Consumers Sorting Through Broadband Battles

The broadband battle between cable and digital subscriber line services to
win the hearts and modems of the consumer Internet market is revving up. At the same time, a new survey shows consumers are giving DSL an early edge among high-speed alternatives.

Cable networks are being upgraded to handle two-way traffic at a furious
pace and telecom companies are swiftening copper lines on a monumental
scale. High-speed consumers should be satisfied with their choice of
broadband access platforms.

But that’s not how it works in the neonate broadband service arena.
Consumers expecting quick installations to quality systems often get
neither easy access nor top-notch connectivity.

Both cable and DSL services face a big challenge in meeting consumer
expectations for broadband services. Several markets across the country, including Tennessee, have become scenes for struggles between cable companies and regional Bell telephone operators rolling out digital subscriber line offerings.

As rollouts and upgrades progress, many customers have complained they’re not getting the high speeds and dependable service they initially thought would be the biggest attractions of cable or DSL. InterMedia, the Tennessee incumbent cable company and de facto @Home affiliate, has spent about $57 billion over the last three years to upgrade its cable infrastructure across the Nashville market, adding fiber-optic
cables, lasers, amplifiers and other transmission enhancements.

During @Home’s cable network upgrade in Tennessee, service disruptions left
consumers disputing the company’s claims to provide “always on” access.

Several TN @Home users lamented that they could not establish a connection
for as long as 4-weeks, after having had cable modem services to their
homes over a year.

Customers were further frustrated by 30 to 40-minute hold times when
calling @Home technical support, and no support from the technicians when
they did finally speak with a human being.

“We’re upgrading … Be patient,” was @Home technical support’s patented
reply. While the news was unwelcome for cable subscribers, it did provide some additional business for BellSouth.

InterMedia sold its cable operations for $2.4 billion to
Tele-Communications Inc. and Charter Communications (CHTR) in January 1999. Since
AT&T Corp. (T) owns TCI, the telecom giant operates about 49 percent of InterMedia’s cable operation, while Charter operates its mid-state presence
in Clarksville, Kingsport, Cleveland and Alcoa.

BellSouth, the incumbent local exchange carrier in Tennessee has a low
spectrum legacy issue to resolve in its central offices before it can
ramp-up DSL services outside the state’s metropolitan areas. Even then,
distance limitations of DSL service mean that BellSouth can likely only serve about 40 percent of the state’s residential market. Many of those who aren’t eligible for DSL also find cable television service isn’t available as well.

Jacqueline Russo, @Home spokesperson, said the Tennessee network upgrade is
complete and that there would be no further service disruptions to cable
modem services.

“All the Tennessee regional data centers have been upgraded and some
additional upgrades for customers will take place with no effect to
subscribers service,” Russo said. “An additional cable router has been
added to Nashville RDC. This will allow us to continue our growth in TN in
a seamless fashion.”

But the cable upgrade was not seamless and many customers who went with @Home as soon as it was available in the area began switching to BellSouth’s DSL service if it was available in their area.

Karen Williams, BellSouth spokesperson, said anyt

ime the @Home cable
network experiences reported service disruptions or outages, the company
experiences an increase in DSL service inquiries.

“BellSouth has seen an increase in customer inquiries about BellSouth’s
ADSL service,” Williams said. “Our customers are concerned about overall
service performance, reliability and security and know that they can rely
on BellSouth for those things.”

Russo said that broadband content delivery is what keeps @Home subscribers
happy and loyal to its services. However, former @Home users disagree. One @Home user said they were
abandoning their cable modem serve as soon as a free DSL installation
promotion was offered.

Road Runner cable modem access is another company that with its subscriber base is keeping cable modem access ahead of DSL. Road Runner is a joint venture, owned by Time Warner and MediaOne. Experts predict that Time Warner’s merger with America Online will likely proliferate cable modem access to AOL users.

The company this week appointed Willilam Gordon III president of the company, presiding over all day to day operations of the cable modem service. Previously he served as chief financial officer and executive vice president. Time Warner said that because of its impending merger with AOL, and MediaOne’s merger with AT&T, no CEO will be needed for Road Runner.

Industry expects believe that cable access has the last-mile delivery edge
to home users while DSL is generally preferred by businesses. With DSL, consumers get a guaranteed amount of bandwidth between their computers and the telephone company’s central office whereas cable modem operations are designed similar to a local area network. That has led cable ISPs to implement caps on streaming media downloads and limit upstream bandwidth.

A recent study by research firm Parks Associates found most dial-up Internet users would prefer DSL over cable modem connectivity. Of 6,000 dialup users
that plan to upgrade, 34 percent wanted DSL, compared with 25 percent who would opt for
cable modem services. Of nearly 600 broadband users, 70 percent said they were
satisfied with their service, with 10 percent claiming to be unsatisfied. Of the
cable modem users surveyed, 41 percent said they would switch services if they could get
the same speed for $10 less per month. Only 31 percent of DSL users provided the
same response.

According to Parks, broadband users surveyed claimed that the most
attractive benefits of the service included the high speed and then the
instant Internet connection, followed by constant connectivity,
broadband content, the lack of need for a phone line. The same users
said they disliked the high monthly fees, service outages and variances
in speed.

But the consumers don’t distinguish between broadband platforms. To home
users, its not a matter of who comes to market first, not who has the
richest content.

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