Trade-offs impede shift to broadband

The rollout of broadband services was at the crux of many Internet startups, and the snags have seriously curtailed more than a few Internet stocks. Exactly why anyone would invest in a business model that relies on an industry that's still in its infancy and, in some cases, both subject to the whims of phone-service providers and contrary to their interests, is somewhat mystifying. Current broadband offerings come in four flavors: cable, digital subscriber line (DSL), fixed wireless, and two-way satellite.

Cable In the early days, cable could deliver more than 10Mbps under optimal conditions. It was also priced at a low $49 a month. But its disadvantages were more numerous than its advantages. A networking expert had to perform each installation, and this took time. Also, as an area became saturated with users, the shared bandwidth fell so dramatically, some complained that at peak hours their standard 56Kbps modem connections were faster.

DSL First introduced by AT&T, DSL was a controversial technology within the company. Because it could be implemented and maintained over regular phone lines at very little cost, it had a direct impact on the company's expensive T1 services. Speeds can reach 80Mbps or so, depending on the system and the distance from the central office. And the distance issue is only temporary; tests show the signal could easily be boosted over repeaters for any distance.

DSL service is available in most of the country for $49 and up, for anywhere from 384Kbps to 1.5Mbps. In parts of Canada, speeds of around 4Mbps can be bought for much less than Americans pay for submegabit lines.

One advantage DSL has over cable is its more consistent bandwidth delivery. Its disadvantages are the same as those of any phone-line service. A squirrel chewing through a wire represents a huge problem in some parts of the country. To solve it, companies have designed wires with various antisquirrel coatings, usually a Tabasco derivative. Another point of failure lies with the servers that talk to the Internet. Telcos don't necessarily have the best Internet technicians working for them, although this is changing. And like cable, DSL requires manual installation. Standardized modems were supposed to eliminate this problem for both services. But cable's standard DOCSIS modem still isn't universal, from what I can tell, and the DSL standard that was supposed to center around something called "G.Lite" never materialized.

Fixed wireless This is the hottest new offering—so new it's hard to get a feeling for how it will work if it becomes popular. It varies from place to place, but typically, fixed wireless offers something like 1.5Mbps downstream and 128Kbps to 256Kbps upstream. For this you pay the same old $49 everybody seems to think is the price point for broadband. These speeds are somewhat arbitrary, though. One company, Teligent, is hoping to offer 45Mbps, but it's hard to say what the pricing will be for such a service.

Fixed wireless uses a small two-way dish antenna aimed at a ground-based transmitter tower nearby. Offered by the likes of Sprint and AT&T, the service presents even more of an installation hassle than cable and DSL, but no more so than the hassle of getting a DSS TV dish installed. Luckily, the DSS business has created an infrastructure of installers that can be used for this and other services requiring a roof-mounted antenna. Early reports say the service is good for these systems.

Two-way satellite New narrow-aperture technologies enable two-way satellite systems to deliver speeds in the same range as fixed wireless—from 1Mbps to 5Mbps—although business customers should have access to higher speeds. The first to offer these systems is Gilat, an Israeli satellite company. RadioShack is selling the Gilat system in conjunction with Microsoft, a part owner of Gilat, but the system doesn't seem to be well marketed.

Its biggest draw is in rural areas where people simply can't get other technologies. The downside is the 5- to 6-second latency resulting from the distance to and from the bird. To make matters worse, certain weather conditions can interfere with the signal. Again, the price is in the $49-a-month range, and professional installation is recommended.

With four technologies available to deliver broadband, you'd think more people would have it. The main problem is installation. All four systems essentially take installers from the same small pool of technicians. The dish installers are a subcategory of this group, causing an even more profound shortage.

It may be a decade before broadband access becomes universal enough for users to see any general benefit. Providers are promising some fancy features, but until they materialize, the market will continue to be perceived as too small to be taken seriously.