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Originating publication
June 24, 1996, Issue: 616
Section: Top Of The News
Embracing Technologies -- Now Playing: Cable Modems
Evan Schuman

They offer blazing transmission speeds at a fraction of today's prices. They're coming to hundreds of neighborhoods, hospitals and universities. But if your place of work has the wrong address, don't expect to be taking advantage of cable modems anytime soon.

These devices, which permit the transmission of digital signals over standard coaxial television cables, are in use in nearly 100 communities. There are plans to deploy many more of them. For commercial applications, their appeal is obvious: Cable modems approach T3 speed at less than half of today's typical T1 price.

For businesses, there are three potential uses for cable modems: accelerated Internet access; telecommuting and other types of remote access; and as an alternative to T1 lines in the corporate network. T1 lines carry transmissions at 1.544 megabits per second, while T3 lines transmit at 45 Mbps.

"We probably experience a much faster connection with a cable modem than our T1," says Ross Skinner, senior network administrator at Phoenix-based Del Webb Corp., a $1 billion builder of retirement communities."It basically gives us the ability to plug into our system as if we were in the office."

Although cable modems in one form or another have been around for the better part of a decade, the confluence of two watershed events has spurred their deployment within the past year: the passage of the 1996 Telecommunications Act and the surge in popularity of the World Wide Web.

"With the Internet, here's an opportunity that's suddenly been born and fallen into the lap of the cable operators," says David Wood, group manager for marketing at Microsoft's Consumer Platforms division, which is developing software for cable modems.

Leading the way in adapting the nation's cable infrastructure for digital transmission are the cable and local telephone companies, but the overwhelming majority of their efforts is focused solely on residential services. To the phone and cable companies, telecommuting is not as much a useful business tool as it is another means of deriving additional revenue out of their installed cable plants.

The cable companies have wires running to approximately 60 percent of U.S. homes, but their commercial installations are few.

Not Interested

The phone companies, on the other hand, have extensive relationships with most businesses and are well-positioned to push the commercial use of cable modems. But why should they? They have their own products to hawk- including ISDN and up-and-coming Asymmetrical Digital Subscriber Lines technology, in addition to T1. BellSouth's Karen Roughton, national media relations manager, puts it bluntly: "We're not looking at cable-modem technology for our large customers in any way."

A few commercial concerns have started to explore making use of cable modems, but they are generally smaller businesses for which T1 service or the equivalent is too expensive.

The handful of larger companies seriously investigating cable modems as a data-transmission option are involved in unusual business situations for which the technology is particularly well-suited. Those businesses are also using the technology for small remote sites.

Most businesses haven't even been wired for cable. "Traditionally, a company doesn't want its employees watching CNN all day," says Dan Torbet, network operations manager at Jones Internet Channel, a cable company based in Englewood, Colo.

Corporations Take It Harder

And, compared to consumers, corporate users tend to be much less forgiving about outages and service disruptions. A residential customer who loses Internet access for a few hours late one night may be unhappy, but if service is restored the next morning, the person is likely to forget about it quickly. If the same thing happened to a large corporation as it was downloading direct-deposit paycheck payroll data, however... well, that's the stuff lawsuits are made of.

"Digging holes and laying cable is an expensive venture," Microsoft's Wood says. "The cable operators want to prove the technology on the residential customers first."

The cost of extending cable drops to a corporate site varies widely-from $5,000 to $100,000, with a median cost of about $13,000 to $24,000-according to Marty Weiss, director of multimedia networks at Cox Cable Communications Inc., Atlanta. "We cannot pass those capital costs to the commercial customer," he says, adding that the cable companies can only recoup their investment through long-term commitments.

That has pretty much limited cable-modem deployment to businesses that already have cable television. Hospitals, for example, have been wired for cable for years so that patients could view television. The same is true for some military bases and many universities.

The other exception is businesses located in areas already wired for residential service, or that relocate to such areas. That's what has happened in Fairfax County in Virginia, where government buildings were wired by Media General Cable for cable-modem access, according to Michael Nelson, an IBM market-segment manager specializing in cable modems. He worked for Media General at the time.

When some of those government agencies abandoned those buildings, it cleared the way for local businesses to move in-several Fortune 500 companies among them. Now Mobil Oil Corp., Boeing Corp., Sprint and Electronic Data Systems Corp. are using cable services for LAN and multimedia efforts.

Attractive to Some Offices

For businesses with offices located near residential areas, such as restaurant chains, real estate offices or retail outlets, digital cable service can be attractive. These include a number of large companies with regional offices that are too small to justify their own T1 connections. Jerry Bennington, an executive officer at Tele-Communications Inc., notes that small offices can be a major corporate headache in terms of network support.

Cable modems "are going to save a lot on your feeder network, if you have offices that can't afford their own networks but find themselves smack dab in the middle of our network," he says. "The winner is the extremely decentralized corporation."

The main technological issue surrounding cable modems concerns the transmission speed that will ultimately be available to the client machine on the end user's desk.

First of all, with commercial deployment of cable modems so limited, performance claims are hard to verify. Industry estimates vary, but most agree that throughput of as much as 30 Mbps over hybrid fiber coaxial cable should be possible. "This will change the way people do business," says Doug Robertson, director of marketing and business development at Motorola Inc., Schaumberg, Ill. "A two-minute video, for example, with a 28.8 modem, takes five hours to download. With ISDN, it takes one hour. With a cable modem, it takes 50 seconds."

But such estimates don't take into account that cable lines are shared and performance will degrade in direct proportion to the volume of traffic. Given that most businesses need guaranteed access speeds for at least some of their applications, cable companies are preparing to offer business packages that would let commercial accounts pay a premium in exchange for a dedicated piece of pipe.

Microsoft's Wood says the software leader is supporting a bandwidth reservation protocol-called RSVP-that should help the cable carriers offer performance guarantees. With RSVP, he says, applications can call in to request priority confirmations from the server.

Limited Reach

Another constraint for cable modems is the limited reach of the cable service providers. There are no international cable companies nor is there any cable company in the United States that delivers to the entire country. This limits cable-modem access to the region served by a given cable company, and means digital cable service is viable as a LAN or a closely situated metropolitan-area network option, but not for a national or international WAN.

Introducing the Internet into the equation changes that-and changes performance levels as well. Using cable modems, data can be dumped onto the Net at tremendous speed, and it can be transported anywhere-regardless of the original service provider's sphere of operation. But once on the Net, performance levels become impossible to predict.

For some businesses, that isn't an issue.

For example, Group Infotech, a graphics company based in East Lansing, Mich., is conducting a cable-modem trial over the Internet. The company says it hopes to reduce greatly the amount of time its designers waste sending and receiving large graphic files.

For Group Infotech employees, it doesn't matter whether it takes two seconds or five minutes to transmit a file, just as long as the image is quickly moved off or deposited onto the client machine.

Another attractive aspect of the Net, when used in conjunction with cable modems, is that it is relatively quick and easy. Motorola's Robertson refers to it as "bandwidth on demand for small business."

"In a sense, you can cut through so many bureaucratic layers with the Internet and cable modems," Robertson says, adding that together they support such high speeds that the PC will soon become the bottleneck, rather than the network connection.

The Big Guys, Too

But not every business seeking to take advantage of cable modems and the Internet is a small one. Microsoft, for instance, wants to use the devices as its ramps on and off the Internet.

"If you take a look at Microsoft, we have offices worldwide and a communications bill of more than $10 million a year for our corporate wide-area network," says Paul Maritz, a Microsoft group vice president. "In the future, that entire network should be able to run over the Internet. We should be able to get rid of the bulk of our infrastructure and use the Internet as our corporate public-area or wide-area network."

At the moment, however, companies looking to take advantage of cable modems at both ends of their network will find it rough going. That's because the pockets of support for cable modems around the country are small and isolated-and likely to remain that way for many years, according to Chris Noll, a development director at BellSouth.

For network managers attempting to divine what role-if any-cable modems will play in their organizations, the other key issue is price. But comparing the cost of cable modems to various alternatives is tricky, because prices will most likely vary from region to region. For companies with multiple locations, that means cable modems could indeed be the most cost-effective solution in some places and not in others.

Although cable executives are leaving themselves plenty of latitude to change prices until the last minute, they consistently indicate that their services will be priced substantially lower than T1 service in just about every market. In cities where a single T1 line runs $1,000 a month, the cable companies are looking to charge about $500.

Price-War Possibility

And in what could be good news for commercial users, some cable insiders are predicting a price war.

"The cable-modem price advantage will not materialize," BellSouth's Noll predicts. "With competition, I believe that prices for comparable private- line and fast-packet technology is going to come down for business use."

Casey Sheldon, Hewlett-Packard's brand manager for interactive broadband products, disagrees, arguing that traditional data carriers won't be able to make up the difference. With cable modems, "you can approach speeds of a T3 at much less than the cost of an ISDN line, let alone a T1," she says.

Many of the field tests and initial implementations of cable modems have been limited. More comprehensive trials that incorporate routing and switching and attempt to manage the cable technology as part of an overall corporate network are planned, but have yet to take place.

Cable modems are in their infancy, technologically speaking. Still, business network managers involved in various cable trials have concerns about the modems' reliability.

Sharon Klocek, manager of Internet development at a graphics company called Visual Inseitz Inc., was telecommuting in a TCI test program from East Lansing, Mich., to her company's headquarters in Rochester, N.Y. "The first time, I lost connections to the net multiple times and had speed problems," she says, attributing the problem to the steadily increasing number of users testing the modems and to the fact that TCI had tried placing too many users on the same node.

"They wanted to have 10 users per node and had worked themselves up to 30 or 40," she says, adding that TCI eventually tried isolating Michigan State University from the other test sites. "Under TCI's implementation, there is no doubt that a T1 is better."

At Del Webb, which is still conducting a telecommuting trial with Cox that began in September, the initial tests indicate a reliability rate of 50 percent to 60 percent. "We're not in a position yet to say that the reliability is there. The service runs very intermittently," Skinner says. "It's still in a test phase. The cable company's changing its equipment and the system on its end almost everyday."

More recently, though, Skinner says, the success rate of the modems has been closer to 98 percent. And when it works, he says, it works well.

In Raleigh, N.C., the city government has been utilizing cable modem technology for the last one-and-a-half years, using Zenith Data Systems Corp. cable modems. Frank Seiber, IS manager for the city, estimates that the modems have been running at about 97 percent reliability with no cable problems, other than a few modem issues and some squirrels who had developed a taste for hybrid fiber coaxial cable. "We've had some problems with the modems. I think the Zenith people have realized that the buffers need to be larger," he says.

Many of these reliability issues could be little more than the growing pains of any new technology, with some of these trials akin to early alpha product tests. But the anecdotes speak to a user's perception that cable companies generally are unreliable and have weak customer support, a perception rooted in consumer experiences.

"People will be nervous about cable operators for some time. The comfort level just isn't there in corporate America," Jones' Torbet says. "Traditionally, cable services haven't been fully staffed and that's caused some problems on the customer service side."

Cable companies' reputation for reliability problems is well deserved, says Roger Magoon, marketing vice president for West End Systems Corp., another cable company in Ontario. "In the early days, the phone companies had no choice [but to give good service] because they were providing a lifeline service and the cable companies weren't," Magoon says.

Other than reliability issues, many corporate sites also have expressed concerns about cable- modem security. Even when the connections are limited to one corporation's offices, the concern is how well transmissions are protected.

Allied-Signal Inc. completed some cable-modem testing at its Phoenix operation, but had limited the testing to exclude much network access, effectively minimizing what the project could actually test. "Security was the main issue. Our IS people didn't like our internal documents going out over anything they didn't control," says Tom Tourville, an Allied-Signal engineering administrator. "It was the old guard. They didn't want anyone hooking up to our corporate network."

IBM's Nelson, the former Media General employee, put the security concerns of some of the larger federal contractors in Fairfax, Va., a suburb of Washington, into context. "There were security concerns, so they only sent around Secret stuff, not Top Secret or Top Top Secret," he says.

Raleigh's Seiber says city officials limited the information transmitted via the cable system to publicly available documents, minimizing, but not eliminating, security concerns. "All of the information is public information, but you don't want people to go in there and change the data," he says, adding that "the controls to our data are in place through our operating systems."

For businesses lucky enough to find themselves in an area that supports cable modems, the potential for faster and cheaper connections definitely exists. The trend for small, distributed sites is going to make the multi-media-friendly connections even more attractive.

Helpful or Harmful?

Will the Internet help or hurt cable modems? For those businesses that can tolerate the reliability and security concerns that plague the Net, the Net makes national or international network connections an inexpensive prospect. That, of course, limits those connections to non-real-time transactions that are not mission-critical, but millions of dollars are spent every year on just such


For the company that's literally in the right place at the right time, cable-modem technology promises some incredibly attractive capabilities.

Next week, we will profile three users of cable-modem technology.

Copyright (c) 1996 CMP Media Inc.



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