NCPA - National Center for Policy Analysis

Systems Compete To Provide Broadband Internet Service

October 4, 1999

Long-distance telephone and cable companies are spending billions of dollars digitizing the nation's cable television network to provide residential broadband access that can greatly increase the speed and quantity of data that can be carried, says a new Heartland Institute study by David B. Kopel.

  • AT&T is spending $1.8 billion to upgrade the TCI cable lines to bring broadband Internet to 10.8 million homes, and $600 million to upgrade the lines serving 4.2 million MediaOne homes.
  • Time Warner is spending $4 billion, and Comcast is spending $1.2 billion for its broadband upgrade.
  • Currently, about a quarter of the 106 million homes with cable can obtain broadband Internet access through a cable modem; by the end of 1999 there will be about 1.6 million cable modem subscribers, and about 7.3 million by 2003.

But consumers will have other choices for broadband service. For instance, Digital Subscriber Lines (DSLs) convert traditional telephone lines into high-speed broadband lines:

  • By the end of this year, Southwestern Bell (SBC) will make DSL service available to 8 million residences and Bell Atlantic to 7.5 million of its customers.
  • By 2002, 94 million phone lines owned by Bell companies and GTE will have DSL available.
  • Another type of system, wireless broadband, is likely to be a superior service for millions of rural customers; Motorola predicts there will be one billion wireless users worldwide by the year 2005.
  • And electric wires can transmit data nearly 50 times faster than conventional telephone modems, though some technical problems remain to be solved.

Despite all the competition, some Internet Service Providers (ISPs) are demanding that the courts or Congress force cable networks to give them "open" access -- turning them into common carriers open to all comers on equal terms.

Source: David B. Kopel, "Access to the Internet: Regulation or Markets?" Heartland Policy Study No. 92, September 24, 1999, Heartland Institute, 19 South LaSalle Street, Suite 903, Chicago, Illinois 60603, (312) 377-4000.


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