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Broadband's wild West
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July 23, 1999: 3:27 p.m. ET
Traditional firms may find methods fall short in nascent high-speed world
By Staff Writer Randall J. Schultz
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NEW YORK (CNNfn) - High-speed Internet access has become the wild, wild West of the Internet world, a place of unlimited opportunity where old methods often fall short.
High-speed access -- known in industry parlance as broadband -- allows consumers to download content faster and in larger doses than at the current phone line-based (analog) speeds common today.
More than 1 million households in North America already have broadband access, according to a study conducted by independent research firm Forrester Research. By 2003, that number is expected to climb to 26 million.
Still, only about 1 percent of home Internet users get their Web access in broadband, with the overwhelming majority connecting through their phone lines using a modem.
Users can get broadband access through variety of ways, although most get it through a cable modem, which uses cable television lines to access the Web.
Other methods have sprung up in fits and starts. Integrated service digital network (ISDN) lines were the first relief offered, with download times twice as fast as modem connections. However, installation and subscription rates were high.
Telecoms stepped in with their own broadband offering, digital subscriber lines (DSL), which work through your current phone lines.
DSL installation is minimal and the service costs about $100 per month, compared with the $10-$20 monthly fee charged by most phone-based ISPs, and the $40 fees charged by cable modem firms.
Still, the service isn't available in all areas and the Baby Bell phone companies pursuing it haven't agreed on standards, which holds back innovation among its offerings.
Additionally, the Bells are fighting what is often a two-front war, according to Mark Hardie, senior analyst at Forrester Research.
"The Baby Bells are fighting from losing their core businesses, local and long-distance phone services, and often don't want to shift resources to their DSL divisions," said Hardie.
"DSL is just not a priority."
Changing climates
Whether they're telecoms or media companies, established firms will be forced to adjust to changing climates and conditions, according to Eric Rasmussen, an associate consultant on broadband technology at TeleChoice.
"There's going to be a whole bunch of new products, applications and ways of using the Internet that no one has thought of before," said Rasmussen.
Initially, it was thought that content would be king of the broadband frontier, with companies like Walt Disney and Viacom (VIA) offering Net users a wide array of video and audio on demand.
Indeed, when Disney acquired the remaining shares of Infoseek (SEEK) earlier this month, Disney (DIS) CEO Michael Eisner touted the company's library of movies and television offerings as a wealth of broadband possibility.
"The problem with much of that thinking is that it's taking something from today, like movies, and merely putting it on the Web," said Rasmussen.
Rasmussen explained that just as the Internet and software industry has created opportunities for thousands of niche companies, so will the broadband industry give smaller firms a chance to serve a market that either has escaped larger firms' attentions or is too small to be financially viable.
Favoring the new
Despite claims from traditional media companies that they have the content broadband users will crave, they may find 50 year-old films a hard sell.
"Content created for TV or films won't fly in broadband," said Hardie.
Broadband access will allow a much richer form of content to be available, content that will be much more engaging and require more viewer interaction than today's TV model. That level of interaction is hard to retrofit.
"You can't take 'Seinfeld' and glue on interactivity," said Hardie.
One area that will be greatly altered is advertising. Much like products are placed conspicuously in movies, broadband content will place products personalized to the user's tastes.
It will come with a difference, however. Hardie foresees every pixel of an image having a purpose. If 20 pixels are used for a product, that product should be clickable, allowing the user to purchase it quickly. If a user likes an actress' dress, she should be able to click through it to buy it in her own size.
Such content needs to be created from scratch, and smaller, more nimble companies may have an advantage over their larger competitors, which have more overhead.
Some smaller companies already are showing promise and are worth watching in the future.
On the broadband access front, Rasmussen likes a trio of upstarts that are looking to take on the Baby Bells in DSL service. They include Covad Communications (COVD), NorthPoint Communications (NPNT) and Rhythms Netconnections (RTHM).
On the content side, Hardie thinks Robocast has potential. The company offers automated Web surfing that displays timed presentations of Web content viewers select.
Another company Hardie has his eye on is Virage. The company makes video and image search software. Virage hopes to find a niche in making digital video content easier for viewers to find, and therefore more likely to be utilized in a broadband setting.
While all of this may have you ready to get set up with a DSL line, keep in mind that the broadband industry still is in a formative stage. The Internet is still years away from being able to deliver a movie on demand in the size and quality available on a television screen.
Additionally, like a sports car on a gridlocked freeway, even users with a high-speed connection will be affected by congestion on the Internet, decreasing download times and the quality of images and sound. 
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