DOCSIS: Vendors Will Tout Modem Wares at Show

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With the fifth round of DOCSIS-certification testing
officially declared a bust, cable-modem manufacturers will go into this week's Western
Show still waiting to exhale.

None of the dozen-plus vendors passed the
standards-certification tests that were held at Cable Television Laboratories Inc.'s
Louisville, Colo., headquarters Nov. 20, officials confirmed.

Regardless, the vendor community is propelling itself
forward, and it will use this week's show in Anaheim, Calif., to showcase techniques that
will likely be added to cable modems next year.

The anticipated new feature list for this year's batch of
cable modems: IP (Internet-protocol) telephony and enhanced security. The anticipated
message from vendors: Retail is coming, and 1999 will be a very big year.

"We've shipped enough infrastructure for 3 million to
4 million subscribers," said Dick Day, corporate vice president and general manager
of Motorola Inc.'s multimedia group.

Motorola plans to highlight its CyberSURFR line with an
IP-telephony add-on this week. "This is an industry looking for its proper place, and
1999 must be the year for subscriber growth. If we don't double our sub count next year,
we'll be very disappointed," Day said.

Motorola shipped approximately 280,000 units in 1998, and
the company expects to meet its 340,000-modem projection for the year, Day said.

And despite the lack of positive results on DOCSIS (Data
Over Cable Service/Interoperability Specification) certification-which is critical
to the retail modem future -- discussions about vendors' retail plans will abound in
Anaheim this week.

Thomson Consumer Electronics, through its RCA brand, plans
to unveil its retail strategy, "Cable@Retail," at the show this week, said Carl
Bruhn, general manager of RCA Broadband.

Bruhn estimated the 1999 cable-modem market at between 1.1
million and 1.5 million units, adding, "We alone could make all that the industry
needs next year." He called the 1999 projections "very conservative."

Bruhn and others expected to see vendor consolidation next
year, reasoning that one-dozen-plus different suppliers cannot stay alive over the long
haul.

That trend started in part earlier this year, when Nortel
purchased Bay Networks Inc. Bay has shipped 225,000 of its modems so far this year, and it
will use the Western Show to discuss its retail plans, said Karl May, vice president and
general manager of Nortel's broadband-networks group. Nortel partnered with MediaOne
Express and 17 Circuit City Stores Inc. locations this fall to sample the retail modem
environment.

Nortel will demo a new twist on "end-to-end" at
the show: a signal path that goes from the modem, to the headend, to a SONET (synchronous
optical network) backbone, May said.

"We want to build not only the transport piece, but
the operations, administration and management sections, as well," he said.

3Com Corp., which has shipped roughly 15,000 cable modems
so far this year, will start shipping a few two-way-capable modems this quarter, officials
said, with major ramp-ups expected in January.

Levant Gun, vice president and general manager of 3Com's
cable-access division, said he expects DOCSIS certifications, when they occur, to speed up
deployments. "There probably will be no new proprietary-system deployments in
first-quarter 1999," Gun predicted.

3Com's Western Show plans include demonstrations of its
headend and cable-modem systems, as well as an announcement to lab-test equipment made by
8x8 Inc., a semiconductor manufacturer and videoconferencing vendor.

General Instrument Corp.'s decision to wait for an approved
DOCSIS standard is "a crapshoot," according to Randy Roberson, senior vice
president of IP telephony for GI. But it's a bet that GI is willing to make.

GI plans to use the Western Show to demonstrate its
SURFboard 2100 interoperable modem and its "SB 3000" internal modem with RF
return, Roberson said, adding, "Once DOCSIS is settled out, modems can offer a level
of performance and an opportunity to add telephony features. We haven't felt that the time
was right. Now, with DOCSIS close, it is. We're ready to go."

Samsung Telecommunications America Inc. -- a cable-modem
vendor that took a big step earlier this year by announcing a deal with Canadian cable
operator Cogeco Cable Canada Inc. -- will ship 15,000 to 20,000 of its
"Inforanger" modems by year-end 1998, mostly to Cogeco. It also plans to test
its modems in Spain, Sweden and parts of Asia, said David Lin, director of marketing and
business development for Samsung.

Lin said he expects the market to change next year.
"It will really explode once MSOs stop deployment of proprietary modems and install
DOCSIS-certified product. That is the key to ubiquitous deployment."

Samsung is planning to announce an agreement with a major
MSO at the Western Show, Lin said, and to demonstrate IP telephony and a USB
(universal-serial-bus) interface as features for its Inforanger modems.

Watch for the telecommuting and small-business markets to
also gain attention this week as lucrative markets for modem manufacturers and cable
operators. "It's a burgeoning market now. The problem is that many small businesses
don't have cable built-in yet," said John Mattson, senior product-line manager for
Cisco Systems Inc.

Cisco shipped 10,000 of its UBR (Universal Broadband
Router) 904 cable modems to MSOs this year, officials said, and it signed licensing
agreements with Sony Corp. and Samsung for its modem software. For 1999, however, Cisco
will focus on multiple services and IP telephony, Mattson said.

"What's big in 1999 is voice-over-IP solutions,"
Mattson added. "We will also add enhanced security through IP technology, which will
allow us to triple our existing levels of security." Cisco will demonstrate its UBR
904 at the Western Show, along with its new IP security and the recently added Broadcom
Corp. 3300 chip.

Terayon Communication Systems has shipped 34,500 modems
this year as part of a corporate mission to "build brand awareness," said Zaki
Rakib, the vendor's CEO. Rakib added that Terayon will also enhance its product line with
the addition of voice capabilities, and it will map out its relationships with retail
outlets.

"In the post-standard era, we'll establish
relationships with several retail markets. That's when the market will enter the tornado
stage," Rakib said.

Terayon's Western Show plans include demonstrations of an
IP-telephony modem with Lucent Technologies and a videoconferencing system.

Sony, which has shipped "a few-thousand" modems
so far, will demonstrate its interactive fantasy game, "Everquest," at the
Western Show. Sony also plans to announce a supply agreement with Prestige Cable's Atlanta
system.

Toshiba America Consumer Products, which has shipped 12,000
cable modems this year, will use the Western Show to demonstrate its version of IP
telephony, in cooperation with Lucent.

And Hybrid Networks Inc. said it will show off a new
DOCSIS-based line of equipment, including cable modems and headend gear, at the show. Also
new from Hybrid: IP-telephony additions to its data equipment.

Leslie Ellis contributed to this story.

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