High-Speed Data Moves Beyond Large MSOs

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Small and midsized MSOs are discovering that there'sless hassle in getting into the high-speed-data business than they imagined, leading manyto conclude that the time is right to go for it.

Three companies last week said that they will move tocommercial deployments, amid signs that many more are preparing to do likewise. While somefirms are putting the business together on their own, sometimes working with local ISPs(Internet-service providers), others are looking at turnkey relationships with majorsuppliers, prompting the big players to more aggressively search for affiliates outside ofthe top 10 "There's a lot of activity going on out there that we can't talkabout yet," said Mario Vecchi, chief technical officer at Time Warner Cable'sRoad Runner Group, which will merge soon with MediaOne Express and compete for affiliateswith rival provider @Home Network. "We're very interested in working with thesmaller companies."

Until now, instances of smaller MSOs getting intohigh-speed data have been few and far between, with the latest involving Bend, Ore.-basedindependent Bend Cable Communications Inc., which, three weeks ago, became the first RoadRunner affiliate outside of the Time Warner fold.

But last week, three small companies made their plansknown, along with a fourth, somewhat larger firm that is competing with incumbentoperators in several East Coast markets.

The small players are the Phenix Cable unit of GreeneCommunications Inc., a multiservice provider serving Russell and Lee counties in andaround Phenix City in eastern Alabama; Cable Michigan, based in Traverse City, Mich.; andCatawba Services Inc. the cable unit of Rock Hill Telephone Co., based in Rock Hill, S.C.

Also getting into the high-speed act with the launch ofservices in Allentown, Pa., is RCN Corp., a multiservice provider operating in severalEastern Seaboard markets, including Washington, D.C.; Boston; and New York.

"We haven't begun advertising, but word-of-mouthhas been keeping us busy with installs ever since we connected our first customer twoweeks ago," said Dan Greene, president of Phenix Cable. "You hear all of thehorror stories about how hard it is to get into the high-speed-data business, but, doggoneit, we're just not seeing those kinds of problems."

Phenix, which didn't even bother with a beta-test onceit turned on its first customer, is using one-way cable/telco-return modems supplied byHybrid Networks Inc. "It's so simple, it's comical," Greene said,noting that the firm is relying on an ISP for connection support to the Internet, but itis doing everything else on its own.

While Phenix, which is currently operating at 450megahertz, is one year into an upgrade to two-way, 750-MHz capacity, Greene felt that theease of installation and the typical residential user's limited need for returnbandwidth made the move to the one-way modem platform a smarter choice than waiting fortwo-way.

With calls coming in at a rate of 15 or so per day evenahead of any marketing, Greene is convinced that by next year, the $39.95-per-monthservice will be generating "an income stream that's viable to thiscompany."

Much the same outlook is expressed by John Barnes Jr., vicepresident of development at Catawba Services, which passes about 69,000 households southof Charlotte, N.C.

While the hybrid fiber-coaxial system -- which is now 80percent 550-MHz and moving to 100 percent by year's end -- is migrating to two-way,the one-way system supplied by Hybrid makes getting into the business much easier, giventhe problems associated with upstream cable, Barnes noted.

"We don't feel like there's any reason towait for two-way when it comes to offering data services, especially when you consider thedifficulties of working in that environment over HFC," Barnes said.

Casual home users using telephone-return lines are notlikely to find any more problems with contention in the home for phone use thanthey've had with traditional online services, and work-at-home users will probablywant a second line if they don't already have one, he added.

The question of whether to confine high-speed-data rolloutsto two-way systems has been a subject of wide debate in the cable industry, with most ofthe top 10 MSOs choosing to go two-way at this point.

But the sense of demand for data services and theadvantages of being first to market are swaying some players to look at the opportunitythe way that Barnes and Greene do.

TCA Cable TV Inc., for example, which recently launchedhigh-speed-data services over a two-way system in Bryan/College Station, Texas, is alsolooking at moving to wide-scale rollouts over one-way systems, said Bob Roseman, vicepresident of business development at TCA.

The MSO, with 860,000 subscribers primarily in Texas,Arkansas and Louisiana, plans to offer business services, as well as residential services,in its markets where two-way is available, but it sees one-way as a viable opportunity,especially on the residential side.

"We're trying to make a purchase decision rightnow for one-way systems," Roseman said. "We're talking to severalvendors."

Hybrid customers, including Barnes and Greene, credited theCupertino, Calif.-based system supplier for helping smaller operators to get into thebusiness by providing strong upfront technical training and a system that facilitates easymodem installation.

To make matters simpler, the operators typically requestthat personal computer owners obtain their own Ethernet interface cards, thereby avoidingthe need for the cable installer to open up the PC.

Hybrid is bringing out two-way modems, which RCN -- nowoperating one-way in Allentown -- will be using for rollouts in New York and Boston, saidRobert Furniss, director of product-line management for Hybrid. While there's amplemarket for the two-way units, there's also growing demand for the one-way product, hesaid.

"We're seeing a lot of the top 10 companiesrethinking their outlook on this," Furniss said. "They're starting torecognize that there are geographic areas where going with one-way systems makes a lotmore sense."

The trend is too young to suggest that the rollout ofcable-data systems might be noticeably accelerated with a move to one-way systems.

But industrywide, such a move could produceavailability of high-speed access to a large share of the U.S. population almostovernight, if Greene's and Barnes' assessments of what it takes are anyindication. 

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