So far, cable modems have proved the champion in the broadband access battle. What - other than being first to market - gives them the competitive advantage?

Cheap, fast and necessary: It may not be the most flattering description, but telecom pundits claim it is synonymous with cable modems. Many also would use the word trusted. About 95% of the U.S. population has cable TV, proving that providers have built confidence and found a place in the homes of consumers.

With a first-to-market advantage - beating DSL into the high-speed access market by a year and getting an even bigger head start on broadband wireless - cable modems definitely have gotten a jump on the high-speed Internet space. To date, at least, they've managed to stay a step ahead of the competition.

They're here

One important advantage cable modems have over other access technologies is that they're familiar and generally well-regarded. "There's been so much advertising and conditioning of the public to accept cable modems because cable is such a daily part of everyone's lives," says Lynn Hall, director of product management for Knology, a cable overbuilder headquartered in the West Point Valley area of Georgia that offers competitive services in Tier 2 and Tier 3 cities in the Southeastern U.S. "[Customers] see cable modems as much more friendly, something they can get on the local level and feel more comfortable with."

Unlike DSL, which has distance limitations, and broadband wireless, which has line-of-site access problems, cable modems are readily available in most areas. More important, the technology behind cable modems is proven. "For consumers, it's not just the technology, it's the facilitation of it," says Chris Bernat, Internet product manager for Knology. "You have DSL technology? Great, how's it running?"

But technology improves every day, and industry activity indicates that 2000 will be the year of DSL (Figure 1). Therefore, cable operators are not taking chances. Knology, for one, is making its modems more attractive by bundling them with other services, such as cable and telephony, at a discounted price. The company also plans to offer content that customers won't be able to refuse.

"With cable modem access, you can give [consumers an] Internet experience by providing content to them and enriching their Internet experience that way," Hall says. "We're not just focused on the actual box, but when they get Internet service, [we] give them national content, local content and broadband content."

Providing entertainment or news that will draw customers in is a natural evolution for cable providers. "The cable operators have got such extensive experience in content, they are the natural to be able to marry together not only the speed but the content," says Jeff Walker, former director of marketing and business development for cable modems at Motorola, which counts Time Warner, Comcast, Cox Communications and AT&T among its biggest cable modem customers.

"We'll be able to serve more people more effectively with the bandwidth that we have," says Craig Moffat, director of business development for Videon CableSystems, a company that provides Internet access via cable modems in two Canadian towns and a small area of Texas. "We provide 100 video channels to people's homes - 100 channels of not Internet video but of real television services. The bandwidth we have in the ground is staggering compared to what [DSL providers] have."

To enhance its product, Videon last summer inked a deal with @Home Canada. @Home Canada provides consumers with a content-rich multimedia experience that features updated video, audio, text and images. And in an attempt to sustain its head start in the high-speed access space, Videon plans to look for suitable cable companies to purchase so it can grow.

But Walker isn't convinced that cable modems will have to compete with DSL and broadband wireless to that extent. All three have the potential to be "famously successful," he says.

Room for one more?

Whether or not all three technologies become famously successful, each inherently has a few advantages in certain situations. Cable modems will hold an advantage in the residential space while DSL will appeal to the business market, Walker predicts. "Cable is accessible to [more than] 95% of the homes. DSL doesn't have quite as an ubiquitous coverage of the homes," he says.

In turn, because businesses are more comfortable with telecom service providers, they will lean toward DSL for their high-speed access. "Look at the comfort level businesses have with their telephone company suppliers. They already get phone service and, in some cases, high-speed data service from them," Walker says.

Not to mention that DSL is more readily available in large, industrial park areas where the plant is in good shape. "DSL has got a distance limitation; 18,000 feet is the maximum," he says. "Office parks have very good coverage. When you get out into residential areas, you don't have the coverage."

As for broadband wireless, it has a possible advantage over cable modems and DSL when it comes to geographic areas where mountains are prominent. The technology has an advantage in cities such as Austin, Texas, where there are a lot of houses on hills that can't be reached with cable, says Lief Koepsel, director of corporate marketing for Com21. Also, it makes sense to put a wireless receiver on top of tall buildings in metropolitan areas, he adds. Com 21, which supplies cable modems to AT&T, Cox and Charter Communications, has plans to move into the wireless broadband space using the same equipment on which it offers cable.

Nothing's perfect

When it comes to actual installation, DSL's "splitterless" setup gives it a slight advantage over cable modems, Walker says. During the past several months, off-the-shelf DSL kits have emerged that allow customers to install their own service without a technician because the line doesn't have to be split.

But that technology admittedly is not ready. "People say DSL modems are shipping right now. They're actually V.90/DSL modems," Koepsel says. Some customers are buying V.90 modems that can handle DSL, betting that some day the modem will support DSL at the house, he says. "Every cable modem sold by the industry is going to supply [high-speed data] over cable service. I wouldn't say that for the DSL industry."

Even so, cable operators claim that similar do-it-yourself retail packages are in the works for cable modems, but a truck roll still would be required to split the line.

Motorola currently is working on several options for take-home kits. The company is developing a modem that complies with the Home Phone Network Alliance standard, which will allow customers to use telephone wiring to set up a LAN, Walker explains. Many new PCs today are equipped with HPNA-compliant adapters, allowing customers to plug into any jack in the home and still use the same jack for telephone service, he adds. "It allows you to set up a high-speed service using a twisted pair."

Such take-home initiatives will make cable modems more customer-friendly, says Videon's Moffat. "We feel strongly that that retail channel is important to driving the penetration of this beyond...the early adopters. We want to get to the soccer moms and the regular people," he says.

Many see security as another area of advantage for DSL. But most in the cable industry say the argument that shared-access cable modems are less secure than dedicated DSL is just an urban legend.

DSL may dedicate the line into the home, Moffat says, but all other lines - from the telephone company to the central office to the point of presence and beyond - are shared. "A shared network infrastructure is nothing to be afraid of," he says. "With proper encryption and state-of-the-art security features, there's no security risk." The slight risks that do exist, he adds, are the same as any Internet connection. "The security of cable modems is no less secure than any other method of access out there."

Taking the cake

So DSL might be more attractive to businesses and broadband wireless might be more convenient in areas of rough terrain. Overall, though, many in the industry argue that cable modems will not be beat.

One defining factor of the technology's strength is Cable Labs, an organization funded by operators to build standards in the space and drive cable modems forward. "We have a common body that we can go to make sure our products work," Koepsel says.

Also, unlike RBOCs and other telephone carriers that already offer T-1 and ISDN service, cable operators don't have a competing technology. To launch DSL, telcos would have to "cannibalize their own business," Koepsel says. "Cable doesn't have that. There's no fragmenting within a company."

And don't forget the bottom line for operators and end users: the price tag.

"The cost per bit for cable modem service just blows away DSL," Walker says. Most cable modem service today gives users 3 Mb/s or more and costs about $39.95 per month, he says. DSL service from Ameritech gives users 1.5 Mb/s downstream and 128 kbs/ upstream for $59.95 per month. "It's not as fast, and it costs more," Walker says. Table 1 compares cable modem availability and pricing in the U.S.

Finally, on a technical level, the massive amounts of bandwidth involved with cable modems give them an advantage, Koepsel adds. "A copper pipe can't carry the data rates that cable can. The cable [modem's] ability to supply high-speed data...whether digital video, digital voice or digital data, gives it its inherent advantage. The future looks a lot brighter [in the] long term for cable."