When Cable Modems and DSL Compete, Consumers Will Win
As the Internet becomes more graphic-, video- and sound-intensive, folks like you and me want real high-speed Internet access in our homes.
A 56-Kbps modem is a big step up from a 28.8-Kbps modem, but it hardly compares with the T1 access you may have at the office. The home user simply needs more speed.
In the last year, the most touted solution to that problem has been cable modems, usually provided by local cable companies in conjunction with national networks such as Athome.
But cable modems have problems that will prohibit them from gaining mass appeal. This service is being implemented slowly in small pockets around the United States but probably won’t be widely available for some time. Before a cable company can offer the service, it has to upgrade its lines to fiber-optic, a process that takes time and money. So if a cable company doesn’t expect to find a strong customer base for the service in a particular area, it may be unwilling to make the investment.
For consumers, cable modem access isn’t cheap. The installation charge is generally about $100. Add to that the price of a network interface card for your computer and monthly subscription rates (including Internet access and modem rental) of about $40 to $50. (However, with a cable modem, you would eliminate the need to pay for a separate phone line for your modem.)
In return for the higher costs, you get speed. Cable modems are fast; you can download information from the 3-to-30-Mbps range and upload from the 128-Kbps-to-10-Mbps range.
But cable modems may not always be able to satisfy that need for speed.
If you’re among the first of a small number of people in your neighborhood to sign up for the service, you’ll enjoy incredible speeds. But because of the way cable modems work, you have to share that bandwidth with everyone else in the neighborhood. As more people sign up, you could see your access speeds go down.
Right now, cable companies can charge premium prices for Internet access because they don’t have any competition in terms of speed. But that could change in the coming months.
A technology originally developed by Murray Hill, N.J.-based Lucent Technologies called digital subscriber line, or DSL, may give cable modems a run for the money. Variations of DSL technology deliver access speeds from 30 to 250 times as fast as the 28.8-Kbps modem you’re probably using now.
DSL has been around for a couple of years, but it’s only recently received serious attention as a universal high-speed solution.
The most amazing thing about DSL is that it runs over standard phone lines. In fact, it can run on the same line as your telephone does without interrupting your voice calls. In other words, with a DSL connection, you can download a huge file while talking to Aunt Flo in Boise--over the same phone line. And, like a cable modem connection, a DSL connection to the Internet is “on” all the time--there’s no dialing. More important, there’s no chance of a busy signal.
Previously, DSL has required a little bit of rewiring at the user’s end. But Lucent recently unveiled a technology called WildWire that packs all the important stuff into a DSL modem, so no rewiring is necessary.
And just a few weeks ago, DSL gained big industry backing. Microsoft, Compaq Computer and Intel announced they were forming a consortium with regional Bell companies to promote the widespread implementation of DSL by the end of this year. Most people in the industry think year-end is optimistic, but DSL definitely seems to be on its way.
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In the beginning, the cost of DSL will probably be comparable to that for cable modem service. US West Communications, which provides phone service to several Western states, including parts of California, has offered a DSL variation called ADSL (asymmetric DSL) for some time in Phoenix and recently announced a larger roll-out in 40 cities in 14 states.
US West’s monthly charges for DSL range from $40 to $80. The $40 plan will get you 256-Kbps access, an intermediate package priced at $65 yields 512-Kbps access speeds, and $80 will deliver the Internet at about 768 Kbps. This doesn’t include the cost of an Internet account, which US West offers for an additional $20 a month.
Obviously, that’s no bargain compared with cable modems. But the important thing is that DSL and cable modems are set to become direct competitors.
It’s a basic premise of economics that competition drives prices down. As both DSL and cable modems are offered in little pockets around the country, prices are bound to remain high. But when both become more widespread and the two start competing for the same customers, prices will drop. That will mean these companies will lose on their per-customer income, but you’ll come out a big winner. We’ll have low prices and high-speed access in our homes.
Kim Komando is a TV host, syndicated talk radio host and author. You can visit her on the Internet at https://www.komando.com or e-mail her at komando@komando.com. Her national radio program can be heard on Saturdays from 7 to 9 a.m. on 97.1 KLSX-FM.
