Cable Internet access goes mainstream

Any speculation that cable operators will limit their Internet access pitch to hard-core users should be erased by the announcement that Internet Ventures Inc. will cut its unlimited access price $10 to $29.95 a month.

Additionally, ICTV, which has developed a TV-based Internet access system, signed a five-year contract with St. Joseph Cablevision to provide service to its 25,000-subscriber system in the St. Joseph, Mo., area.

IVI President Don Janke said the only way cable operators will be able to push their Internet access services beyond early adopters is by dropping monthly prices.

Current cable modem services typically cost $40 to $50 a month and represent too much of a price jump for average residential users, he added.

"There should be some evolution rather than some quantum leap," said Janke.

IVI provides service branded under the PeRKInet name to cable operators in rural areas. So far, its clients include American Telecasting in Medford, Ore.; Avenue TV Cable in Venture, Calif.; Cox Cable Humboldt in Humboldt County, Calif.; Davis Communications in Deer Park, Wash.; and Sun Country Cable in Groveland, Calif.

In all its markets, IVI provides two tiers of service. One, aimed at residential users, is significantly slower than most cable modems-256 kb/s vs. a typical 1.5 Mb/s. A higher-level service costs $95 a month and provides Ethernet speeds.

By lowering price, the company will attract lighter users and cut into the market share of Internet service providers limited to offering 56 kb/s service, said Janke. "If you look to the right place for your competition, you'll price it at $29.95," he said.

ICTV is using the same thought process. In the initial rollout by St. Joseph Cablevision, cable customers with addressable set-top boxes will pay $9.99 for five hours of access. Cable customers without addressable boxes can subscribe to a package for $5.99 for three hours a month. Additional hourly usage for both groups will run $1.99 during peak hours and 99cents off-peak.

ICTV President Wes Hoffman said that because the company is loading the service with games and other entertainment, cable operators should be able to reach 10% to 12% penetration rates compared with cable modem operators, which report 1% to 3% penetration levels.

"ICTV services are much more entertainment-oriented," said Hoffman. "It's not Excel spreadsheets and PowerPoint. We're really competing for time on the television rather than time on the PC in the den. We believe about 50% of our customers are going to be very comfortable living in the five-hour-per-month range."