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August 3, 1998

InternetView:
xDSL Vs. Cable Modems

By Jason Levitt

able modems vs. xDSL (Digital Subscriber Line) technology has been the subject of debate lately. Allow me to add my two cents.

At first glance, xDSL appears to be the front-runner. After all, it can use the phone wire that's already in place in almost every home and business. Cable modems require a television cable system, which is also in a lot of homes and businesses but doesn't have nearly the same penetration as basic telephone service. One important advantage that cable modem providers do have is a captive audience. All cable modem subscribers go through the same machine room in their local area to get Internet access.

In my home turf of Austin, Texas, Time Warner runs the cable system and its RoadRunner cable modem service will go online this fall. What's the first thing many subscribers to that service will see after they connect to the Internet? The Time Warner home page. Of course, that's just the default home page and it's easily defeated. What's more important is that Time Warner owns the machine room that all cable subscribers connect to for Internet access. When Time Warner, or a third party, develops applications to take advantage of that bandwidth, it will be able to deploy those applications more effectively for their cable modem subscribers than an outside provider.

America Online did a good job of leveraging its virtual community in the early '90's. The company had a captive audience and used it wisely. Similarly, when the Netscape browser was deployed, the first thing most users would see was Netscape's home page. All those eyes gave Netscape the clout to offer extended content and promote its products aggressively.

In contrast to cable modem service, xDSL's flexibility and multivendor support is making it look like a better choice for IT departments that want to hook up telecommuters and home offices, as well as for extranet applications. Any Internet service provider will be able to resell xDSL connections, and those connections are open to some competition due to the Telecommunications Act of 1996. The competitive multivendor environment, coupled with the G.lite standard, which is expected to arrive by year's end, should lead to a brisk commodity market for xDSL equipment and make it a particularly attractive and low-cost pipe.

But while new services are sure to be spawned by all that bandwidth, xDSL providers won't be able to depend on the guaranteed captive audience of their cable modem counterparts.

You can read Jason Levitt's Internet Zone column on InformationWeek Online
at techweb.cmp.com/iw/author/internet.htm.