The Long Road to Broadband: Converging on the Last Mile

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Given the fate of some early broadband business models, and the slower-than-anticipated deployment of broadband in general, today's managers pinning their hopes on the convergence of voice, video, and data networking technology might agree.

Early victims of the broadband mousetrap suffered from inflated expectations; it isn't difficult to find a breathless article or white paper dated from late 1999 proclaiming the era of broadband was upon us, a multihundred-billion-dollar market ready to explode, blooming fully by mid-2001. But, of course, the future never arrives on time. Economic cycles ebb and flow, and legislation drags on, while supply and demand do their courting dance.

The current economic situation has been especially troublesome for the broadband market; in an attempt to cut costs, R&D budgets have been slashed across industry segments, from telecom equipment manufacturers like Lucent and Alcatel to infrastructure mainstays like Cisco, Nortel, and Broadcom. Following suit, the incumbent (ILEC) and competitive local exchange carriers (CLECs) that make up much of the manufacturers' customer base have cut back on their purchases of next-generation equipment.

Neither has media coverage been helpful in tempering expectations, hyping uses of broadband technologies that don't yet exist, or at least aren't yet economically feasible. Still, while only about 18% of households in the U.S. subscribe to any form of broadband service today, that number is expected to nearly double by year-end. The users coming online with higher-speed connections will require more bandwidth still.

What is Broadband?
"Broadband" is a generic term for any networked voice, video, and data delivery mechanism. More specifically, the common definition of broadband calls for bandwidth of at least 384Kbps-the minimum bandwidth required for full-motion digital video.

"Convergence," the much-anticipated result of broadband capabilities, makes possible not only faster Internet connections, but entirely new kinds of content. Until the last 24 months or so, the Internet was largely text-based. Then came graphics and low-quality video capability. With widespread broadband will come professional-quality streaming video, full-scale inter- active gaming, home networking and management, and much more. So what is behind the slower-than-anticipated deployment of broadband? A recent study by TNS Intersearch found blame in high prices and low availability. But these causes are really symptoms of the larger problem. What is that larger problem? When will the broadband future arrive? Like the children in the backseat on the road trip vacation, we keep asking, "Are we there yet?"

The State of Broadband
From Benjamin Franklin's overhaul of the American postal service to the invention of the telegraph, from the government- granted monopoly-and subsequent breakup-of AT&T to the deregulation efforts culminating in the Telecommunications Act of 1996, communications has been a field in technological and legislative flux.

The 1996 Telecom legislation was the watershed event in broadband's evolution, for better and, well, not better. By mandating that Bell-operated companies must offer their competitors "open access" to their networks, the Act invited all manner of communication providers to the party. Suddenly, broadcast companies, cable operators, ISPs, long distance carriers, and telecom outfits were all competing to offer the same services.

Even with open-access mandates, CLECs have been failing at an astounding rate, largely due to fierce competition and a poor ad market-while the ILECs remain saddled with debt. Within this seeming disarray of the broadband markets, four high-speed Internet access delivery channels are battling for market dominance: cable modem, digital subscriber lines (DSL), satellite, and fixed wireless. Let's look at each in turn.

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