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Groups OK two cable modems
By Jim Davis
Staff Writer, CNET News.com
March 4, 1999, 12:45 p.m. PT

Cable industry trade groups today gave the stamp of approval to two cable modem makers, a significant, sorely needed step toward wider deployment of high-speed Internet services.

The Cable Broadband Forum (CBF), an industry trade group advocating high-speed Net access over cable networks, said Toshiba and Thomson Consumer Electronics have equipment that can "talk" to equipment made by rival manufacturers.

Cable companies have been anxiously awaiting standards-based cable modems, which will allow them to provide high-speed Internet access with lower service and equipment costs.

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"We believe this will enable the rapid growth of the high-speed cable access market," said David Fellows, former CTO of RoadRunner. Fellows is now a consultant to CableLabs, and chairs a board which reviews modem test results.

"Ultimately, this is the first step towards retail distribution of cable modems," said Patti Reali, a telecommunications analyst with the Gartner Group consultancy.

Many gradual steps will occur, however, before a full-fledged retail market for cable modems exists. Most consumers won't see anything on store shelves until around the third quarter of this year, Reali estimated.

When they do start showing up, industry consortium CableLabs, which performed the testing, is supplying a "CableLabs Certified" seal showing that companies meet specified standards.

Tom Cullen, CBF spokesperson and vice president of Internet services at MediaOne, said the announcement is a "pivotal event" in rolling out lower priced services and products that consumers can have confidence will work properly. "This clearly solidifies cable's role in deploying high speed services to consumers," he declared.

For consumers, certified, standards-compliant modems could be purchased by consumers at retail stores starting in the fall or possibly sooner, and used with any service provider's equipment. Currently, some stores in limited areas of the United States carry cable modems for sale, but generally they can only be used with an ISP in that region. (See related story)

QUOTE SNAPSHOT
March 4, 1999, 1:01 p.m. PT
Cisco Systems Inc. CSCO
98.2500	+3.1250	+3.29%
Motorola Inc. MOT
67.0000	+0.6875	+1.04%
3com Corp. COMS
25.0000	+0.4375	+1.78%
Northern Telecom Ltd. NT
55.0000	-0.1250	-0.23%
Com21 Inc. CMTO
20.5000	-3.0000	-12.77%
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For modem makers, certification means that cable operators will be more comfortable buying their equipment. Nine modem makers submitted equipment for testing, including Motorola Cisco, and Com21, and Nortel. None of these companies, which are the top four modem makers, made the cut today.

"While Toshiba and Thomson are not the biggest cable modem vendors, they are two of the largest consumer electronics companies and are strong retail players," said Michael Harris, president of Kinetic Strategies. "It's really the tip of the iceberg," as far as having more vendors becoming certified soon.

Another big name in modems, 3Com, wasn't on the list. "We would've preferred a different result," said William Markey, director of consumer marketing for 3Com, while reiterating 3Com's support for the testing process. He said results of the tests are being evaluated, and engineers are working on getting products ready for the next wave of certification.

Cable broadband still slowed by other issues
Cable broadband services are not going to magically appear as a result of today's announcement.

About 520,000 households now subscribe to a cable modem service. That compares to around 15 million customers of America Online's dial-up modem service. Leading cable providers include @Home and RoadRunner. However, Dataquest predicts the cable modem market to 2.4 million by 2002.

Those subscription numbers will start picking up with the deployment of standards-based cable modems, but a number of issues remain in getting high-speed service to consumers.

For one, cable companies are still building out the links between homes and the cable company's offices. According to Kagan estimates, TCI, the largest cable operator, will only have between 50 to 60 percent of homes in its service areas ready for two-way communications by the end of 1999; Time Warner Cable, the second largest cable operator, expects to have 85 percent of its homes ready during that same time period, with overall industry numbers pegged at around 40 percent by other analysts.

Once two-way networks are in place, there is still the matter of putting more equipment in place in the cable plant so that service can actually be turned on to customers.

"There's a lot more work ahead," Leslie Ellis, senior analyst of broadband technologies at Paul Kagan Associates.

Related news stories
• Consumer cable modems to be OK'd March 3, 1999
• Intel driving low-cost cable modems February 16, 1999