Death knell for residential non-cable access?

["Roeland M.J. Meyer" <rmeyer () mhsc com>]

I'm getting more info, but it looks as if even access to the Internet may be offered for free. Free ISP services are 
being contemplated by AOL and MSN, as a response to low-cost offrerings from the RBOCS, and more notably, from TCI and 
other broadband cable operators. The battle-ground is the residential access market.

Currently, dialup modem acces is dropping to $9US per month in order to compete with cablemodem offerings. Considering 
the cost per kilo-bit ratio (CKb), cable-modems are still a better value at this time, for residential customers. There 
are technical and contractual reasons why cable-modems are not suitable for business use. In that arena, xDSL is making 
serious in-roads and there is still a market, if you are a DSL re-seller/provisioner.

As you can see in the accompanying chart, even at zero ISP cost, modems can no longer compete as an access media, 
unless the telco charges are dropped. This is not going to happen any time soon. Evenso, the local telco's are the only 
ones able to do it.

This presents a serious threat to direct access providers like AOL and MSN, even the WebTV system is being threatened 
by this cable-modem roll-out, as they use dial-in modems to provide their services. Coupled with restrictive practices, 
by cable operators, it is difficult to even provide ISP services as a third-party on the cable-modem network. The 
cable-modem customer is required, contractually, to use the ISP services of the cable operator. What this means, for 
third-party access providers, is a serious loss in residential business. Possibly, a decimation of that market.

The consideration, of the major players, in giving Internet access away, at no cost, should be viewed as an extreme 
measure on their part. The collateral damage in this attempt at saving their market is to utterly destroy the local 
access ISPs, whose primary revenue is local access services. Granted, they won't survive the cable-modem threat on 
their business, once cable-modems become available in their area, anyway.

Note that in the following chart; Monthly costs are estimated, based on California rates, and include local telco 
service charges where appropriate.


 

    Type      bit-rate    Monthly    CKb
    modems    33.6Kbps    ~$25US      $0.74US note:$25 telco + $0 ISP charges
    modems    33.6Kbps    ~$34US      $1.01US note:$25 telco + $9 ISP charges
    Cable     1024Kbps    ~$49US      $0.04US
    DSL       1148Kbps    ~$600US     $0.52US
    T1        1540Kbps    ~$2500US    $1.62US



--------------------
Roeland M.J. Meyer, CEO
Morgan Hill Software Company, Inc.
http://www.mhsc.com/
mailto://rmeyer () mhsc com
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