Cable Modems Spread at Uneven Pace


Washington-The cable industry's high-speed Internet-access business surged in 1999 to maintain a strong lead over local phone companies and other data providers, according to a government report released last week.

The report-the second prepared for Congress by the Federal Communications Commission-found that cable ended 1999 with 875,000 data subscribers, or 84 percent of the residential broadband market.

Phone companies deploying digital-subscriber-line service ended 1999 with 115,000 subscribers, or 11 percent of the market. Other competitors had 50,000 subscribers for a 5 percent share.

Although cable more than doubled its cable-modem-subscriber base in 1999, the FCC found that cable actually lost market share to the phone companies.

Cable ended 1998 with a 93 percent share, compared with 84 percent in 1999. The telcos ended 1998 with 7 percent, compared with 11 percent in 1999.

The telcos' growth rate was also much faster than cable's year-to-year-380 percent, compared with 150 percent for cable.

"We are seeing encouraging trends here," FCC chairman William Kennard said. "We are just getting started with this exercise of broadband in this country."

The study showed that broadband is being widely deployed throughout the United States. For example, it said 59 percent of U.S. ZIP codes-covering 91 percent of the population base-had at least one subscriber to a high-speed-data provider.

Even so, Kennard said, the study revealed that rural residents, minorities, inner-city residents, low-income consumers and tribal areas were not enjoying access to broadband to the same degree as wealthy sectors.

"This is not a new revelation at the commission," said Kennard, who has fought for federal policies designed to close the so-called digital divide.

FCC commissioner Susan Ness said evidence of uneven broadband deployment was a worry for policymakers. "I remain concerned about the communities at risk," she added.

The FCC said 2.8 million U.S. residents subscribe to high-speed Internet providers, but only 1 million subscribe to providers that offer at least 200 kilobits per second in both directions.

The FCC relied on the million-subscriber figure to establish cable's market share in relation to the shares of its competitors.

Many FCC studies, including last week's, rely on data collected months ago. The National Cable Television Association said cable operators concluded the first half of 1999 with 2.3 million cable-modem subscribers, more than double the 1999 total established in the FCC's report.

Under the Telecommunications Act of 1996, the FCC is required to take immediate action if it finds that advanced telecommunications services are not being deployed "in a reasonable and timely fashion."

Last year, several members of Congress, including Sen. Conrad Burns (R-Mont.), questioned the FCC's conclusion that broadband is reaching the public as fast as it should.

Kennard indicated that he was not prepared to deregulate incumbent phone companies prematurely based on a formulation that deregulation will speed deployment of broadband. "We can't allow this issue to be used as a scare tactic," he added.

Although the study concluded that goals established by Congress were once again being met, the FCC said it would take five steps intended to speed deployment, including the already-announced move of probing whether multiple Internet-service providers should have access to cable Internet facilities.

In a statement, NCTA president Robert Sachs hailed the study's findings, adding that the FCC's policy of "regulatory restraint continues to be borne out by marketplace developments."