WIRED FOR SPEED

By MICHAEL KRANTZ

Pity the poor beleaguered cable guy. Direct-broadcast satellites are eroding his turf from the air while the Baby Bells and the burgeoning Internet creep in over the phone system. Worse still, he faces this growing competition while trying to shake a public image only a bit more benign than Saddam Hussein's.

The cable empire is finally striking back. Its secret weapon: blisteringly fast access to the Internet, courtesy of the cable modem, an electronic gadget that connects computers to the outside world via cable-TV lines instead of phone lines. In the past two weeks, America's two largest cable operators, TCI and Time Warner, launched the nation's first commercial cable-modem services in Fremont, California, and Akron, Ohio, respectively. Time Warner built its own service, dubbed Road Runner (after Warner Bros.' lightning-speed cartoon character); TCI joined forces with a Silicon Valley start-up called @Home. The basic pitch, however, is the same: Net access at speeds hundreds of times faster than today's conventional modems.

It's a good pitch. Weary Netizens know all too well that browsing the World Wide Web these days is less like surfing than like crawling: data drips like molasses onto your computer screen, sometimes taking several minutes to create a single page of text and graphics. If you want to download, say, a 5-minute rock video, you'll have time to catch a quick meal--maybe even a movie--while the phone line churns away.

Your cable line, by contrast, has enough data-carrying capacity--or bandwidth--to deliver 60 or 70 channels of live video the instant you turn on the tube. It is, in high-tech parlance, a very fat "pipe"--some 300 times as fat as "twisted pair" copper phone lines. What if, the cable industry breathlessly asks, some of that bandwidth could be diverted to the Internet? How might entertainment and commerce--not to mention the industry's bottom line--be transformed?

It is to answer that question that the leading major U.S. cable operators are racing to become Internet providers. Today's media darling, @Home, which launched last year vowing to build the first national cable-modem network, has exclusive deals with TCI, Cox and Comcast. In addition to its Fremont service, it is readying rollouts with TCI in Hartford, Connecticut, and Arlington, Illinois; Cox in Orange County, California; and Comcast in Baltimore, Maryland. "We're in a frenzy," says CEO Tom Jermoluk. "We've got 20 or 30 cities going online. We'll reach hundreds of thousands of homes very shortly."

Time Warner's Road Runner service, which began as a small trial in Elmira, New York, is available to 300,000 homes in Akron and neighboring Canton, Ohio, and is set to expand in Elmira and Corning, New York, this year, and to San Diego soon after.

The price, for those already paying for Internet access, is probably right. Net users pay at least $20 a month for bare-bones access, and users of commercial online services, which charge by the hour, can rack up huge monthly bills. Cable modems, for about $35 a month, not only deliver dramatically faster performance, but also, like cable TV, are "on" 24 hours a day with no extra-usage charge. Time Warner Cable president Glenn Britt says the Akron rollout has a waiting list 1,800 names long.

He had better wire them up quickly. The telephone companies, eyeing the same potential subscribers, have begun introducing their own high-speed services, including ISDN (integrated-services digital network), which offers four times the bandwidth of a standard modem, and ADSL (assymetrical digital-subscriber line), which approaches cable speed. And the telcos are good at running the complex switching and billing systems required to bring the Net to millions of customers.

The cable companies, by contrast, have a lot to learn. @Home's launch was delayed for months as it struggled to find a way to mesh its high-bandwidth system with the rest of the Internet, which is like an old mansion filled with narrow, twisty corridors and data-clogging culs-de-sac. One @Home innovation is to store data from frequently visited sites in giant computer files called caches--a solution that may not work if those sites change too quickly.

A bigger headache is that unlike the telephone system, cable networks were designed for one-way communication: a single strong signal transmitted down a tree-and-branch system to thousands of passive users who aren't sending any data back. Sending a high-bandwidth signal from head-end to home in such a system is easy; getting thousands of individual signals back upstream--which is what a neighborhood of people E-mailing one another represents--turns out to be a nightmare.

The main culprits are the amplifiers that sit along cable lines, keeping signals strong and clear during their downstream journey. Not only do these amps not work when messages are funneled upstream, they actually degrade signals already under assault from radio interference. "There's far more noise in the coaxial system than any of us expected to see," says a hardware executive who has been close to the cable-modem industry since its inception. "It's really difficult to drive the signals out over these lines. Every trial to date has run into that as a significant problem."

What's unclear is how effectively the problems have been solved. Jim Chiddix, Time Warner Cable's chief technical officer, acknowledges that it's taken the company longer than expected to work out glitches, but adds that "our new network works. Akron is the real deal." The solution to balky coax networks? Replace the balkiest portions with gleaming fiber-optic wire. The Akron system and those that follow, says Britt, will run fiber from the head ends to local nodes serving 500 homes apiece.

The fiber solution, though, comes only at dreadful expense. Time Warner, says Britt, spent close to $175 a home upgrading Akron for the Road Runner launch. At 300,000 homes, that comes to $52.5 million in fiber alone for one midsize market. At that rate, upgrading Time Warner's entire 11.8 million-home empire would cost more than $2 billion--and that doesn't include the cost of the modems ($400 a subscriber, but probably dropping fast) and other expenses.

That's a lot of money to throw at a service that has yet to produce any major revenue. In fact, cable operators' network upgrades are aimed at much richer and more important prizes, chief among them their own survival. The Telecommunications Act of 1996 freed media giants of all persuasions to compete in one another's markets. With everybody from the Baby Bells to Bill Gates breathing down their neck, cable operators have little choice but to lay fiber over their aging coax networks as the old analog media converge into one big digital stream. High-speed Net access, for the moment, is just an intriguing appetizer to a main course comprising telephones, wireless data services and even interactive television. "Eventually this architecture will let us do what we've done in Orlando," says Britt, referring to Time Warner's famously costly interactive TV adventure. "We'd like to attach our cable to any video or telephone device you have in your house."

And, of course, deliver their own programming. Road Runner already offers its subscribers, among reams of Akron-related news and information, a catalog of brand names from the Time Warner entertainment cornucopia, including Time Inc. Magazines, TIME-LIFE Books and Warner Bros. Online. @Home takes a similar tack, signing up a rich roster of content partners and designing a user-friendly interface to guide users to them.

All of which conjures an uneasy vision of media goliaths creating proprietary content slanted toward proprietary programming and delivered to customers over proprietary pipelines. This, of course, is the antithesis of today's chaotic, freewheeling, radically democratized Internet. Oh, well. Information may want to be free, but it's the companies that are paying its freight that will have the final word.