Use it or lose it

These are exciting times. Maybe too exciting. The industry's enthusiasms are contagious. Its disappointments are, too.

Take interactive TV. It's been a disappointment. Some people in the cable industry bought the near-term interactive TV model. Now, they feel burned. On the rebound, they may be unjustly extending their skepticism about interactive TV to all other forms of cable-based interactivity. That would be a far worse mistake, in my view, than buying a rosy interactive TV scenario.

It's a big world. There's a lot going on. But nothing is more interesting than the possibilities raised by the cable modem.

Why? Because the cable modem leverages the broadband character of the cable network and delivers new services, new revenues and, ultimately, new networks. Cable modems are a gateway to Internet services, data services and voice services for cable subscribers-all laid on top of the cable TV company's current video entertainment business.

Think of a big world, a growing world, a world without maps or borders.

"Telecommunications is undergoing a total reconstruction, not a facelift," says James Phillips, corporate vice president of Motorola Inc.'s multimedia group, manufacturer of the CyberSURFR cable modem. "This will make divestiture look like a facelift."

Divestiture promoted competition in the long-distance and corporate data markets. Technology is promoting competition in the local access industry. That's where the cable TV companies can come up big, if they have the will.

For consumers interested in near-term, economic access to a variety of high-bandwidth services, cable TV companies offer "the most robust, single-source solution," Phillips notes. The remaining barriers to mass deployment of cable modems-product, price, standards, the network-are manageable, he argues. Cable modems work. They are powerful interactive devices. Not that the manufacturing community is satisfied and resting on its work to date. Motorola, for instance, used the recent National Cable Television Association show to unveil its new Panama chip set, developed by Motorola's multimedia and semiconductor organizations, to give its modem more zip.

Price per unit is a function of supply and demand. Demand, in part, is a function of price. Demand for cable modems, Phillips notes, is ramping up as suppliers begin manufacturing large lots of modems.

"Motorola has moved beyond the design shop to the factory," Phillips says. "We're moving out of that gate."

What about that industry perennial, the standards problem? Standards disputes traditionally provide a convenient beard for cautious network operators who wouldn't be caught dead investing on the come. Not this time, the cable industry says.

"Cable systems operators are saying, 'Focus on getting the product out now. Whatever you do, don't let the standards process slow you down. We want the mass market now,'" Phillips reports.

But does the public want cable TV companies playing a bigger role in their lives? Aren't these the people who snarl your television service, snarl your bill, then snarl at you? Cable modems represent not more of the same but a different, service-oriented game.

"Cable guys," Phillips believes, "are rushing to gain credibility by launching cable modems and saying to customers, 'Look! We're a thousand times faster [than telcos]! Want any voice, too?' They need that credibility."

As for the network, far from being a strategic thorn in the bouquet, cable modems will promote a new flowering of networks.

The cable modem legitimizes cable and hybrid/fiber coax (HFC), Phillips says. "That is great for the cable world and for the HFC world."

If the cable modem is so powerful, not just as a product but as a force possibly reshaping whole industries, is it possible that the big local exchange companies (however many there may be when you read this) will seek to seize the initiative in the next 12 or 18 months and win the race to the competition's customer? Could they make it more difficult for cable TV companies to use the cable modem to seize customer control in demographically strategic consumer battlegrounds? They could. But they won't. That's just too soon to move for these companies. They aren't that fast. Or so their history says.

The cable industry has an unusual, even unique window of opportunity. In the cable modem, they have a practical, powerful weapon.

There is the prize. Here's the way. Where's the will?