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Plug-and-Play Modems Enhance Retails Role in Data Rollouts

3/19/2000 7:00 PM Eastern

Cable-modem technology is gaining new traction in the
marketplace with the introduction of the first standards-based units with plug-and-play
functionality, as well as new deals supporting retail distribution of Thomson Consumer
Electronics modems at Circuit City Stores Inc. locations in several cities.

In its latest round of Data Over Cable Service Interface
Specification certifications, Cable Television Laboratories Inc. endorsed three vendors'
products that come with universal-serial-bus connectivity built in. This means the modems
can be plugged into recent vintage PCs without requiring installation of Ethernet cards.

Certification of the USB-enabled modems signals that the
industry has moved to a new plateau where installations will go much faster and smoother
than before, Comcast Corp. president Brian Roberts said.

"Sales of USB-equipped PCs are booming," he said.
"These breakthroughs on cable-modem USB technology culminate years of close
cooperation with the PC industry and are critically important to our industry as we
establish our leadership in high-speed Internet services."

Even before the USB modems become available, Comcast is
working closely with Thomson and Circuit City in support of retail distribution of DOCSIS
modems in Baltimore, Indianapolis and Fort Wayne, Ind.

Together with similar initiatives involving MediaOne Group
Inc. in Atlanta; Richmond, Va.; and the Boston suburbs, the Thomson and Circuit City
linkups represent significant progress in efforts to overcome long-standing barriers to
retail distribution of cable modems, said Carl Bruhn, general manager for Thomson's RCA
Broadband Cable. But, he added, there's still a long way to go.

"The big question in retail is the issue of residuals,
and there's still no general agreement there," Bruhn said in reference to retailers'
demand for a share of ongoing revenues from cable-data services.

Instead of predicting "DOCSIS modems under the
Christmas tree," Thomson recognizes that retail distribution on a vast scale will
require hard work at the local level on the part of MSOs and vendors.

The selling point to retailers is the power of broadband
connectivity to drive sales volume well beyond the initial purchase of the cable modem.

"We believe we can put a convincing story together
working market by market with MSOs to show retailers that they can attract more business
from people who have broadband connectivity to the home," Bruhn said. He noted that
consumer demand for connectivity of stereo components to broadband Internet links for
downloading music in MP3 format is one obvious example of how retailers can benefit.

Thomson's previously certified RCA cable modems are selling
for anywhere from $199 to $249, depending on rebates and other terms that are worked out
at the local level.

While its newly certified USB units and other modems are
designed to meet DOCSIS 1.1 requirements once 1.1 certification is put into play at
CableLabs, the company doesn't expect the retail price to go up, noted Tony Watters,
marketing manager for the RCA Broadband unit.

"We'll be happy if we can get current prices, given
the way the price spiral goes in this competitive environment," he said.

CableLabs also certified USB-enabled DOCSIS modems produced
by Arris Interactive LLC and Motorola Inc., as well as new DOCSIS models from Askey
Computer Corp., Com21 Inc., Dassault Systems S.A., Terayon Communication Systems Inc.,
3Com Corp., Toshiba America Consumer Products and TurboComm Technology Inc.

Motorola's modem also comes with a HomePNA (Home Phoneline
Networking Alliance) port, making the first time a DOCSIS modem with connectivity to this
home local-area-network platform has been certified. HomePNA carries signals at up to 10
megabits per second over twisted-pair telephone wiring in the home.

With virtually every PC sold in the past three years
equipped with USB, a vast base of users will be able to purchase the new DOCSIS modems and
plug them in without requiring cable technicians to install Ethernet network-interface
cards.

"We're expecting several more USB submissions,"
CableLabs vice president of broadband services and technology David Bukovinsky said.

Retail distribution should get a further boost once the
cable industry's "Service Locator" initiative, spearheaded by CableLabs, is
under way, Bukovinsky noted. "There's a big fear factor for vendors and retailers, as
well as MSOs, that people will buy cable modems only to find that they can't get service
on their block," he said.

The Service Locator system, to be administered by an
outside party, will allow users to go online at home or at points of sale to learn
immediately whether they can get cable-data service. The database will be secured to
prevent misuse of information provided by MSOs about service availability.

Sources said the initiative is slated to begin in April, if
not sooner, starting with distribution of information to PC buyers through PC OEMs
(original-equipment manufacturers) when those buyers come to the OEMs' online sites.
Later, the information will be made available via kiosks at retail outlets.

Thomson's latest compilation of analysts' projections for
cable-modem sales shows that the consensus calls for about 2.6 million new units being
sold this year. The accelerated installation pace made possible by USB should pump up the
volume higher, Bruhn said.

Retail distribution's importance over time is still a
matter of debate within vendor and MSO circles, though, due to new thinking about the role
of the DOCSIS platform in cable communications.

Even though Arris was among the first vendors to be
certified with a USB-enabled modem, the company expects that MSOs will still want to
supply modems as part of a DOCSIS gateway for all data-based services, including voice,
into the home, president and chief operating officer Oscar Rodriguez said.

 

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