It's in the chips: Vendor developments lead to shrinking cost and size of cable modems

While cable modem service providers such as @Home and Road Runner have been grabbing most of the headlines lately, some of the more important advances have occurred far from the spotlight.

Beyond the glitzy ads of service providers and-to a lesser extent-the marketing ploys of cable modem vendors, chip manufacturers have been quickly compacting the size and cost of the basic ingredients used in high-speed data service over cable plant. Using the Multimedia Cable Network Systems (MCNS) Data Over Cable Service Interface Specification standard, chip vendors are economizing on a piece of equipment that is expected to make the transition from service provider-supplied to retail by the end of this year.

One of the biggest leaps was unveiled at last month's Western Cable Show when Stanford Telecom debuted its single-chip assembly, which combines an upstream 16 quadrature amplitude modulation (QAM) or quaternary phase shift keying (QPSK) modulator with a downstream QAM receiver.

By combining functions that previously required two chips onto a single piece of silicon, overall manufacturing costs are cut, and vendors can produce modems significantly cheaper, said Chuck Frank, vice president of Stanford's telecom component product group.

Stanford already is supplying its chips to Com 21, Phasecom and Panasonic. All three are expected to be among the first wave of vendors pushing cable modems at retail outlets just in time for Christmas 1998.

"Just about everyone in the first round of volume orders has gone with Broadcom or Rockwell," which compete with Stanford, said Will Strauss, president of Forward Concepts, a Tempe, Ariz., consulting firm. "But in the next round of orders, people will see there's a price advantage to going with a single chip. When you get to retail, that's when the price pressure hits."

The competition also isn't standing still. Both Broadcom-which supplies chip sets to 3Com, Motorola, NextLevel Systems and Scientific-Atlanta-and Libit Signal Processing-which counts Toshiba among its customers-are pushing toward single-chip solutions. At the cable show in Anaheim, Calif., Broadcom announced it had developed its first media access controllers that comply with the MCNS standard, pricing them at $30 a unit in quantities. Combined with a $150 chipset designed for the headend units, vendors can provide modem systems to cable operators for a few hundred dollars per household.

Also, because they are using MCNS as their basis, vendors should be able to begin interoperability testing early this year. In fact, several already have started the process.

"The market growth for high-speed cable data services is very dependent on how quickly interoperable cable modems can be sold through retail outlets," said Levent Gun, vice president of engineering for 3Com's cable access division.

To that end, at last month's show, Libit demonstrated a telco-return cable modem reference design that is interoperable with 3Com's headend system.

Other chip makers also are getting in on the act, although they're not necessarily pushing for single-chip solutions. Some see chipsets as the key to pushing the envelope of speed. Officials at Analog Devices and Hayes Microcomputer Products said the two companies would work together to develop a modem that pushes data transfer rates up to 43 Mb/s downstream and 10 Mb/s upstream.

Prototype modems are expected to be available for field testing in the second quarter, said Guy Pimiano, senior manager of Hayes' cable product units. However, before that occurs, the company said it will test the modems with various headend vendors and CableLabs.

CABLE PRICES SOAR

Cable prices in systems where rates are regulated rose 8.5% between 1996 and 1997, according to the FCC's latest figures. In unregulated systems, prices shot up 9.6%. During the same period, though, consumers were receiving more channels in both systems.

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