Explosive Cable Modem Growth Forecast

An Internet research firm Wednesday predicted an explosion in the number of residential customers receiving high-speed cable Internet services over the next eight years.

Pioneer Consulting reported that 1.5 million subscribers worldwide currently utilize
cable modem Internet access, including approximately 790,000 North American
users.

Pioneer estimates that by the year 2007, more than 45 million Internet
connections will be made through cable modems worldwide. North America’s share of the market is estimated to be just under
24 percent, or 11 million users.

“Cable operators have begun major residential deployments, thereby creating
a true retail market for consumer broadband modems,” said Scott Clavenna,
Senior Analyst at Pioneer. “Through these relationships cable operators
have an excellent opportunity to introduce advanced services at a low cost.”

The residential global cable modem market will expand from its
year-end 1998 of 560,000 subscribers to more than 1.5 million in 1999, then
enter a period of massive expansion in consumer usage, reaching more than 45
million users by 2007.

In contrast, the business market for cable modem services remains quite
limited in Pioneer’s view because of a poor or non-existent relationship
with cable operators.

Meanwhile, manufacturers are ramping up their efforts to serve the demand
for cable modems.
Motorola Inc. announced Monday that
they have shipped more than 500,000 of their CyberSURFR cable modems
worldwide. In addition, Motorola has shipped cable modem infrastructure to
support nearly 4 million cable modem subscribers worldwide.

Anticipated growth in the cable modem market will increase current pressure
being brought upon the Federal Communication
Commission
to intervene on behalf of ISPs and open access to cable
networks. OpenNET
Coalition
, the recently formed lobbying group consisting of top
national ISPs, will continue to press for FCC regulatory guidelines on
open access to cable networks.

Charles M. Brewer, founder, chairman and chief executive officer of MindSpring Enterprises Inc., is a
founding member company of the openNET Coalition. Brewer said “the core
telecommunications offering of the future will be connectivity to the
broadband, always on, packet switched Internet. The only economically
viable way to deliver this connectivity for many years to come
will be through a wire.”

“If we are going to have a competitive residential market for the core
telecommunications service of the future, we must have an effective way for
competitive service providers to share the broadband wires that lead to
homes” Brewer said.

In response the growing cable modem market, Internet Ventures looks to
expand their market by petitioning local public utility commissions for
leased access rights to cable networks. Don Janke, president of Internet
Ventures said “leased access now becomes the only assurance that consumers
will receive competitively priced broadband Internet in a timely fashion.”

Internet Ventures contends that while open access requires additional FCC
regulation of the cable industry, leased access is already provided for in
Section 612 of the 1996 Telecommunications Act.

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