The Cable Modem
by Pattric Rawlins
Internet and on-line usage has grown tremendously in recent years. This is true despite the slow narrowband connectivity offered by existing dial-up connections. Although telephone companies have attempted to alleviate the frustrating click and wait on-line experience, dramatically increased performance is now available from the next generation of connectivity products. One such product is the cable modem.
More than 103 million homes in North America are passed by broadband coaxial cable and more than 73 million homes are cable television subscribers. The massive extent of this coverage provides an excellent opportunity for providing residences and local businesses with high speed connectivity. The cable modem is the product that will allow the cable industry to provide consumers with this access.
The Cable Modem Connection
The cable modem allows the personal computer ("PC") to connect to a cable network. Coaxial cable from the cable wall outlet plugs into the cable modem and an Ethernet cable connects the cable modem to the PC. Once connected, the cable modem allows the PC to send and receive data from the cable network.
The advantage of connecting to a cable network is the overall high speed and high bandwidth available. Cable networks employ a tree and branch topology that provides extremely large capacity and quick response time. The tree portion of the network consists of fiber optic lines sprawling out into the community from the local cable broadcast source ("headend"). The branches of this fiber optic tree are coaxial cable lines that convey the cable broadcast signal through local neighborhoods to residential homes and businesses. Modern cable companies employ this hybrid fiber and coax ("HFC") topology and the cable modem provides access to this network.
Traditionally, the HFC cable network is unidirectional. Broadcast signals travel in one direction, from the headend to the residential or business television. The cable modem, however, provides the capability for two-way communication. With a cable modem, the PC can receive downstream signals from the headend and send upstream signals to the cable network. Through a cable modem connection, real time audio and visual data is displayed on the PC with television quality. Similarly, upstream communications from the PC are as quick as changing channels with the television remote control. The cable modem is the nexus for this monumental increase in speed and quality.
The Cable Modem Product
The significant increase in quality and speed of Internet connections does not mean that cable modems are the wave of the future. The requisite services, such as Internet connectivity, must be in place for the cable modem to have value to consumers. Therefore, cable companies must provide the capital investment to establish connectivity and content. Standards must be established so that cable modems are ubiquitously connectable to cable networks. Without its connectivity and content companions, the cable modem will struggle in a consumer market that affordably provides these services today.
Internet connectivity through a cable network will require a significant capital investment by cable companies. Local headends will need to be equipped with costly servers to route network traffic to and from the Internet. Additionally, cable companies will have to provide the physical connection from the headend to the Internet through expensive fiber optic lines. The large number of headends will significantly compound this expense, as each headend serves roughly 500 to 2,000 neighborhood homes and businesses.
Furthermore, cable modems must be manufactured to meet a single industry standard. Today, the IEEE and MCNS standards are in use. These competing standards result in cable modems that are incompatible with cable networks using a different standard. Consequently, consumers relocating to an area served by a different cable company may be required to purchase an additional cable modem. This would drastically detract from the marketability and viability of the cable modem. Additionally, cable companies would be forced to sell modems that comply with their specific standard. This would add considerable capital investment for production and warehousing of the cable modems. Alternatively, an industry standard would allow third parties to manufacture, market, and sell cable modems at a reduced cost. It would also allow PC manufacturers to integrate the standard into their computers, resulting in simplified connections much like the "cable ready" television.
Business Strategies and Partnerships
In order to meet the challenges that face the cable modem as a viable consumer product, many strategies and partnerships have emerged. Thorny issues such as capital investment and connectivity are being managed through partnerships. Creative strategies have developed to leverage existing Internet service provider ("ISP") connectivity and thereby reduce start-up costs. Not surprisingly, new services and new companies have emerged to provide the cable industry with solutions.
Connectivity issues are being addressed by product offerings from major computer companies like Hewlett Packard and Digital Equipment Corporation. Both of these companies are now offering professional services and headend servers to route network traffic to and from the Internet. Additionally, system integration services are available for maintenance and support. However, complete Internet connectivity requires a connection from the cable headend to the Internet. To supply this connection, MCI is offering the cable industry connections from their local headends to the Internet through maximum capacity fiber optic lines. These new services, in combination, provide the cable industry with low cost access to the robust infrastructure needed to support Internet connectivity through cable modems.
The telephone return model is an innovative short-term solution that enables cable companies to offer high speed Internet connectivity with significantly reduced start up costs. This model takes advantage of the high speed downstream capabilities of the cable network while using a telephone line for upstream data from the personal computer. New companies such as Internet Ventured, Incorporated ("IVI") have emerged to fill this niche. IVI purchases or partners with local ISPs to leverage existing Internet connectivity. This allows cable companies to offer high speed Internet services immediately while defraying the start-up costs. The cable company can then absorb, over time, the costs associated with headend computer hardware and fiber connections to the Internet.
In addition to niche companies, new business ventures have been formed by partnerships within the cable and entertainment industry. At Home Corporation ("@Home") and The Road Runner Group ("Road Runner") represent the polar ends of these partnerships. @Home was founded by Tele-Communications Incorporated, with equity investments from Comcast Corporation and Cox Communications Incorporated. @Home offers a turnkey solution to cable companies that includes hardware, Internet connectivity, and system integration and support. In contrast, Road Runner is a joint venture that concentrates on offering content to consumers connected to a cable network. This group is backed by Time-Warner Cable and Time Incorporated New Media. Much of the content offered by Road Runner comes from Time-Warner, including magazines such as Time, Money, Sports Illustrated, and People. These two companies complement each other and together can offer a cable company complete connectivity solutions and popular content services that enhance the cable modem's marketability and viability to the consumer.
The cable modem is the next generation product for network connectivity. It allows consumers with personal computers to connect to a cable network that provides Internet access and popular content such as movies and magazines. The increased bandwidth of the cable network provides television quality video signals to downstream PCs and equally fast upstream data communications. Major players have entered the market and offer turnkey connectivity services, computer hardware and integration services, fiber optic lines for connection to the Internet, and entertainment content. Once an industry standard for cable modems is selected, the near ubiquitous coverage of cable networks will allow the cable industry to mass market the cable modem connectivity product. Soon, the cable modem will replace the telephone modem as the primary Internet connection as consumers demand increased speed, quality, and content.