A big year with more integration

Electronic News, Jan 5, 1998 by Will Wade

Mr. Pepper also predicts that consumers will begin to network their houses, linking home offices for Dad and Mom with the systems their kids use to study and play games. Of course, the small home network will have links to corporate LANs, local school networks and the Internet. And that means they will all need some means of dialing up to the external sites.

Current analog modem technology has been pushed about as fast as it can go with the current generation of 56 kilobits-per-second modems. While last year was marked by intense competition between the incompatible x2 and K56flex formats, the take-no-prisoners marketing battle tended to scare off consumers and drove prices down. This year, the International Telecommunications Union is expected to finally approve a 56Kb standard at its meeting later this month. Just about every major chip and system vendor has announced plans to offer software upgrades to move existing platforms to the ITU format very soon afterwards. Look for 56Kb modems to be a major seller this year, perhaps even with slightly higher prices.

Cable Modems Vs. Phone Lines

However, the chip industry is gearing up for what could be an even fiercer battle for the next generation of high-speed Internet access technology: cable modems vs. digital subscriber lines (xDSL). Cable modems pump data over the enormous installed base of coaxial cable used for video, while xDSL uses the same phone wiring currently used for voice traffic. Both offer blinding data rates, ranging from one to 40 megabits-per-second. Both can be offered affordably by current carriers. And at the moment, neither is deployed on a wide scale, and this is starting to irritate some potential consumers.

Cable modems have a big head start, with about 15 percent of the existing wiring in North America upgraded to support two-way data traffic, and about 170,000 systems in operation in the region. More importantly, the cable industry approved the MCNS specification last summer, and interoperable systems have started shipping. This provides a big incentive for the cable carriers to deploy the expensive central office equipment, which in turn attracts more users.

"Chips for cable modems are finally here and people are in the early stages of product rollout," says Rich Nelson, director of cable modem products for Broadcom. "The major goal for now is to get all the systems interoperable." Cable carriers, watching some of their revenue stream being diverted by satellite television, have a huge interest in promoting cable modems. The number of users is expected to increase significantly this year, especially with the consumer systems likely to move into the standard retail channels instead of being provided by the cable companies.

Digital subscriber lines actually come in several different varieties, but all of them offer faster data rates over existing phone lines. One format, HDSL, is already in widespread use on T1 lines, while another, ADSL, is seeing early testing aimed at the telecommuter market. One problem hampering the xDSL deployment is the lack of standards. Like the cable carriers, phone companies must upgrade their equipment in order to offer the service, and purchasing these expensive machines before a standard is adopted might mean purchasing a second unit later.