When the @Home Network-Cisco Systems Inc. high-speed
Internet road tour rolled into the Fiesta Mall in suburban Phoenix last week, it wasn't
exactly entering virgin territory.
While other towns around the country await their first
high-speed Internet introductions, three competing companies are already battling it out
for market share in Phoenix.
Local cable incumbent Cox Communications Inc. entered the
high-speed market late last year with its "Cox@Home" cable-modem service. It was
followed closely by U S West, which chose Phoenix as the first market to test its
digital-subscriber-line high-speed Internet service, dubbed MegaBit."
And in April, wireless cable operator People's Choice TV
Corp. (PCTV) brought its "SpeedChoice" high-speed service to Phoenix.
Mike Whalen, vice president of finance and acquisitions for
PCTV, said the high level of competition makes Phoenix a good test market for the
wireless-data service, which the company markets to both businesses and consumers.
PCTV also eyed the Phoenix market because its topography --
lots of desert surrounded by tall mountains -- lends itself to good line of sight between
MMDS towers and antennae.
Because nearly 95 percent of the Phoenix market is within
line of sight of SpeedChoice, the company is promoting the service on a marketwide basis
through aggressive radio and newspaper ads. The ads themselves poke fun at SpeedChoice's
competitors, neither of which can reach every neighborhood yet.
SpeedChoice signed up 750 users in its first four months in
Phoenix, Whalen said.
Although it doesn't release MSO take rates for its service,
Cox@Home has already acquired "several-thousand" subscribers in Phoenix,
according to Dean Gilbert, @Home Network's senior vice president and general manager.
Bruce Smith, media-relations manager for Cox in Phoenix,
said about 45 percent of the Greater Phoenix area is data-ready for Cox@Home.
"We are upgrading 10,000 miles of
infrastructure," shesaid. "We are about halfway completed."
SpeedChoice is aggressively targeting neighborhoods that
have not yet been reached by Cox@Home. The company is also pitching businesses such as
real estate agents with multiple locations, which need a high-speed service that is
accessible to all of their area offices.
According to a spokesman for U S West, its MegaBit DSL
service is not available through every switching office, or even through every line in
areas where the switching office provides some DSL service.
He added that the move to VDSL (very high-speed DSL), which
will allow the phone company to deliver video over the same lines, will help to drive the
availability of high-speed Internet service to more Phoenix-area homes.
Ken Colburn, who hosts a local radio show called Computer
Corner, said that although "U S West is trying like hell" to promote
MegaBit, "it's vaporware. You can't get DSL to work anywhere."
Colburn said he has dedicated different radio shows to each
of the three high-speed players, and he looks at each objectively. But Colburn also owns
four Data Doctors stores, where he displays and sells SpeedChoice.
Colburn admitted that cable modems have an advantage in
that subscribers don't need second phones, nor must they dial in to ISPs. The downside, he
said, is that the service's speed might be compromised if many neighbors share it.
"My recommendation for people with cable modems is:
'Just don't tell anybody about it,'" he said.
Data Doctors chose SpeedChoice because it was the only
service available to all of its stores. "Most industrial areas aren't reached by
cable," Colburn said.
"We're absolutely ecstatic about providing a product
that's not tied to the local telephone business," Colburn added. "They're
lethargic, and they just don't care."
If SpeedChoice is able to upgrade its wireless-data service
to two-way, "we're completely divested of any U S West relationship," Colburn
Data Doctors is just one of a number of local computer
dealers that SpeedChoice can point to in its advertising. With a product like high-speed
Internet access, where seeing is believing, it's important for potential subscribers to
have an opportunity to test-drive the service.
"The mall tour is a great opportunity to take the
whole notion of event marketing to a higher level," Gilbert said. "It lets
consumers know that this is a mainstream technology, and it's very affordable."
Gilbert said a recent stop in Orange, Calif., attracted
nearly 5,000 people and the attention of the local consumer press.
Cox@Home holds product demonstrations in Phoenix "on a
very regular basis," Smith said. "We're more aggressive as new service areas
The cable company has demonstrated its high-speed service
through a "Cyber Geek Fest" at the Hard Rock Cafe in the Camelback section of
Phoenix. Cox@Home is also the exclusive Internet provider for Bank One Ballpark, where it
has kiosks set up to promote the service.
Country clubs, retail complexes and restaurants have hosted
Cox@Home demonstrations. And four Phoenix-area Cox offices open their doors to potential
customers who want to try it out.
U S West sends a recreational vehicle equipped with five or
six computers linked to DSL lines to local neighborhoods and shopping malls to demonstrate
the product's speed.
"The competitive environment here is very fluid,"
Smith said. "It's very exciting for the customer because of all of the choices
Cox@Home costs $29.95 per month for Cox cable customers
($10 extra for noncustomers), plus $15 per month for modem rental. Modems are available
for purchase at $399, plus installation. Cox@Home serves as the ISP, Smith said, so
there's no additional ISP charge.
DSL is more expensive. U S West's fees range from $40 per
month (256 kilobits per second) to $840, depending on the download speed. An ISP charge is
extra -- either $19.95 through U S West, or users can keep their ISPs.
SpeedChoice residential service costs $35.95 per month,
plus $9.95 per month in modem-lease fees. Installation is $149, although Whalen expects
installation costs to drop as competition heats up. Customers can buy the modem for $299.
Before too long, there may be a three-way race for
multichannel-video customers, as well. U S West is seeking cable licenses from 15
municipalities in the Phoenix market to deliver video over VDSL. A spokesman expects the
first such licenses to be signed within the next month.
And PCTV plans to supplement its SpeedChoice service with a
120-channel digital-video service for an additional $29.95 per month, Whalen said.