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April 1, 2002
Two recent pieces of news suggest the cable industry has moved squarely into the post-Excite@Home era and is willing to invest in the equipment that will enable new broadband services.
Excite@Home, an ISP that was co-owned by several large cable providers, was essential to cable's initial push into high-speed data services. It provided its partners with a high-capacity, high-quality backbone and the expertise necessary to roll out services.
Then it melted down. Excite@Home filed for bankruptcy late last year and finally shut down in February. Multiple system operators (MSOs) had to scramble to keep the company's roughly four million subscribers up and running.
But new developments suggest the industry is moving ahead, or at least trying to:
Cable Television Laboratories Inc. (CableLabs), the central industry consortium, announced March 28 that 11 cable modems and two cable modem termination systems (CMTSes) have been approved as complying with the next-generation spec, version 1.1 of the Data Over Cable Service Interface Specification (Docsis). This brings the number of approved modems to 21.
The companies gaining Docsis 1.1 certification for their modems are Accton Technology Corp., Arris Group Inc. (Nasdaq: ARRS), Askey Inc., Conexant Systems Inc. (Nasdaq: CNXT), Quanta Network Systems Inc., Samsung, Scientific-Atlanta Inc. (NYSE: SFA), Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA), Terayon Communication Systems Inc. (Nasdaq: TERN), Thomson Multimedia Inc. (NYSE: TMS), and Xrosstech Inc.. Arris and Riverstone Networks Inc. (Nasdaq: RSTN) CMTSes were certified.
ADC Telecommunications Inc. (Nasdaq: ADCT) announced March 28 that Cox Communications Inc. (NYSE: COX), the fifth-largest operator with more than six million subscribers -- pending the merger of AT&T Broadband and Comcast Corp. (Nasdaq: CMCSA, CMCSK) -- has purchased about 40 CUDA 12000 CMTSes. The CMTSes, cable's equivalent to a DSL DSLAM, will be used in four of the MSO's regions.
These announcements indicate that cable operators are moving forward with the task of deploying broadband, as they race against DSL providers to deliver value-added services to the lucrative small- and medium-sized business market. This trend was recently profiled in an Optical Oracle report (see Cable MSOs Set to Win?).
The key is that the industry survived the shutdown without panic. "They managed to keep the lights on," says Michael Harris, president of Kinetic Strategies, a cable broadband consultancy. "There have been some glitches in quality, but no mass losses in connectivity."
It is clear, however, that the demise of Excite@Home will continue to reverberate in at least three areas:
The network: Though the Excite@Home owners managed to cobble together backbones and keep services up, the job is far from finished. "They skipped a lot of steps in terms of optimizing the network," says Michael Goodman, a senior analyst for the Yankee Group's Media and Entertainment practice. "They deserve credit... but in some cases the network is held together by chewing gum and bailing wire.”
The services: The industry’s preoccupation with the network drew attention away from wide-scale rollouts of next-generation services. While gear is still being introduced -- as evidenced by the CableLabs announcement -- rollout of applications such as cable-based VOIP and streaming media will not begin until late in the year, according to insiders.
The economics: The Excite@Home implosion impacted the industry’s collective business model. Operators have to spend more money on gear to create the backbones, but with Excite@Home out of the picture, they get to keep all the money the cable modem business generates.
Though the industry was forced to scramble due to the drastic speed of Excite@Home’s demise, few tears were shed by MSO executives. Operators had long-term plans to phase out the organization anyway. They paid Excite@Home roughly 35 cents on the dollar for its services, and this arrangement had become antiquated as costs came down and as it became apparent that the necessary expertise could be developed in-house, or culled from the rolls of laid-off CLEC personnel.
The consensus is: What could have been a disaster has instead become an inconvenience, albeit a major one. "I think it's safe to say the industry is in the post-At Home era," Goodman says. "But it entails a lot of cleaning up behind the scenes of the At Home mess."— Carl Weinschenk, Senior Editor, Light Reading
Editor's Note: Light Reading is not affiliated with Oracle Corporation.
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