Cable Access Providers Top Million Customer Milestone

Cable companies appear to be doing a good job fighting off an increasing challenge from Digital Subscriber Line, according to a leading market research firm.

Kinetic Strategies Inc. reported Monday more than 1 million households in the U.S. and Canada currently subscribe to cable modem services. Of this total, approximately 70 percent are in the U.S.

Kinetic, the publisher of Cable Datacom News, estimates cable modem service is available to some 32 million households, or 30 percent of all cable homes passed. On average, more than 2,500 new cable modem customers are installed each day.

Cable Internet service providers [email protected] and RoadRunner provide access for more than 90 percent of all North American cable modem customers.

June data indicates that [email protected] serves an estimated 620,000 customers while RoadRunner provided access for 340,000 cable modem users.

In terms of North American cable Internet market share, [email protected] owns 59 percent of the market, while RoadRunner possesses 32 percent share. Other players in the market include independent cable operators and ISPs, such as Adelphia Communications, SoftNet Systems Inc. and High Speed Access Corp.

RoadRunner affiliates Time Warner Cable and AT&T-owned MediaOne reported the largest cable modem customer totals in June. Time Warner served 186,000 customers while MediaOne provided access for another 140,000 cable modem users. Canada-based Shaw Communications led @Home affiliates with 120,000 customers. Cox Communications and Rogers Communications followed closely with 112,000 and 100,500 members, respectively.

Regional Bell operating centers have accelerated deployment of Digital Subscriber Line networks nationwide in order to combat encroaching cable network systems. Michael Harris, Kinetic Strategies president and principal analyst, said the successfully deployment of cable modem access drove RBOCs to respond to increased demand for broadband services.

“If it were not for cable networks establishing a beachhead in broadband services, DSL deployment never would have happened.” Harris added the accelerated development of broadband access does not mean that the two technologies go head-to-head competing for the type of clientele.

“DSL is well-positioned to make advances in the business and home office segment of the market, while cable access is ready to serve home users,” Harris said. “Cable was not designed for businesses, it’s meant to be marketed to 30 percent of the U.S. homes they can reach.”

Regulatory fervor has gripped the broadband cable access development since AT&T entered the market. There are currently three different legislative proposals being reviewed by Congress that could dramatically impact the burgeoning cable access market, and the Federal Communications Commission is scheduled to rule on a leased access petition in August.

Harris believes that cable legislation issues would be resolved by the end of the year. All the same, Harris finds the debate filled with irony.

“Despite recent municipal rulings being contested over questions in jurisdiction, I really think that the FCC has taken a progressive stand by facilitating broadband competition between DSL services and cable, satellite and other wireless solutions. I always find it ironic that AOL is calling for regulatory actions in one facet of the market, while fighting it in another.”

The North American cable industry installed access for 500,000 cable modem customers in the first six months of 1999. By comparison, North America’s largest ISP, America Online Inc., attracted more than 2 million new customers during the same period.

In related developments, Cable Television Laboratories Inc. doubled the number of suppliers whose modems have been certified for retail sale in June. Currently there are 10 modem suppliers whose products have been certified for retail sale.

Richard R. Green, CableLabs president and chief executive office, said the increase in the number of hardware suppliers is evidence of a robust cable access market worldwide.

“This large increase in the number of suppliers gaining certification status is terrific evidence that the cable industry’s retail-oriented process works well, Green said. “It is producing a large number of certified companies from an international base of suppliers, all of whom are eager to serve the consumer and cable operators.”

Cable modems have emerged as the leading consumer choice for high-speed Internet access, outpacing alternatives such as digital subscriber line, satellite and broadband wireless technologies. However, cable modems still account for only a small portion of the overall Internet access market, which now exceeds 30 million users.

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