High-speed access kicks it into high gear.

Cable modems make a dash to lead the market for telecommuting.

How will AT&T's $48 billion acquisition of cable company Tele-Communications, Inc. change the race between cable modems and digital subscriber line (DSL) services to provide tomorrow's telecommuters with fast, reliable,

Before the mega-deal was announced, DSL services appeared to have the edge, even though cable TV systems are more widespread and an estimated 200,000 subscribers are already using cable modems to access the Internet.

That's because DSL services are generally considered more reliable and secure than cable TV systems, and could quickly become as ubiquitous if, and when, carriers decide the market is ready.

DSL services operate over existing copper telephone lines, Out at more than 100 times the speed of today's fastest dial-up modems. For Internet access, asymmetrical DSL (ADSL) services are expected to be the most popular since they match the asymmetric pattern of Internet use, where user queries, messages, and other data usually account for a fraction of the inbound traffic. Typically, ADSL services offer inbound speeds to 6 Mbps and outbound rates to 640 Kbps.

Cable modems, in comparison, can achieve peak download rates of 36 Mbps and upload rates of 10 Mbps, though rates of 3 and 1 Mbps are more typical. Rather than buying the modems, users generally lease them from their local cable company. Rates generally run from $40 to $50 per month, including unlimited Internet access.

For corporate use, though, cable modems raise a number of troubling service and security issues. Cable TV operators have a spotty service history, and that will have to improve for IT managers to entrust Internet access to a cable TV system.

Managers are also concerned that dozens of subscribers or more share the same cable. Some cable providers offer security services, such as filters that supposedly make data from one subscriber invisible to others, but the effectiveness of these procedures against hackers has yet to be proven.

Another obstacle is the lack of bidirectional transmission with older cable systems. Two-way connectivity requires the cable operator to install special head-end equipment, costing $500 or more per subscriber, and some are reluctant to make the investment. In these cases, the user must rely on a dial-up connection for the return link.

AT&T STRATEGY

With its acquisition, AT&T has the opportunity to address these issues, while at the same time accelerating the growth of cable-based Internet service. For starters, AT&T gains access to TCI's approximately 13 million U.S. cable TV subscribers and its local coaxial cable network. It also gets controlling interest in the @Home Network, which offers high-speed Internet access via cable TV with TCI and other cable operators, including Comcast Corp. and Cox Communications. Through its partners, @Home has access to 50 million U.S. homes.

AT&T's strategy is to combine its long-distance, wireless, and Internet services with TCI's cable, telecommunications, and high-speed Internet businesses into a single company, to be called AT&T Consumer Services. Presumably, the new company will redress the poor service plagued cable operators past.

With its deep pockets, AT&T will also to speed the upgrading of TCI's cable network for two-way, high-speed Interact access and other services. TCI says it was planning to have 25% of its network upgraded to two-way by the end of this year, and to have the entire job done by 2000. As for a major rollout of @Home, TCI says it has been waiting for a cable-modem standard, which it expects to see by year's end. With AT&T, the pace will quicken.

MODEM GROWTH

Besides AT&T, a number of leading cable operators remain optimistic about their chances of competing for the telecommuter market. They may have been encouraged by the projections of market research firms even before the AT&T announcement and by the earlier cable investments of other prominent players such as Microsoft and Compaq Corp.

Cable-modem sales should grow to $400 million by 2001 from $20 million in 1997, according to Forward Concepts of Tempe, Ariz. A recent report by Forrester Research, Cambridge, Mass., projects that about 7 million households will subscribe to cable-based Internet services by 2001.

Sensing the opportunity, or maybe hedging its bets, Microsoft has invested $1 billion in Comcast Corp., a cable system operator, and has spent $425 million to buy WebTV, which offers Internet access via cable systems. More recently, Microsoft and Compaq each invested $212.5 million in Time Warner's Road Runner high-speed on-line service, which serves more than 90,000 customers but has the potential to reach 27 million cable homes.

Another factor that could drive cable-modem sales is the agreement by leading players to adhere to the Data Over Cable Service Interface Specification (DOCSIS), a standard devised by the Multimedia Cable Network Systems (MCNS) consortium, which represents cable TV companies. Cisco Systems, Hayes Microcomputer Products, and Samsung Electronics Corp. are among the firms planning to build devices based on the specification, which covers equipment at both subscriber locations and cable operator head ends.

Other networking companies are also gearing up to handle demand for cable modems. One of the most advanced designs is the unit developed by Toshiba to comply with the DOCSIS standard. Capable of providing downstream data rates of 40 Mbps and upstream rates to 10 Mbps, the modem interoperates with all MCNS-based termination systems and sells for $315. It supports SNMP (Simple Network Management Protocol) network monitoring and comes with two embedded MCNS security modes: baseline privacy and full security.

Bay Networks' Generation 4 modem combines the company's network management capabilities with the modem technology acquired with LANcity. As such, it provides the end-to-end management capabilities commonly lacking in cable systems.

Generation 4 modems include an SNMP agent and offer several Management Information Bases that provide extended management to the modem's radio-frequency interface and attached devices. The modem is also DOCS1S compliant and sells for under $200.

EXPANDED SERVICE

To secure the needed corporate support. leading cable operators are taking a full-service approach, including installation, help desk service, maintenance, and end to-end management. They have also hired people with computer or Internet service provider experience.

Many are also upgrading to hybrid fiber coaxial (HFC) networks to achieve peak rates to 36 Mbps. Time Warner Cable says it will spend the bulk of its $1.5 billion capital budget on HFC upgrades during the next few years.

Its Road Runner cable Internet service is currently available in eight metropolitan areas. Users pay $100 to install the service, which includes a cable modem with an Ethernet port, a choice of Ethernet card for their PC, and software. The $40 monthly service fee covers unlimited Internet access at speeds to 27 Mbps downstream and 3 Mbps upstream. Actual speeds depend on how many users are assigned to a channel, who is on-line, and what they are doing.

Subscribers to the @Home service pay from $35 to $50 per month for high-speed Internet access, depending on the cable operator. Before the AT&T involvement, the company was already building its own nationwide, fiber ATM backbone to service its partners. It claims more than 100,000 subscribers to the "always on" service, which requires no dialing or logging on, so there is no waiting or dropped c0nnections.

Its @Work division augments the backbone network with cable and fiber-optic links and a switching infrastructure to allow businesses to connect their corporate LAN to the Internet and extend it to employees working at home. Service is currently limited to business hubs such as the Northeast corridor, Chicago, and the west coast, but a rollout is underway into 27 states and Washington, D.C.

MediaOne, the broadband services firm created by the merger of U.S. West Media Group and Continental Cablevision, serves 5 million subscribers in 17 states. The Englewood, Colo. firm, which claims 25,000 subscribers to its high-speed Internet access service, is busy upgrading its I-IFC network in anticipation of reaching 8 million homes by late 1999.

In Boston, MediaOne has earned kudos from IT managers at Boston College and Digital Equipment, who were early adopters of the cable Internet access service. Boston College began as a beta test site in 1995, offering cable-modem service to students, professors, administrative people, and IT support staff. It now has close to 100 users. Digital began offering cable-modem service to its 9,000 full- and part-time telecommuters last December.

SUPERCARRIER MODEL

Another strong competitor, RCN Corp. of Princeton, N.J., provides local and long-distance phone service, cable TV, and Internet access over its fiber-optic network. RCN currently offers service in several markets from Boston to Washington, D.C. It recently filed to provide similar services in the San Diego-to-San Francisco corridor, which reportedly accounts for 10% of the nation's telecommunications usage. During the next 10 years, the company says it plans to extend its network and services into 24 major urban markets, creating a network independent of the local phone and cable infrastructure.

Meanwhile, RCN is building its Internet services through acquisitions. In June, it acquired New York City's largest independent Internet service provider (ISP), Interport Communications, Inc. Earlier, it had picked up UltraNet Communications, Inc. and Erol's Internet, Inc., Boston's and Washington's largest ISPs.

RCN sells its Internet access service for $39.95 per month, including a cable modem operating at rates to 10 Mbps. Customers receive a discount of up to 35% if they also buy phone and cable TV services from the company.

RCN's business model was effectively a precursor to AT&T's plan to become a telecom supercarrier offering local, long-distance, and cellular service and cable TV and Internet access all on one bill and with a price discount for buying all these services from one company.

With its size and the convenience of the all-in-one digital service, AT&T will no doubt draw more consumers, and telecommuters, to cable-based Internet services. Still to be resolved is how the other cable companies will compete with the new giant in their midst, and if this will also spur further growth in cable-based Internet, and what the telcos will do to make DSL services more compelling.

Edwards is program chairman of NetCom, the Network Computing Solutions Conference and Exposition, which will be held in Ft. Lauderdale, Fla., February 16-18, 1999, and in Anaheim, Calif., September 21-23, 1999.