(FORTUNE Magazine) – hq: bedford, mass. founded: 1986 sales: $6 million employees: 91 stock: awre; nasdaq web address: www.aware.com

Most home PCs today can access the Internet at speeds of only 56,000 bits per second or less--a laughable experience for anyone used to blistering-fast T1 connections from their office. Yet that gap between home and office may soon start to disappear. Aware's newest asymmetric digital subscriber line (ADSL) modem technology should be able to match T1 speeds and deliver up to 1.5 million bits per second over standard telephone lines. That's the "lite" version--the full one can zap over eight million bits per second. With ADSL modems in their home PCs, consumers will get Internet connections that are always on, via a phone line that can simultaneously handle voice calls.

ADSL is the telcos' answer to cable modems, which are being pushed by the likes of @Home Network and Time Warner and offer equivalent or faster access to the Net. Cable modems, however, require users to share capacity: That gives ADSL, which guarantees bandwidth to its users, a big edge. But the phone companies, as always, have been dragging their feet. For one thing, they're afraid that pushing ADSL could cannibalize sales of their profitable T1 lines. And, unlike cable operators, phone companies are not really in the business of installing equipment in people's homes. Today ADSL requires a home visit by a technician who physically splits voice and data lines. But last November, Aware announced its lite version, which can be turned on remotely.

Rather than waiting for the telcos alone to push this advance, the computer companies (which need hot new features to persuade consumers to upgrade their PCs every few years) are taking action. Notes CEO Michael Tzannes: "With ADSL lite, the power equation shifted from the phone companies to the PC industry." In January a consortium led by Compaq, Intel, and Microsoft, with the Baby Bells in tow, announced an effort to create an ADSL standard that will likely be based on Aware's technology. The first evidence of the standard should appear this Christmas, when Compaq is expected to introduce PCs with hybrid ADSL/56K modems. Aware licenses its software to companies like Analog Devices, Lucent Technologies, and 3Com. They make ADSL chips that go into modems and into receiving equipment that sits at Internet service providers or phone company central offices.

Aware has lost money almost every year since it was founded. It originally worked on projects for the U.S. military and intelligence community. An earlier effort to develop cable-telephony technology was abandoned, as were efforts to create a CD that could hold seven hours of music and to design a video-editing chip for consumers. Today the company sells data-compression software used to transmit medical images, seismic data, and soon, fingerprints sent from local police stations to the FBI.

Tzannes thinks ADSL will end Aware's losses. He tells of attending a Chicago Bulls basketball game with chairman Chuck Stewart five years ago, when the company was just starting to focus on ADSL. In between quarters, a fan was given a chance to win $1 million by making a shot from the foul line to the basket at the opposite end of the court. Stewart said, "If this shot goes in, ADSL will be huge." The ball arced through the air and, amazingly, hit nothing but net.

--Erick Schonfeld