After years of talk, phone and cable companies are now ready to offer some real choices for high-speed Internet connections.
The market for fast online access is still minuscule and faces substantial marketing and pricing hurdles, but the moneymaking potential created by the explosive growth of the Net is too much for these companies to ignore.
Consumers will be the beneficiaries of this fierce competition, but they will have to choose between the substantially different technologies offered by the phone and cable firms. It is just about time for users to start calculating which are the better deals.
Today, cable giant Time Warner announced that it would enter the California market by providing cable modem service in San Diego starting February 6. Sources said the company will charge $44.95 a month for the service to existing cable subscribers and $49.95 a month to those who don't already have cable service.
San Diego is the third--but the biggest--market where Time Warner has launched its service, which uses cable lines to download Internet information at 10 mpbs, 1,000 times faster than today's standard modems. By year's end, the company will add ten more markets--likely including Texas and Florida--and hopes to be installed in 3.5 million homes.
@Home, jointly owned by Tele-Communications Incorporated, Cox Communications, and Comcast, is also rolling out its own brand of cable modem access nationwide and is beefing up the service to offer live chat sessions and other features.
But while they try to figure out how to enter this new arena, financial pressures at cable TV giants such as TCI are making the costly network upgrades more difficult.
On top of that, competition for customers will be stiff. Just this week, two Baby Bells--Pacific Bell and Bell Atlantic--said they are gearing up for the launch of a competing service.
High-speed ADSL (asymetric digital subscriber line) connections run over regular phone lines and move information at 1.5 mbps, considerably slower than cable modems. On the other hand, an ADSL connection could be used for data connections and voice service simultaneously.
"The battle between cable and telcos for Internet access is heating up now," said Wen Liao, an analyst for Jupiter Communications. "We're starting to see more cable deployment."
Pac Bell said it would roll out its ADSL service in September, first in Silicon Valley and then throughout the rest of California. Bell Atlantic will begin its trial on the East Coast in six weeks and will deploy for real in an as-yet unspecified major city by fall.
Bell Atlantic chief executive Raymond Smith this week called 1997 "the Year of ADSL."
But the technology faces roadblocks, both on the regulatory and pricing front. Pacific Bell, for example, has suggested charging at least $100 per month for ADSL.
"Pricing is the main problem," Liao agreed. "On the other hand, the technology is a good one for the telcos, because they also can deploy voice over the same line."
The big loser in this scenario, according to analysts, is ISDN--a competing high-speed Net access technology that has gained ground slowly over the past several years but has always been a source of complaints about difficult installations and fluctuating fees. This week, Pac Bell president David Dorman stressed that he would push his customers toward ADSL, not ISDN.