The Internet connection - @Home

Electronic News, Sept 16, 1996 by Cynthia Bournellis

Mountain View, Calif.--A number of computer and networking companies are finding there's more than one way to skin the Internet cat. And they're looking to one Silicon Valley startup, in particular, to lead the way: @Home Network Corp.

Home, a joint venture between Tele-Communications, Inc. (TCI) and the venture capital firm of Kleiner Perkins, Caufield & Byers, was founded last year to deliver Internet services over high-speed cable modems to PCs through the cable television infrastructure. Last week, @Home "turned on" its network backbone for full production. The service was initially introduced to consumers in selected areas of Fremont, Calif., earlier this month through TCI Cablevision of California and is available to over one-fourth of the homes in Fremont. @Home's other cable partners, Cox Communications and Comcast Corp., both of which have a 14 percent equity investment in the company, will begin test trials in Baltimore and other selected markets sometime this fall.

Subscribers pay $34.95 per month to @Home, which splits the revenues with the cable operators, pocketing $17 of the monthly rate. Subscribers receive 24 hours of unlimited access to the Internet, a cable modem, E-mail and "chat" functions, a customized @Home Web browser and a menu of local community content.

So what do you get for $34.95? Content ranging from sports to pop culture to world news. Content providers include CUC International Shoppers, SportsLine, C/Net, Knight-Ridder, USA Today and the Discovery Channel Online. @Home organizes the content and delivers it to the user in a manner that is easy to access. For instance, if the user is perusing news headlines, and wants to read a particular story that has information about a particular bill in Congress, then decides that rather than reading the story, the user can click directly on the bill via a hyperlink.

The Web browser @Home uses is a custom version of the Netscape Navigator client software from Netscape Communications. Netscape saw the potential revenues behind @Home's plans early on. Last September, Netscape licensed its client and server software to be used as the foundation for the @Home Network.

The promise of delivering broadband interactive services and content to the masses has struck a cord with many of the industry's leading companies. Those who have flocked to @Home's side are Cisco Systems, Sun Microsystems, Silicon Graphics, Oracle, Objective Systems Integrators, Tivoli Systems and Sprint. What's the appeal? That depends on who you talk to. "This (deal) is important to us in terms of revenues," said George Abe, manager of business development at Cisco.

Scattered through out @Home's network architecture are lots of switches and routers. For instance, every headend (the point in the network where the cable signal gets passed to the subscriber) requires one or more routers. "There are 11,000 headends in United States alone, and they are all candidates for headend boxes," said Mr. Abe, adding that there are also 62 million U.S. cable subscribers. "Our role is to bring the best network layer infrastructure to their service, independent of what modem they use," added Mr. Abe.

At the moment, @Home is using modems from LANcity Corp., which agreed to be acquired by Bay Networks earlier this month for $59 million. Zenith is another major supplier of modems to cable operators. Sources said Hewlett-Packard is working on cable modem technologies and may have a product out by the middle of next year. Cisco also develops high-speed communications through Terayon Corp., a company that designs voice and data transmission products for cable-based digital communications. Ciso purchased an equity stake in Terayon last January. Mr. Abe said Cisco will not be shy about bringing their modem products to @Home's attention. He said Terayon's ASICs are complete and should be available by April.

Many observers agreed that cable modems are the smart way to go for broad bandwidth communications. While still in their infancy, cable modems are predicted to exceed 1.8 million units in shipments by the year 2000, reported Dataquest. "Cable modems solve the MAC and PHY problem, but not the networking problem," said Mr. Abe. "The hybrid fiber co-ax and XDSL market is where we will bring value."

The @Home Network runs over a private asynchronous transfer mode (ATM) backbone. Within that backbone are regional data centers (RDC). Connected to each RDC are a number of headends, which in turn are connected to a group of homes. For example, there are 150 nodes in Fremont feeding into the headends. Those nodes are attached to 300 homes, which are passed for cable.

A key piece of this service is @Home's Smart-Cache technology. Smart-Cache gives content providers tools to better control caching, which occurs when popular pieces of information are stored on a local server rather than a remote site. This enables customers to have immediate access to large files such as broadcast-like video clips and animated graphics. "It's cheaper to put data on servers closer to the home," said Milo Medin, VP of @Home's Network group.