Broadband Technology

The Basics of Broadband

Broadband technology is the always-open gateway to a new world of Internet-connected services delivered at lightning-fast speeds.

Engineered by many of the companies that have funneled cable television and telephone service to U.S. households for decades, broadband is a huge pipeline that links consumers to the Internet. Thanks to its digital roots, broadband eliminates the so-called "world wide wait" that plagues slower, less-advanced technologies.

Broadband technology also is fostering a new class of consumer- and business-related services. Services in development include Internet-based telephone and videoconferencing; viewer-customized TV feeds and e-mail with audio and video attachments.

Major telecommunications and new media players such as MediaOne, AT&T, SBC Communications, Rhythms NetConnections, the Baby Bells, DirecTv, Microsoft Corp. and Intel Corp. are making major investments in this field. But they must vanquish major challenges before broadband technology gains mass acceptance. What's more, they need marketing, subscriber-acquisition/retention and customer-service support.

Today's broadband arena is crowded with competitors. Consumers are finding it difficult to choose the high-speed Internet-access service that best suits their needs. It's a problem directly tied to the marketplace's lack of objective, comprehensive information about broadband.

Make no mistake: Broadband's marketplace-penetration prospects are bright. A recent report issued by the marketing research firm Forward Concepts estimates that broadband subscribers will reach 35 million in the U.S. by 2005. But today's broadband takeup rate is slow compared to that of so-called "dial-up" Internet-access services such as America Online that rely on slow telephone-line connections to the Internet. Of the U.S.' estimated 50.3 million Internet-access service subscribers, 94% of them use dial-up connections.

Broadband Defined

The rush to deliver Internet access is unprecedented. More than half of the U.S.' 100 million households have personal computers, and almost half of those PC users subscribe to an Internet-access service.

More than 90% of those online subscribers pay for dial-up service, usually provided by an Internet service provider (ISP) that offers Internet access over slow, 56-kilobits-per-second (kbps) or 28.8-kbps computer modems and a telephone company's copper lines.

Broadband-access penetration has been sluggish for several reasons. Cable and telephone companies have been slow to upgrade their networks with fiber-optic and other expensive technologies. Independent DSL enterprises have also had trouble winning access to the telephone companies' proprietary lines.

As those networks come online, service providers must market their services to a population whose grasp of the technology is tentative. For all of the grousing among dial-up service subscribers about how long it takes them to move from Web site to Web site on the Internet, most of those users say that moving up to speedier broadband service may be too big a step at this point.

The Technology

Newton's Telecom Dictionary defines "broadband" as "a transmission facility that has a bandwidth, or capacity, greater than a [telephone] line. Such a broadband facility … may carry numerous voice, video and data channels simultaneously."

To put it plainly, a broadband network is a fat, highly engineered pipeline laid by a cable TV, telephone or independent service provider. Wireless pipelines are also being built by satellite-based and terrestrial companies.

A vital component of that pipeline is digital technology. It compresses vast amounts of voice, video and data information broken down into "bits." Broadband can ferry exponentially more audio, video and data information, or bits, than regular cable, telephone or wireless connections can. Broadband can deliver TV- and radio-like signals to a PC, as well as connect a user to the Internet, in the blink of an eye. Think of the difference between broadband and dial-up service -- often referred to as "narrowband" -- as the difference between a fire hose and a garden hose.

Two more keys to boosting a pipeline's capacity to carry voice, video and data are fiber-optic technology, which uses light waves to transmit data, and fiber optics' next-generation brother Passive Optical Networks (PON). PON technology runs optical fiber from a customer's residence to a central telephone or cable system office by splitting that fiber among many homes. The result is super-fast transmission speeds of up to 1.25 gigabits per second (gbps).

Because it can convey so much digitized information so fast, broadband technology solves the problems faced by network operators trying to keep up with the World Wide Web's explosive growth. Broadband, unlike its predecessor technologies, creates the capacity for network operators to deliver new, bandwidth-hungry applications like videoconferencing; streaming audio and video; interactive games; and real-time voice services.

The Players

Several technologies provided by a range of vendors deliver high-speed, broadband-based access services. At the head of the pack today in terms of subscribership is cable-modem technology.

U.S. cable TV companies such as AT&T, Time Warner Inc., Charter Communications and MediaOne have installed thousands of miles of copper-based coaxial cable, as well as fiber-optic lines, in underground networks across the nation. Those networks funnel video and audio signals to homes and businesses that are translated by decoder boxes attached to television sets.

Because that video and audio traffic uses only part of a cable company's pipeline, there's usually room to offer more services, such as high-speed Internet access, if digital technology is added.

A cable modem is the gateway that lets a home or business tap that pipeline to the Internet. A "hybrid" fiber-coax (HFC) network can deliver data at rates ranging from 3 mbps to 10 mbps -- more than 100 times faster than a 56-kbps, dial-up modem. That network also promotes, among many services, the deployment of Voice Over Internet Protocol (VOIP) local telephone service; digital TV services that deliver hundreds of video channels; and interactive TV applications.

Cable modems carry two major benefits for consumers: A lightning-fast connection to the Internet, and the fact that that link is always on. There is no need to dial into an Internet Service Provider (ISP) that uses telephone lines every time you want to get on the Internet.

This access changes consumer-usage patterns. For instance, subscribers "snack" more on information like weather, movie listings and stock quotes when it's always at their fingertips. In turn, the PC is moving more and more from the den and home office and into the family room.

What's more, broadband's blazing speed adds another dimension to Internet-based entertainment; saves time; and raises productivity/efficiency quotients on more work-oriented chores such as accessing databases, conducting research and Web surfing.

Today, cable modem installations total 1.8 million in the U.S., where some 70 million households subscribe to cable TV service. By 2003, eMarketer estimates that the modem-subscriber base will total more than 10 million. To get there, however, cable networks must be engineered to support two-way data traffic -- both downstream from the access provider to the individual user, and upstream from the individual user back to the provider. Cable's plant also must solve another issue: During peak usage times, cable modem speeds can drop due to the technology's party-line configuration.

Marketplace Challenges

Broadband's deployment lags the penetration rates generated by dial-up Internet-access services that primarily target consumers whose PCs have 56- or 28.8-kbps modems.

According to Forrester Research, only 6% of the U.S.' online households subscribe to a cable, telephone or wireless service providers' broadband service. In raw numbers, that totals about 3 million homes.

But the future is bright. DSL, cable modem and other broadband connections will hit the 35-million mark in the U.S. by 2005, according to a May, 2000, report from the marketing research firm Forward Concepts. They predict that such broadband-enabled services as packet voice transmission, e-commerce, videoconferencing, virtual private networks, and gaming will drive demand, particularly in the residential and small office-home office (SOHO) markets.

Of that 35-million-customer market seen in 2005, cable will account for 60% of the subscribership, with DSL dominating the SOHO and enterprise markets. For companies with fewer than 20 people, DSL penetration rates could near 50% and run as high as 75% in businesses with up to 100 people, according to Forward Concepts.

Nonetheless, broadband today is a relative infant in the telecommunications sector, and it faces a number of growing pains as it heads toward toddlerhood and into adolescence.

Infrastructure

Building the so-called "information superhighway" has been, and continues to be, a mammoth undertaking. The effort involves major industries and thousands of players in and around those industries -- many of them connected through strategic alliances, partnerships, joint ventures and/or common ownership.

Along those lines, cable- and telephone-network upgrades are proceeding at varying speeds, depending on the company. What's more, service providers must iron out any number of technological issues before they can provide seamless, bug-free service.

Wireless service providers must find ways to speed the upstream, or return-path, delivery of data to make that option more attractive to consumers, particularly in geographically isolated regions. And broadband players of all stripes, from Internet-access providers and vendors to content providers, must find ways to unclog the backbone bottlenecks that occur when large numbers of users access the Internet at one time.

Today's Market Environment

When high-speed-Internet service providers begin to reach beyond the 6% slice of online consumers who currently use broadband -- the so-called "early adopters" -- they face significant marketing challenges.

Consumers need help sorting through their choices. In some major markets as many as 20 companies offer Internet access, home-networking and other residential and commercial telecommunications services. Many consumers also know little about broadband technology, some 60% of the 502 respondents in an early 2000 Strategis Group survey said they knew almost nothing about DSL. Another 42% said they knew next to nothing about cable modems.

One major cable operator -- Cox Communications Inc. -- has reported impressive broadband penetration rates of about 5% in some of its markets after bundling high-speed access services with cable TV and telephone service in discounted monthly packages. But getting customers is not the same as keeping them.

Studies have shown that most users are satisfied with their service and would recommend it to friends. But fewer than half of those current subscribers would keep their service provider if a competitor came to town.

Customer Acquisition and Retention

Acquiring, retaining and upselling customers is an economic imperative, considering that access providers are spending enormous amounts of money to build out and upgrade their networks.

The average per-customer acquisition cost for ISPs and broadband-access providers is $150 to $200 -- a figure that isn't expected to drop in the near-term, according to Jupiter Communications. Factors cited include the sluggish takeup rate; a falloff in the number of U.S. households going online each year; and the use of access-service subsidies to try to grow market share. DSL providers such as Covad and Northpoint that target the small business market can spend several thousand dollars to acquire each customer.

Those expensive efforts could pay off in the long run: A majority of current broadband users -- 58%, according to one Forrester Research study -- value the always-on connection and the instant access to the Internet.

Going forward, broadband technology is expected to become a commodity much like electricity and water. As Wilf Corrigan, the chairman-CEO of LSI Logic Corp., has said, "The broadband-enabled global communications infrastructure represents the mother of all technology opportunities."

SOURCE : http://www.cable-modem.net