As a former cable guy, Lisa's comment "... huge decline in the price of ... communication lines" prompts me to write about something that's been on my mind for a decade: the cable TV industry's early efforts to offer internet service.
The initial effort was led by @Home Network, a company founded and funded by Kleiner Perkins Caufield & Byers, the same Silicon Valley VC that had originally funded Netscape. @Home's initial efforts were successful, and the major cable TV retailers all signed up.
Numerous pundits had a field day: That brain-dead cable TV industry is actually planning to offer internet service? The pundits fell into two camps:
- "They'll never make it work." This camp claimed that the industry would never be successful, pointing out, among other things, that the 5-40 MHz return band was too vulnerable to RF interference. Stewart Alsop, in a famous 1997 Fortune editorial, noted that "Cable Modems are a Fantasy" (written, as it happens, about the same time that Fortune's sister company Time Warner Cable was gearing up to offer internet service).
- "They'll never be able to handle the load." This camp claimed that the industry's network could not handle the anticipated number of subscribers. This camp also cited the 5-40 MHz return band, claiming that the industry would never be able to solve the interference problem. Others claimed that the cost of connecting to the internet would kill the idea; one editorial even claimed that every cable company would need an OC12 just to handle the load.
It other words, one camp claimed the industry wouldn't get any business and the other claimed that it would get too much business. One of my former associates, referring to the latter camp, noted: "well, I sure hope we have that problem!"
A few years later, @Home went bankrupt, and cable TV companies introduced their own versions of internet service. @Home was a noble effort, but IMO it failed for two reasons:
- It tried to become a "portal" like AOL and CompuServe. At one point, it even bought an electronic greeting card company.
- It was too successful in building a workable product. After a few years of using @Home, cable companies began to think, "this stuff isn't that difficult, so why are we paying @Home to do something we can do ourselves?"
Now, a decade later, equipment specs have been standardized and numerous manufacturers make "cable modem termination system" (CMTS) equipment for headend installation. Just about every cable TV retailer in the country now offers some sort of internet service. As long as the RF network is properly maintained (correct signal levels and stringent control of ingress/egress), the CMTS runs with little attention.
Modem manufacturers have proliferated too, and the modems themselves have gotten easier to use. Many cable TV retailers now offer install-it-yourself modem kits. Except in cases of signal failure, most service problems can be resolved by rebooting the modem. Of course, the industry still faces problems today. In my experience, the biggest problems are slow response in some geographic locations, and lack of service in rural areas.
In most cases, the slow-response problem is caused by congestion upstream of the cable TV headend. Maybe there's not enough capacity in the connection between the headend and the internet (usually a T1 or a T3), or maybe it's farther upstream.
Lack of internet service in rural areas parallels a similar problem the industry faced in the 1980s: lack of video services in rural areas. The rise of DBS (DirecTV and Dish) has largely resolved the video problem, but the lack of internet service continues to be a public-relations headache. Perhaps the recently-passed stimulus package will provide the REA with funds and authority to assist cable TV retailers extend their internet services.
As for Alsop's famous editorial, perhaps he should have checked his sources. He notes, "The show operators said that the local phone companies could not provide enough bandwidth for all the cable-modem demos. Uh-huh. Right." Well, that was the problem. The exhibits on the convention floor were connected to a LAN that was supposed to be connected to the internet, probably by a T1 or a T3. Whatever it was, it wasn't there: the local phone company didn't get it installed in time.