Dueling with the Death Star
Now that John Malone has explained that he's "back" at TCI's helm, the prospects for cable's move into interactive services look dim. Seems the man Al Gore dubbed Darth Vader has gotten burned by the Death Stars.
Direct-broadcast satellite services like DirecTV have made significant inroads into the cable market in the past year. Wrestling with this new competition, a depressed stock price, and a US$15 billion debt, the new, fiscally responsible Malone is no longer pushing hard for fiber upgrades to the company's cable systems. Which puts @Home Network - a service bringing high-speed data to the home, of which TCI is majority stockholder - in an uncomfortable position.
It's clear that, in the words of @Home vice president Milo Medin, "if you're in the one-way video business and that's the only business you're in, you're gonna get toasted by the space segments." But without hybrid fiber-coax (HFC) in the cable plant, the Sunnyvale-based broadband network service has nowhere to go. Ditto for companies building cable modems.
In the case of cable modems, the underlying technology is reasonably sound, but unit costs are still prohibitively expensive. And as tech continues to evolve at lightning speed, the standards for cable modems will be quickly outdated, forcing the industry back to the drawing board and causing more problems and delays.
The situation is similar, though less grave, for @Home. Though it is partnered with Cox, Comcast, and other cablecos, losing TCI doesn't help enlarge the number of digital-ready cable markets.
And while it's possible to set up a cable modem using a phone line for upstream data, having to cannibalize an existing line or add another won't fly in Peoria. To make cable-modem services work in the mass market, Medin explains, "you need modems that are cost-effective, manageable, and supportable. That means HFC.
"Clearly, @Home's strength is networking, not fast Web surfing: the company doesn't own the plant, the modems, or the content - it simply puts it all together and guarantees that it works. @Home's efforts in intelligent caching and replication are needed for any broadband service - even the RBOCs' high-bandwidth ADSL efforts, which run over normal phone lines - to achieve the promised increases in speed. And Medin points out that @Home isn't necessarily forever tied to cable. "We could run quite well on ADSL," he says. "We would lose some of the advantages of broadband, but it would work.
"Beyond HFC upgrades, the most significant hurdle these cable ventures have yet to clear is service. Convincing customers to have both a cable installer set up the cable modem and a computer technician connect the modem to a PC will take a massive marketing campaign.
Meanwhile, Medin remains convinced that ADSL à la the RBOCs won't be a threat: "Who's lost money because the phone company has moved quicker than they expected?" Given that the TCI-Bell Atlantic merger (which the capital-rich RBOC nixed) would have averted TCI's current fiscal woes, the answer to Medin's question is looking more and more like John Malone. And unfortunately, our bandwidth is suffering for it.
Tim Barkow
[Original story in Wired 4.01, page 140.]
Island Smarts
Singapore's IT2000 could very well be a pipe dream: its infrastructure is built on mainframe technology and a hybrid connection system - "hybrid" meaning not all fiber. But technology isn't the island's only challenge. Asia Connect, a Malaysia-based Internet concern, has big plans - and big backers - that could turn Penang, Malaysia's northernmost state, into the intelligent island Singapore wishes it could be.
With a commitment to both Asia-centric content and openness, PenangNET - Asia Connect's ISP (www.penangnet.net.my/), will offer freedoms that Singapore's network won't. Asia Connect has entered into partnerships with Netscape, CyberCash, Sun Microsystems, Oracle, and Microsoft, builder of PenangNET's OS: the fabled Normandy 4.0.
Where Singapore's IT2000 labors under the weight of government bureaucracy, PenangNET has the freedoms inherent to a privately funded network: 51 percent of PenangNET's US$500 million in assets are owned by AsiaConnect, 45 percent by a subsidiary corporation of the government of Penang, and the remaining 4 percent by Binariang, a Malaysian telco.
Says Ray Cheng, AsiaConnect's CEO, "We're looking to educate the people."
Insanely Great
Gary Hudson, a commercial space flight entrepreneur, has tried since 1970 to secure funding for his quirky, reusable, interstellar rockets topped with helicopter-like propulsion blades. Twenty-seven years later, he's gotten his first break.
Hudson's first investor, a wealthy individual interested in commercial space activities, became aware of Hudson's Roton project while reading Wired. The investor's interest sparked others'. Hudson now has several million in the bank helping to make his dream a reality. "Publicity hadn't ever gotten me anywhere," laughs Hudson.
But a lot more money is needed. Current financing will bring the Roton through design and initial experimentation, but Hudson estimates that approximately US$50 million will be needed over the next three and a half years to launch anything skyward.
For Hudson, the Roton is the realization of a childhood yearning for a new frontier: "In about two years, I'll start getting excited."
Web Wipeup
The dream ended quietly for the once scorching Web site known as The Spot." So began Chip Bayers's Time magazine parody, "The Great Web Wipeout." The piece purported to "look back" from January 1997 at the deflation of a Web hype machine that had already become dangerously overheated in early 1996.
Ironically, American Cybercast, the company behind the Web soap opera, filed for Chapter 11 reorganization on January 15, putting The Spot in the intensive care ward.
Bayers claims it wasn't that hard to predict, citing similar crises in the software, videogame, and CD-ROM industries.
We'll go out on a limb and predict that The Spot doesn't make the "The Great Web Comeback" list in January '98.
