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Time Warner stocks up on cable modems

Time Warner Cable is buying 250,000 CyberSurfr cable modems from Motorola for its Road Runner service.

Motorola's (MOT) Multimedia Group announced today that Time Warner Cable has agreed to purchase 250,000 CyberSurfr cable modems for use in its Road Runner online access service, yet another prominent endorsement of cable modem technology.

Motorola says this order, in addition to a previous order for 50,000 units, will allow the company to sell the modems for under $300. Industry analysts say cable providers have been asking for a modem that's under $300 and that this is the first time a manufacturer has been able to do that.

"When you see shipments of this magnitude, that is evidence cable modems have a place in entertainment networks of the future," according to Kieran Taylor, an analyst with TeleChoice, a telecommunications industry consulting firm.

The announcement is the second major shot in the arm for the cable modem industry within the last month. Earlier in March, U.S. Robotics (USR) said they intended to provide cable companies with all the equipment and software needed to provide consumers with Internet access over cable television networks.

USR's entrance into the market is also an indication that cable modems are here to stay, according to Taylor, but the modem maker has some obstacles to overcome, he warned. "USR is a relative newcomer to cable modems, and their technology is primarily around data networking. It will take some time for them to tailor solutions, whereas Motorola has been in the market for a number of years."

By year's end, Time Warner hopes 4.5 million homes nationally will be online through the Road Runner service. In some markets with the service, Time Warner is using cable modems from Toshiba and Hewlett-Packard.