by Rob Lever
Washington (AFP) April 24, 2000 - A battle is being waged in the trenches and in space for dominance of the high-speed Internet connections that millions of people are seeking for faster Web surfing and new applications like interactive TV.
Companies are investing billions in the expectation that the next generation of Internet connections will come either over wires used for cable television or existing telephone lines, although a few say this will come via satellite.
Among the first to deliver the high-speed connections were cable modems, offering speeds 10 to 50 times faster than traditional dial-up connections for 40 to 60 dollars a month.
As of last year, about 1.1 million US homes had cable modems for Internet, according to a Yankee Group survey.
But rapidly catching up is a new technology known as DSL (digital subscriber line), which uses existing phone lines, allowing a single wire to be used simultaneously for voice and data, at speeds and costs comparable to those used by cable modems. About 300,000 US homes had DSL service in 1999.
Both services -- which offer the extra advantage of being "always on," eliminating the need to dial up a service provider -- are expected to grow at a fast pace because of Americans' hunger for "bandwidth," or the capacity to deliver large amounts of data over the Web for graphics, pictures, video and audio.
The fast connections will enable Web users not only to shop faster, but use the Internet for different purposes such as video conferences, listening to music, and eventually for interactive television.
But analysts are divided over which technology will rule the Net.
"Cable modems are definitely out in front," says Matthew Davis of the Boston-based Yankee Group, which predicts 9.6 million Americans will use cable modems by 2004 to seven million for DSL.
"Cable companies were the first to realize the residential demand, first to provide high-speed access, and first to understand how to price it attractively," says Christopher Whitely of Insight Research in Parsippany, New Jersey.
"Today, they are offering TV, Internet, and telephone service bundles with an aggressive marketing strategy."
But Paul Roche, a partner in the Silicon Valley office of McKinsey and Co., says DSL will win the race because of a problem with cable technology: the speed goes down as more people use the service in a particular area.
"It's like taking a shower when someone else is doing laundry," Roche writes in a column for the online ZDNet News.
"The applications of tomorrow -- such as streaming video, music on demand or interactive TV -- all require substantial bandwith and likely will operate better on DSL," says Roche.
A study by McKinsey and Sanford Bernstein projects cable and DSL will each have 13 million users by 2004, after which DSL will take the lead.
A possible wild card in the battle is Internet transmission via satellite.
DirecPC, a unit of GM's Hughes Electronics, offers a consumer high-speed service via satellite for about 20 dollars a month.
"We're better" than cable or DSL, says Hughes spokeswoman Gayle Armstrong.
The satellite service has only about 120,000 customers worldwide so far, says Armstrong, who acknowledges "we haven't marketed it very well."
The advantage of the satellite system is that "it's ubiquitous, it doesn't matter where you are or what the terrestrial infrastructure is," says Armstrong. You just pick up off the shelf and install it."
Armstrong says DirecPC service is available worldwide from the Hughes fleet of satellites, and that the company plans to market the service to its eight million customers who receive DirecTV, the direct broadcast service via satellite.
She also says Internet via satellite is at least as good if not better technically than cable or DSL, and "avoids the mess in the middle" by bypassing bottlenecks on the ground.
She said DirecPC has been doing "webcasts" of concerts and other live events and says "it's broadcast quality."
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