Rush for faster residential Internet service

Dec. 1, 1997

Rush for faster residential Internet service

More than one million homes will be wired with high-speed Internet service by the end of 1998, according to two research analysts who spoke recently at the Montgomery Securities Twenty-seventh Annual Investment Conference in San Francisco, CA.

Montgomery telecommunications analysts William D. Vogel and Bruce Carlsmith predicted that cable modems and a variety of telephone-based digital subscriber line solutions are how consumers will most likely receive higher-speed Internet service. Other methods, such as direct broadcast satellite and fiber-optic cable, would play smaller roles over the next few years, they said.

Vogel said that telephone company pilot programs have shown that the demand for high-speed Internet access is enormous.

Customers without high-speed Internet service are limited to sending and receiving data at 56.6 kbits/sec over conventional telephone lines or at 128 kbits/sec over more-expensive Integrated Services Digital Network connections. Cable modems and digital subscriber line products will allow transmission at a rate of 1.5 Mbits/sec, which is 12 to 26 times faster.

Carlsmith said that commercialization of cable modems will be accelerated by the use of a hybrid system under which consumers would receive information at 1.5 Mbits/sec, but would upload it over conventional telephone lines at the slower speeds. This "telco-return" system would eliminate the need to install new cable lines capable of two-way communications, he said. However, cable operators would offer two-way service in areas that are being rewired. Shipments of cable modems will reach two million units annually by 2000, he predicted.

Vogel forecast that 4.8 million homes in the United States would have digital subscriber line technology by 2000, "creating a $600 million services market opportunity and a $2.4 billion equipment market." Consumers would pay about $250 for equipment, he said, and monthly service could be priced at about $50 per month. u

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