Depending on which technology master you serve, telecommunications competition is either the dream you've always hoped for, or the nightmare that has you sitting bolt upright in the middle of the night.

In the two years since telecommunications was overhauled via legislation, true competition has been largely nonexistent. But beneath the surface, companies are preparing themselves to take part in an all-out war.

The telcos plan to deploy ADSL in an attempt to corner the datacom market, supported by vendors who are working to make the technology deployable in a majority of the telcos' copper plant.

The recently completed LMDS (local multipoint distribution system) spectrum auctions put several companies in a position to offer voice, video and data using new wireless technology.

America's deep-pocketed utilities are grappling with deregulation forces that promise to spur strategic alliances as they branch out from power distribution to the unknown world of telecommunications.

Turn on the light and put your imagination on hold (for now). What follows is your competitive "wake up" call.

It used to be that when someone talked of competition to cable TV, it meant one thing: DirecTV, that space-based "death star" that promised to swoop in, sign up 10 million subscribers and give the cable industry a run for its money.

Since then, the cable industry has been largely successful in fending off the DirecTV threat, helped by regulations that bar satellite providers from beaming local-market programming to their subscribers, as well as stiff competition from Primestar, the c able-owned DBS company.

But the war isn't over yet. Even though the DBS market has already experienced some level of consolidation and serious erosion of margins on hardware as prices plummeted from competitive posturing, more and more satellites are being launched — almost wee kly — into space. Each launch by such companies as Iridium or Teledesic (or a host of others) sets into orbit another piece of an interconnected constellation of communication satellites, some of which might be used for video, while others potentially st and in the way of cable operators gaining ground with telephony and/or data transmission.

In addition, the Federal Communications Commission just completed the largest-ever auction of spectrum for a local wireless communication service, known as Local Multipoint Distribution System, or LMDS. Such a system, consisting of a network of microcells, has more than enough bandwidth to easily send hundreds of video channels, telephone calls and deliver access to the Internet simultaneously.

The space race

The Teledesic Network and Iridium both plan to use Ka-band low Earth orbit (LEO) satellites to provide worldwide communications. While both have their business plans centered around the provision of voice service, there is plenty of bandwidth to offer da ta, and perhaps video as well.

Teledesic, through its constellation of 288 satellites, is attempting to replicate in space the quality and reliability of a terrestrial fiber optic network to bring "affordable and interactive broadband communication to all areas of the Earth, including those that could not be served economically by any other means," according to the company's position statement.

Backed by wireless pioneer (and former cable operator) Craig McCaw and Microsoft founder Bill Gates, Teledesic plans to cover 95 percent of the Earth's landmass, giving millions of users simultaneous access to a massive broadband pipe that is free of the annoying delays typical of many satellite-based communication networks.

With all those satellites, broadband users will have access to an incredible two-way, 64 megabits-per-second network that utilizes fast-packet switching to keep customers connected. The service is expected to go into commercial mode sometime around 2002.

Iridium is on a much faster track. To date, 56 of the 66 satellites that will make up the Iridium network have been placed in space. Three more launches were scheduled to occur by mid-May to complete the constellation.

The project is being funded by an international consortium, and Motorola — whose engineers proposed the concept — signed a $3.4 billion contract to become the prime contractor. Each of the 66 satellites costs $62 million to construct and weighs a half - ton. Commercial deployment of voice, data, fax and paging services to handheld devices around the world is slated to begin September 23 of this year.

LMDS: Lurking in the background

But perhaps the greatest potential threat to traditional cable TV operators will be those who bid and won licenses in the recent LMDS auction. While the much-anticipated and oft-delayed auction didn't live up to the revenue projections some expected, the 128-round auction will net the government a bit more than $578 million.

LMDS spectrum is being made available in two blocks per trading area.

All told, the FCC will issue licenses for 483 basic trading areas with a total of 1.3 GHz of spectrum per trading area. Two licenses for each area will be available: one for 1.15 GHz (block A) and another for 150 MHz (block B).

The auction actually resulted in 104 bidders winning a total of 864 licenses. A total of 379 A licenses were sold, covering 90 percent of the U.S. population, and 485 B licenses were sold, covering 99.5 percent of the population. Unsold licenses will be r e-auctioned later, according to FCC officials.

With that much bandwidth available, LMDS can certainly deliver a wide variety of services. What remains unclear, however, is whether a provider can make money offering services that are similar to those that already exist, over a network of towers that so me analysts suggest will cost at least $500,000 for the first two-way cell, which covers five to 10 square miles. Additional cells are expected to cost much less because they essentially consist of little more than receivers and repeaters.

To date, the only existing LMDS operator is CellularVision of New York, which pioneered the technology and actually launched commercial cable TV-like service in Brighton Beach. There, customers pay $19.95 a month for a basic package of 31 cable stations, about 30 percent less than basic service from CableVision and Time Warner. The 12,000 customers CellularVision purports to have use tiny roof-top (or window-mounted) antennas, and set-top boxes connect their TVs and personal computers to the network.

Although CellularVision apparently intends to continue operating in New York, it did not pursue licenses to operate elsewhere. Instead, it plans to offer other LMDS operators advice and consulting services for a fee.

As for potential, the service could be the breakthrough technology that allows a single provider to easily offer the full suite of communication and entertainment services, according to analysts. Some reports suggest LMDS could be a billion-dollar industry in five years.

Of course, that will depend on the LMDS license winners actually coming to market with real services. Already, on the hardware side, there has been a shake-out. Texas Instruments and Hewlett-Packard, which both developed LMDS systems, sold them (to Bosch Telecom and Lucent, respectively).

The other question is financial wherewithal. Big-name telcos and cable companies were barred from buying licenses for fear they'd simply stockpile the licenses without building the networks. Some observers doubt that small companies will be able to raise the necessary capital to build the networks, however.

Despite the fact that LMDS can send video and voice signals, most people are betting on LMDS as a high-speed data play. LMDS can be used to interconnect local area networks, create campus area networks and serve as a medium for asynchronous transfer mode and Sonet. With an asymmetrical pipe that can operate at 1.5 Gbps downstream and 200 Mbps upstream, even during peak hours, the system would yield 7 Mbps downstream and 1 Mbps upstream per household, according to research performed by Hew-lett-Packard.

Outside the U.S., interest in LMDS is high. Countries that simply don't have a modern telecommunications infrastructure see wireless as an affordable means of leapfrogging into the 21st century.

— Roger Brown

More telco partnerships?

Two years after the Telecommunications Act of 1996, the reality of the marketplace hasn't quite caught up to the hype of unleashed competition the landmark legislation promised.

But for those keeping a close watch on the MSOs, telcos and especially the utilities, things are just starting to warm up in a number of ways.

Utilities shifting gears

As little as two years ago, there was a lot of talk within the energy generating community about customers taking control of their energy consumption (demand-side management) on two-way networks with nifty control units in the home or office. But that's changed.

"The electric utility industry," says Jim Heisey, general manager for utility automation at C3 Communications Inc., "has evolved away from a push on demand-side management. The regulators themselves have de-emphasized that and have begun to emphasize deregulation of the electric industry.

"They're now telling the utilities they have to change things so that there are competitive offerings in the market. The logic goes, if the energy marketplace is competitive, the efficiencies will naturally follow."

This ongoing shift in emphasis has had a big impact on a lot of companies, including Heisey's. C3 was formerly CSW Communications Inc., a subsidiary of Central and South West Corporation. In 1996, the company was in the midst of a wide-ranging trial in Laredo, Texas.

The trial had CSW working with a gaggle of vendors on its own bi-directional 750 MHz HFC, CSMA/CD, mid-split network. Eventually involving well over 1,000 homes, customers used an energy control unit to take advantage of off-peak savings on energy, to program home appliances (AC, water heater, etc.), control water heater temperature, and to monitor electricity rates and utility bills at anytime. Plans also called for home security services, Internet access, and possibly cable and telephone service as well.

Yet the political landscape and economics put the kibosh on the trial and steered CSW toward a new competitive strategy. "The Laredo project was launched when demand-side management was a priority among regulators," says Heisey. "The effort proved to be highly successful, largely through a really effective job on the marketing and the customer interaction side of the business.

"(Yet) the technology is still in a pretty early state, dealing with a number of field failures and things that are not as proven as the market would like. The other aspect of that sophisticated network is that it really requires both telephony and cable television services to absorb most of the cost of it."

As the deregulation effort gained steam, CSW changed its name to C3 Communications and put its money on where it saw the utility market going. "What we've done," says Heisey, "is to refocus and not throw the net so broad as to encompass telephony and video services. What we want to do is really focus on the automated metering technologies and related capabilities. Because, as you open up the market to competition, as we're seeing in California for example, it literally requires that you have an automated communications system in place. So, we see that as a fundamental market drive we're determined to be a significant player in."

Heisey says the two prevailing AMR technologies are either telephone-based or wireless. Telephone-based systems usually work best with industrial/commercial clients and in rural areas. Wireless solutions are used in more urban residential markets.

A broadband connection?

Yet a wireline broadband solution for such monitoring services still has its proponents.

Scientific-Atlanta's MainGate product line is configured around a broadband framework. The control in the system rests in either the customer's hands or with the utility itself. Utilizing a small portion of bandwidth (approximately 1 MHz in the forward and reverse directions), the system can provide meter reading, tamper protection, outage detection and notification, and energy management applications, among others.

According to Patty Donaldson, vice president of marketing for S-A's control systems, the synergies between cable's broadband capabilities and the utility industry's needs is self-evident. "I think there is a tremendous opportunity for electric utilities and cable companies to partner," says Donaldson. "In fact, I think they're missing a major opportunity.

"The utilities need some type of interactive network to be able to do these energy services. And I certainly can't think of a more robust network with unlimited bandwidth than a broadband network, and it's already in place in many instances. That's a great network to utilize, especially when you're just beginning with a suite of services and you know you're probably going to want to add on to those services as new technology becomes available."

Donaldson admits there are other ways to communicate and perform energy services, such as the paging/telco WAN configuration to provide traditional AMR solutions. However, she says broadband offers an almost real-time connection and unlimited bandwidth.

One cable company, with two now-suspended trials to its credit, believes it's only a matter of time until the cable/utility connection is made permanently. The first trial Cox Communications attempted was in its Hampton Roads, Va. system, working with Northern Telecom (Nortel) and Virginia Power.

"We started out," says Mark Davis, Cox' director of engineering for telephone technology, "with what we call an integrated solution that would take voice, video and data and combine it into one box that would go on the side of the home. And data included Internet access, as well as the CEBus, which was designed to do energy management with an industry standard the power industry uses.

"We actually delivered some prototype boxes to Hampton Roads. We had most of the features working on it. It did cable telephony, it did switched digital video, it did Internet access, it did CEBus."

But market forces said otherwise. Davis reports that the push for standalone appliance solutions for telephony and data services, as opposed to an integrated solution, took hold, and Nortel felt compelled to address those solutions instead and terminated the trial.

Davis says a few months later Cox was approached by Ericsson, which proposed the same integrated solution, but in an ATM format to the home. They took the technology to Oklahoma City, Okla. and had about 20 homes operating with the Ericsson boxes. Then, says Davis, despite being "so close," Ericsson restructured, laid off thousands of employees and dropped the trial.

Other market dynamics, says Davis, have also put the integrated solution on the back burner. The standards-compliant cable modem, the OpenCable effort and continuing advances in cable telephony are quickly making volume-pricing for these technologies a reality.

But Davis believes there's a good chance that an integrated solution will still come about. "We still hear of initiatives going on dealing with integrated voice/video boxes," says Davis. "It's just that it's going to be a little bit more challenging because of these new market dynamics.

"I still think that sometime in our future we are going to have to move to a switched network. The question is, when? You know, (possibly) when we start introducing high definition television to our networks and when (network) requirements go up exponentially again, that could be the time. Now, whether it's switched in a packet form or circuit switched, we don't know. But I think it is in our future sometime."

Does this future integrated solution include utility-related services as well? Davis thinks it's a distinct possibility, "I think so, if it's cost-effective. You know, they spend about 50 cents a meter read per month. That's not a lot of revenue, but if you could do it incrementally with some other service we provide, then I think it would be very easy. It's a win-win for both of us."

The telco connection, ETC...

While AMR related services are a big part of the utilities' (and possibly cable's) future, increased profits do not rest on meter reading alone. And Section 103 of the Telecommunications Act is seeing to that. Through this section, previously-restricted public utility holding companies can enter telecommunications and information services (see sidebar) by forming an "exempt telecommunications company" (ETC).

Central and South West Corp., like a growing number of utilities, has used Section 103 to create a number of telecommunications subsidiaries. One of its key creations is CSW/ICG ChoiceCom L.P., a limited partnership between CSW and ICG Telecom Group, a subsidiary of ICG Communications. The partnership between the utility and the competitive local exchange carrier (CLEC) is working to provide consumers with local telephone, long distance and a variety of data communications services in a four-state region that includes Texas, Oklahoma, Louisiana and Arkansas.

"What we're looking for," says Bear Poth, vice president of sales and marketing for CSW/ICG ChoiceCom, "is for new businesses from the perspective of a utility. And with our deal with ICG, it was simply an opportunity to get to what is a very high-growth marketplace where you can create a lot of value."

While they do offer a residential phone product, Poth says the company's primary targets at this time are businesses. Going up against a formidable foe (i.e., Southwestern Bell), ChoiceCom has to get creative with its sales approach.

"We have a real interesting approach," says Poth, "in that we come in and provide a consultative solution. We'll come in and look at a company's phone records and we'll pick apart its phone bill."

While they haven't launched an Internet/data product yet, Poth says they provide Sonet-based, OC-type circuits, as well as regular DS-3 and DS-1 level interconnectivity. And ADSL technologies aren't far off the radar screen either. "Yeah, we sure are (looking at ADSL)," says Poth. "I mean all the CLECs, through their interconnection agreements, have access to copper. So, you have to look at all the different xDSL technologies to see how they will fit in."

Given the company's pedigree, formed by an established, deep-pocketed utility and an aggressive telephone competitor, ChoiceCom's future looks to be a solid, steady one, says Poth.

"The main thing is that we want to continue to go out and capture market share and retain our customers so that they're long-term clients. Right now, Southwestern Bell still has 99 percent of the marketshare. It is not a competitive marketplace. But we're going to do everything we can to get our piece of the pie."

What's good for the goose...

As telecommunications factions continue to jockey for competitive advantage, some things are universal for all concerned. The bottom line in the burgeoning competitive marketplace, whether it's an expanding cable company, an entrenched baby Bell, a hungry CLEC or a well-bankrolled utility, is still the customer.

And, while whiz-bang technology is one thing, true competition and marketing saavy is something totally different. And utilities are no different when it comes to learning this lesson.

"Electric utility companies," says C3's Heisey, "have never really marketed or sold to customers. If you think about it, have you ever had a say in how much your utility bill was? The truth is that their only customer has been the electric utility regulators.

"Now, there's this whole thing about opening up the marketplace, offering new services and doing effective customer service. It is a hard time for most electric utilities. They haven't a clue and most of them are arrogant enough to believe that they are already really good at it.

"We believe if you don't really add value, and get yourself in gear and do it soon, you're not going to hold a lot of customers when someone else comes in and offers the same service for 20 percent less."

— Michael Lafferty

What is an ETC?

One of the most potentially far-reaching provisions of the Telecommunications Act is Section 103, which added a new section to the Public Utility Holding Company Act of 1935 (PUHCA).

Together, the two sections permit previously-restricted public utility holding companies to enter telecommunications and information services markets without prior Security and Exchange Commission (SEC) approval. The utility companies can enter these new markets through the acquisition or maintenance of an interest in an "exempt telecommunications company" or "ETC."

Under PUHCA's new Section 34(a)(1), an ETC is any person (and/or company) determined by the Commission to be engaged directly or indirectly, wherever located, through one or more affiliates (as defined in Section 2(a)(11) of PUHCA), and exclusively in the business of providing one or more of the following:

(A) telecommunications services; (B) information services; (C) other services or products subject to the jurisdiction of the Commission; or (D) products or services that are related or incidental to the provision of a product or service described above (i.e., A, B, or C).

Myth or behemoth?

There was a time when ADSL technology got about as much respect as the skinny guy in the Charles Atlas bodybuilding ads, getting sand kicked in its face from those outside the telco industry. But new developments in technology and standards, as well as the beginning of actual commercial deployments, are putting muscles on ADSL as well as the family of DSL technologies.

According to a recent study by Allied Business Intelligence, ADSL (asymmetric digital subscriber line) service is poised to capture 36 percent of the broadband local loop market by the year 2003, as measured against 26 percent for cable modem service. Strengths of the technology include the promise of using existing telephone lines, now numbering more than 700 million worldwide, according to data from the ADSL Forum, whose executives add that the technology started connecting up "real" customers beginning in 1997. In addition, like cable modems, ADSL offers bandwidth-hungry consumers the promise of high data rates — up to 9 Mbps in the downstream. But unlike cable modems, ADSL provides a point-to-point connection to customers, which has implications both for security and speed of service.

Telcos conducting field maneuvers

Not only are titans of telephony like US West and Ameritech launching their ADSL offensives, but a number of ISPs, as well as rural telcos and others are either currently testing ADSL, or are preparing service launches of their own (see deployment chart, page 28).

In one of the first skirmishes of broadband data supremacy, US West is preparing to launch an aggressive offensive with a 40-city, 14-state roll-out of ADSL service slated to be completed sometime this June. Jeremy Story, a spokesperson for US West !nterprise, the telco's data arm, estimates that about two-thirds of the central office equipment necessary to support the service for that roll-out had been installed at press time.

The company has learned a lot from its first roll-out of DSL service, which was initially HDSL (high bit-rate digital subscriber line) in Phoenix last October, with a migration to ADSL in January.

"In Phoenix, we didn't encounter anything we hadn't anticipated, based on our lab tests. But it perhaps hammered home some things we had anticipated, such as loop lengths being critical," says Story. "And I think the speed issue is one as well, and migrating from HDSL to ADSL enabled us to get around some of the hurdles that we experienced initially in Phoenix.

"HDSL had a 12,000-foot limitation for the distance, and its speeds capped out at about 768 K (kilobits per second) symmetrically," says Story, "while ADSL extends to 18,000 feet, and has speeds up to 7 Mbps in the downstream."

And just as the cable industry has been experimenting with various scenarios for hooking up customers to cable data service and completing the in-home installation process, US West has also been gathering data on how to get customers online. While finding that many of its customers in Phoenix were computer-saavy early adopters who wanted to install their own modems and Ethernet cards in their computers, !nterprise contracted with MicroAge to offer technical support and conduct the in-home installation process for those who weren't comfortable with the do-it-yourself approach.

For its regionwide deployment, US West will be using SpeedRunner modems from NetSpeed, which include a "splitterless" technology that will provide "plug and play" installation, says the telco, eliminating the need for a technician to visit the customer site. In fact, just like cable companies, telcos are for the most part eager to get out of the installation business (see "Marshalling," below).

Pricing for the coming service roll-out will include both an installation fee (including modem and set-up) of $199.95 for a one-year contract (or $299 for a month-to-month contract), plus a recurring monthly service fee, the amount of which depends on the quantity of bandwidth desired. At the low end, 256 K service will cost about $40 per month, while the pricetag for 7 Mbps service will be $840 a month.

Meanwhile, Ameritech has rolled out the service through, its ISP, in Ann Arbor, Mich., and is preparing to roll out in Royal Oak, Mich., followed by Chicago, which will occur before the end of the second quarter.

"Right now, we are offering service to within about 9,000 feet of the central office, hoping to get up to about 18,000 feet from the CO," says corporate spokesperson Jean Medina. "We anticipate that within three years we will be able to provide the service to 70 percent of our customers," says Medina.

For its initial roll-out, the company is enticing consumers and small businesses with a data line and unlimited Internet access for $49.95 per month, plus a one-time $150 installation fee (for its initial rollout, the company is waiving the cost of the modem, which is $199). After the first rollouts are completed, the service will increase to $59.95 per month.

The company has also been working to knock down the amount of time it takes to complete the installation of the service at the customer premises, as an install which initially took about four hours is now down to three, and will shortly hit the two-hour mark, adds Medina.

In another realm, Internet service providers looking to please their customers with high data rates are helping to give DSL technology, as a whole, a boost. "What we are starting to see in the DSL environment, and what will begin to spark high growth, are providers wholesaling DSL access," says Daniel Briere, president of TeleChoice, a research, consulting and analysis firm. "ISPs are taking these up and bundling them as part of their service, in the same way they bundle an ISDN line."

Marshalling the troops

Much like the cable industry has put its shoulder to the MCNS/DOCSIS effort to standardize cable modems, a number of telecom companies and manufacturers have formed a consortium to speed up the deployment of ADSL to the mass market, dubbed the Universal ADSL Working Group (UAWG). Companies involved in the group include heavy hitters like Microsoft, Intel, Compaq, Ameritech, US West, Bell Atlantic and Sprint. The goal of the UAWG is to craft a standard for a simplified version of full rate ADSL, one that combines the benefits of "splitterless" ADSL and ADSL Lite; as part of this effort, the group is working to ensure the new standard will be interoperable with the current standard for full-rate ADSL, ANSI's T1.413, according to executives with Motorola, a UAWG member company. Splitterless ADSL eliminates the need for a splitter to be installed at the customer premises to separate the data signals from the voice signals on the line, and thus also eliminates the need for a truck roll to the home. That means a user could theoretically buy a modem and install it on his own. ADSL Lite offers a slower data rate (1.5 Mbps in the downstream) than does full-rate ADSL, but it also attempts to reduce the complex digital signal processing requirements of full-rate ADSL.

Meanwhile, the International Telecommunications Union is also working on a spec for a simpler form of ADSL called G.Lite, and is working with the UAWG to try to create "this G.Lite/Splitterless ADSL solution," says Rick Hall, strategic planner for xDSL systems at Motorola.

"What the PC manufacturers and the RBOCs are trying to do is make the modem like a modem you'd buy at retail," says Hall. "I think that the volumes can get really interesting, if a manufacturer starts shipping these modems in their PCs."

But make no mistake. Service providers like US West are not passively standing by, waiting for a new standard to be developed. "Once a standard is proposed by the UAWG and accepted by the ITU, it will certainly speed deployment of DSL across the country," says US West's Jeremy Story. "But we found ourselves in a position of wanting to deploy ahead of the standard, so we have done that. And we will make ourselves compatible with that standard after the fact. Having participated in the UAWG from the beginning, we knew what it was going to take to be retroactively compatible. And so we purchased our equipment (from NetSpeed) specifically with that in mind. We could support the standard simply by installing a second pool of modems. There is a software detect ion system that we will use, which, when the signal comes in, will know if you are using US West's DSL, or whether it's the UAWG standard DSL, and it will route you to the appropriate modem bank."

The psychological war

Titans also employ the more subtle weapons of words to win converts, and cable companies, as well as those entities which are pouring their energies into deploying ADSL and other DSL technologies, are already pointing out the soft underbelly of the other side's service, as they see it.

In one example, Tele-Communications Inc. Chairman and CEO Dr. John Malone, arguably the standards bearer for the cable industry as well as its technical community, gave his assessment of the competition at the MSO's March gathering of investors in Denver. Is ADSL giving Dr. Malone nightmares of metallic monsters carting off cable modem service subscribers? Apparently not.

"If we (the cable industry) do our job appropriately and in a timely manner, I'm not particularly concerned about ADSL," said Malone. "It's a hit-or-miss technology, and not even the telcos know whether it's going to work or not until they try (to hook it up in the home). Second, the capital costs for terminals is more than our set-top."

Potential technical challenges the technology faces include interference with HDSL lines in the same binder group (or bundle of lines), as well as legacy issues on older plant, such as "wires that lead off to nowhere which introduce echoes" and "garbage coming in over the wires from the airwaves, " says Terry Shaw, Ph.D., project director, network systems, CableLabs.

"It will work in a number of situations," he adds, "but the primary place it will work is in newbuilds, new neighborhoods."

But while critical of full-rate ADSL, CableLabs' Shaw sees more promise in the developing technology called DSL-Lite: "It doesn't have the high data rate that ADSL does, but by lowering the data rate, they increased the robustness."

Undeniably, telcos and other ADSL proponents face a number of technical challenges. Just as cable MSOs have been working to activate and perfect the return path to carry data traffic, telcos must pay close attention to the condition of their copper plant.

"The biggest (technical) challenge for DSL has been copper loop qualification," says TeleChoice's Briere. "The records that some telcos have on what copper is where, how long it is, and how many bridge taps and loading coils there are, those records are not good. They like to see 60 to 70 percent loop qualification to deploy in a certain area, and in some implementations early on, they are hitting about 25 percent."

Though it's still early in the company's roll-out, Ameritech's experiences with loop qualification seem to be quite different. Medina says that thus far, less than two percent of the loop where Ameritech has installed ADSL has been unable to support the service.

Throwing stones in the other direction, ADSL proponents point out that there are also chinks in cable's armor, such as potential privacy issues. "Even though there are encryption schemes to protect your data, you are still on the same physical media as your neighbor (because it's a shared, broadcast network)," says Hall. "And with the ability of today's hackers to get through firewalls and unencrypt things, it could make people nervous about whether their information is private . . . A key advantage of ADSL is that it is 'point-to-point,' which gives end users the advantage of dedicated bandwidth and high bit rates. Because cable modems are a shared medium, the bit rate to each user is dependent on how many others are on line at the same time. As more people sign up for service, the bit rate to each user declines."

"I would point out that the U.S. government has operated extremely secure communications systems over shared media for years — and that's out on the airwaves," counters CableLabs' Shaw. "The security issues are things that you take care of in the design with appropriate means of protection."

As for the question of how much system loading could slow cable data rates, Shaw responds, "Data typically comes in independent bursts. So while you may require a lot of bandwidth over a short period of time, your average requirement for bandwidth over a longer period of time is much lower. Yes, the rate will slow down, but the studies that Bob Cruickshank and Tom Moore did here at CableLabs on the loading of the system showed that you had to have a tremendous number of cable modem users on a system before it slowed down to a rate like ISDN. Hundreds of users."

The glow on the horizon

Given the challenges still facing both ADSL and cable modem technology, it will be probably be awhile before full-scale war breaks out. "Right now, it's almost like you have two battleships that are running parallel to each other, but they are still far enough away that it doesn't make sense for them to start taking pot shots at each other," concludes Briere.