The retail environment for cable modems and Internet-over-cable services changed dramatically when Cable Television Laboratories Inc. certified two internal modems from Zoom Telephonics Inc. and GVC Corp., paving the way for so-called cable-ready PCs to hit retail shelves.
"It's certainly just as important for the industry to have cable-ready PCs as it is to have digital-ready TVs," Kinetic Strategies Inc. president Michael Harris said.
"The certification was really a major milestone for us to get the [cable-modem] product into a wider channel," AT & T Broadband vice president of broadband-data services Luisa Murcia said.
The availability of internal cable modems will "make the acquisition [of cable modems] as seamless as with other products, such as telephony modems," she added, referring to the ubiquity of V.90 analog dial-up modems in today's PCs.
Murcia declined to discuss whether or not the MSO is involved in talks with computer makers or retailers about pushing those modem-enabled computers into the hands of broadband-hungry consumers.
While no formal announcements have been made between modem vendors, cable operators and PC makers, the presence of Data Over Cable Service Interface Specification 1.0 internal modems may begin to galvanize the various players to work out business models.
Perhaps the biggest spark to move the process along is this month's announcement that telco SBC Communications Inc. will launch digital-subscriber-line service in San Antonio, complete with "free" Compaq Computer Corp. "Presario" PCs outfitted with DSL modems for those who sign up for two years. The monthly price is $60, with conditions.
"There's no reason to think you won't see that on the cable side, too," Zoom director of marketing Larry Hancock said. He added that Zoom is already talking with build-to-order computer-system builders about the PCI (peripheral component interconnect) modem, and the company will shop the internal modem to major computer vendors and MSOs.
The long-awaited arrival of internal cable modems presents operators and Internet-service providers such as Excite@Home Corp. and Road Runner with several opportunities to brand and market cable-ready PCs in conjunction with computer OEMs (original-equipment manufacturers) and retailers.
"We definitely have talked with most computer manufacturers," Excite@Home manager of cable and network technology Mike Hayes said. He added that cable-ready PCs will help to provision modems faster and facilitate self-installs of data service.
Hayes anticipated that several PCI cards will eventually go through Excite@Home's approval process.
"From an overall retail perspective," including computer branding, he added, Excite@Home's retail strategy "is being weighed carefully."
While the cable industry's relationship with retailers has been shaky at best, Hancock pointed out, "There are MSOs more interested in retail than other MSOs." Comcast Corp., for example, has established relationships with both mom-and-pop and national retailers. And Cablevision Systems Corp. owns and operates The Wiz retail outlets.
"Cablevision will continue to ensure that The Wiz is the most convenient and accessible outlet for customers to take advantage of high-speed Internet access such as our 'Optimum Online' cable-modem service," senior vice president of high-speed-data products Gemma Toner said in a statement on the retail potential of cable-ready PCs. "As always, we will pursue every option to achieve that objective," she added.
Last month's launch of CableLabs' Go2Broadband service will provide a service locator to assist computer makers and retail partners in selling cable modems-an effort that should accelerate the cable industry's ties with retail.
In a release announcing the initiative, AT & T Broadband senior vice president of data services Susan Marshall said: "We at AT & T Broadband are strongly behind the Go2Broadband service initiative, and we have already built the infrastructure to start real-time transactions. We see vast potential, and we fully expect the Go2Broadband service to evolve to include functions that go beyond service availability and that allow cable operators to complete consumer sales and to schedule installations of service."
While internal cable-modem reference designs have been around for at least one year from both Broadcom Corp. and Conexant Systems Inc., it was Conexant's design that was made into product form first and sent to CableLabs.
Because the chip set and modem are complex, Hancock said, it took three rounds of testing to win certification.
Further explaining the challenges of internal-modem-card certification was John Graham, vice president of marketing for computer and broadband products for Conexant, who noted that one year ago, the cable industry was averse to internal modems due to RF-noise-leakage fears. Also, a CableLabs process to certify PCI-based modems did not exist at the time.
Microsoft Corp. also expressed concerns, Graham said. Referring to Microsoft's "Windows Hardware Quality Labs" program, he added, "Without WHQL certification, nobody slips anything into a PC."
With those hurdles cleared, Hancock said that in Zoom's talks with computer builders, "They have to be convinced that they can get the chips." Consequently, he added, "We will go into OEM system builders in conjunction with Conexant."
These builders make build-to-order computers for retail, leaving the branding of the machines up to retailers or retail partners, which raises the possibility of cable-ready PCs co-branded with MSOs, Excite@Home or Road Runner.
One potential barrier to the integration of internal modems with PCs is price, which, according to Harris, "isn't at a point where it guarantees PC ubiquity."
Hancock countered that Zoom's PCI-card pricing, which hasn't been announced publicly, is flexible and determined by order volume.
Further helping the cable-ready PC cause is the desire of Excite@Home to bolster subscriber numbers and its existing relationship with Compaq. Consumers can visit Compaq's high-speed Internet-services Web site to learn about the @Home service and availability.
Compaq also owns about 10 percent of Road Runner. Compaq and Road Runner executives could not be reached for comment.