More consumers call the cable guy for Internet speed

After years of plodding along the information highway, American consumers are getting the chance to cruise.

Three industries - cable, telephone, and satellite - are vying to offer Internet browsing up to 100 times faster than today's dial-up modems. The service, often called broadband Internet, won't merely speed up consumers' online experience, analysts say, it will transform it.

"It's different not only because it's faster," says Mark Zohar, an analyst at Forrester Research in Cambridge, Mass. "It's different because you can do different things on it."

For example, the new devices are so fast that video e-mails could become commonplace, analysts say. Consumers will be able to download big files, such as new software or digitally recorded music, in minutes instead of hours.

Competition to deliver high-speed access is heating up - and for now, cable is leading the pack.

Already, nearly 2 million Americans use their cable-TV line to hook up their computers to the Internet. (The cable-modem connection doesn't interfere with cable-TV programming.) By 2003, Forrester Research estimates that about 20 million Americans will have signed up for cable Internet access.

Those numbers may get a further boost from last week's proposed merger between America Online (AOL) and Time Warner. AOL's $145 billion purchase of Time Warner represents not only the largest corporate acquisition in history, it also will encourage AOL's more than 20 million members to switch to cable-modem service.

"Clearly, AOL is going to put its marketing strength behind cable in those areas where Time Warner operates," says Michael Harris, president of Kinetic Strategies Inc., an Internet research firm based in Phoenix.

Telephone companies are beginning to fight back with a technology called digital subscriber line, or DSL. The system uses the existing phone lines to deliver speedy access to the Internet.

DSL has only about a third as many broadband Internet customers as cable. But even its most basic service typically operates a little faster than cable modems, especially during peak browsing periods, says Daniel Todd, director of business services at Keynote Systems Inc., a San Mateo, Calif., company that measures Internet performance.

DSL is also more expensive. According to Mr. Harris, cable modem service costs from $30 to $50 a month; DSL costs anywhere from $50 to $100 a month.

One other difference: Most versions of DSL currently work only if the customer lies within about 3 miles of a telephone company's switching station.

For all those reasons, telephone companies are currently pushing the service at business customers while cable operators are targeting consumers.

Despite the rapid growth of both systems, many consumers - especially in rural areas - don't have access to either. Fortunately, satellite-television systems are offering high-speed Internet access, as well. That should help fill in the gaps as the other two industries build out their systems and overcome their technological barriers.

Who will ultimately win? Few analysts are willing to speculate.

But Jeff Chester, executive director of the Center for Media Education, a nonprofit Internet advocacy group in Washington, D.C., argues that cable companies have all but won the battle - unless regulators act quickly.

He's concerned that a few media giants, such as AT&T and the future America Online-Time Warner combo, will dominate the speedy connections to the Internet and the content it provides.

At the moment, telephone companies can't offer DSL Internet access without letting competing Internet service providers also use their DSL lines.

But cable companies don't share that requirement. So if you want cable-modem access to the Internet, you have to subscribe to the service provided by your local cable company.

"The Internet's at risk," says Mr. Chester. "The cable industry wants to apply the business model of cable television to the Internet. They simply want to limit diversity."

But other analysts disagree. If it appeared that cable had conquered the competition, "I wouldn't be surprised if the government did change the rules," says Kathey Hale, principal analyst with Dataquest Inc., a San Jose, Calif., market research firm.

"There's going to be quite an interesting competition here. It may well be the case that cable will lead with a bundle of entertainment, and DSL will lead with communications services," Ms. Hale says. "There may be room in the US consumer's wallet to increase spending on both fronts."

(c) Copyright 2000. The Christian Science Publishing Society

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