided to delay its release.

Intel and Via Technologies reached an agreement paving the way for more competition in the Pentium II market, signing a licensing agreement. The Taiwan-based firm is the first company to enter into a cross-licensing agreement with Intel for chipsets (companions to the main processor).

Virginia on my mind
It's no wonder Steve Case hangs his hat in Virginia. Lawmakers there continued efforts to attract and retain high-tech companies with the unveiling of the Virginia Internet Policy Act. The seven-point package addresses online child pornography, consumer privacy, fraud, and spam.

Also in Virginia, the Loudoun County Library decided to implement new Net usage rules following a landmark federal ruling that deemed its old policy of filtering online access for all patrons a First Amendment violation. The new regime allows unfettered online access for adults who sign an "acceptable use" policy, agreeing not to view illegal material such as child pornography.

President Clinton introduced e-commerce initiatives adhering to a hands-off approach that pleases industry but leaves consumer activists and some European governments frowning. A new report also outlines measures to encourage private investment in high-speed Internet connections to the home, fight fraud, and measure e-commerce's effect on the economy.

PCs are "pretty crude"
Hewlett Packard chief Lewis Platt rekindled talk of the personal computer's obsolescence, calling the PC "pretty crude." His comments are more evidence that all of the largest computer companies are seriously rethinking the utility of this aging paradigm.

Apple's iMac took the top spot in desktop computer superstore sales for three consecutive months this fall, beating out low- and mid-range PC systems.

Palm Computing's next-generation PalmPilot VII will incorporate a host of features that will tie it much more closely to the Web than previous devices, but no new hardware features are expected. The leading handheld device will cost about $800 when it arrives in late 1999.

Also of note
Cable & Wireless named Dennis Matteucci chief executive of its U.S. unit, replacing Rich Yalen, who resigned last week after eight months on the job...NBC is moving to buy a minority stake in iVillage, a Web site aimed at women...Reports of increased hacker attacks on Unix and Linux computer systems are no more than routine Net probing, according to computer security officials...Microsoft's Windows NT finished dead last overall in a comparison with five different versions of the Unix operating system.