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Cable companies have two goals in their battles against the telcos. First, they'd like to deliver high-speed data services, including digitalized programming, to the home. Second, they'd like a piece of the voice action, but only after they've gotten the data side. Telcos are so deeply entrenched that the only way to get a piece of the voice market is to offer additional services beyond standard telephone handset service. Cable modems are required to make the two-way system work, and they aren't cheap, at least not yet.

An even bigger problem with the notion of supplanting the telcos' voice service is that most homes aren't wired with cable outlets anywhere near their phone jacks.

So if the cable companies can get into the business of supplying high-speed Internet access and movies on demand, they may be able to get voice and even two-way video services on top of that. Companies like @Home are banking on this working, and on cable companies being able to manage the complex two-way system.

The Big "If"

That last part is a big "if," since the cable companies to date haven't been particularly adept at rolling out and managing new technology in a timely way. Indeed, they've been telling the 500-channel story for a long time and still typically deliver 30 to 80 channels in most markets. They have a lot of fiber to lay to make a two-way system work; they also have a lot of capital equipment to purchase--all for a market that may never materialize.

Phone companies, on the other hand, are licking their chops over the program-delivery market just as the cable folks' mouths water over the telcos' voice market. xDSL has come to market incredibly quickly compared with ISDN's rollout in the 1980s and continuing into the 1990s. The technology is well understood, and standards are converging fairly quickly. All this means exactly one thing: Telcos are taking the threat of cable seriously and have created xDSL technologies with an eye toward leapfrogging cable providers.

ADSL at its highest proposed data rates would send data downstream at up to 9 Mbps and back upstream at about 1 Mbps. That's significant because the downstream rate can accommodate a compressed HDTV (High-Definition TV) stream or a few NTSC (National TV Standards Committee) streams, implying that very high-quality video programming can be delivered with the technology and that multichannel videoconferencing is realistic. ADSL, however, probably won't be widely deployed at these high rates but rather at something more like 1 Mbps downstream and 384 Kbps upstream. That's still good enough to do NTSC downstream and get good-quality multichannel videoconferencing.

Video on demand over the same phone lines that carry our present voice calls is an attractive notion, and converter boxes will probably be priced similarly to or less than today's NetTV-style devices. Put an Ethernet port on those boxes and connect your laptop or home PC, and you've got quite a home data network.

If forced to pick a winner, I'd pick the telcos. They've got the deep pockets to fund the ADSL rollout. But in any event, high-speed data networking to the home is around the corner, and that's a good thing for business. Whether you intend to deliver content to consumers or to employees at home, ubiquitous home networking is on the way.

Send your comments on this column to Art Wittmann at awittmann@nwc.com.