01 Mar 2000

Have you noticed how it's never called cable TV anymore? Now it's broadband to the home. Or, two-way interactive high-speed connections.

Or wireless broadband platforms. And, if you are a former phone company, it's not telephone lines but fibre optics, or upgraded ADSL (Asymmetrical Digital Subscriber Lines).

All this jargon is about offering high-speed access to the home, driven most recently, and most urgently, by the demand for fast Web access. This is all well and good, but there is a darker side for the companies involved and the consumers waiting for quicker connections. So far, the roll out of this high-speed, land-based, jim-crackery has been pretty damn slow, both here in Europe and in the US. Europe's satellite platforms have been quicker to roll-out digital services than cable, but satellite is so far still asymmetrical, big pipe down, smaller pipe (usually via the phone line) back.

Cable in the US has been busy upgrading its networks for years, yet there are still only 1.62 million homes in that fair land that offer high-speed access delivered via cable modems and upgraded cable lines, according to a report by Sanford C. Berstein and McKinsey & Co. The tally for telco upgraded ADSL lines is even worse: less than 230,000 residential DSL customers at the end of 1999.

In Europe, the incumbent telcos have been dragging their feet on ADSL because of cost, fear of cannibalising their other services, like expensive ISDN connections, and also - until recently - less demand from consumers for higher speeds. In the UK, BT will start offering ADSL in some areas this month (March), while in France, France Telecom has come under pressure from the regulator to open up its ADSL lines for use by competing carriers.

This is similar to a wider move by the European Union to liberalise the "last mile" of all telcos networks. By December of this year, Brussels wants competitors to the former monopoly telcos to have access to their wires at commercial rates.

Meanwhile, European cable company UPC is busy upgrading former municipally owned cable networks. Its Chello Internet service unit counted 121,000

broadband Net access customers across Europe at the end of December. Today there are an estimated 500,000 broadband users - cable and ADSL - in Europe.

The problem is cost and technologies. Cable modem Internet service is not perfect: it is a shared service, so users in a particular area log onto a shared pipe. During peak usage times the speeds slowdown. Further, the fact that it is shared means there could be security issues, like your neighbour easily hacking into your on-line brokerage statements.

ADSL allows telcos to speed-up their miles and miles of copper networks, but these networks use electrical signals, not the optical pulses that characterise fibre optic networks. And the problem is that the two technologies don't mix.

So, in the US, companies like Bell Atlantic and Bell South, which have been first out of the gate to upgrade their lines to fibre optics, now find that unless they lay that fibre right to the customer's home, which is costly, they can't 'mix' the fibre backbone and the ADSL networks to form a seamless connection to users. Equipment companies like Alcatel are working on the problem, and have in tests a sort of adapter that is designed to let fibre and DSL interconnect. At the moment these adapters cost between $1,000 (£625) and $50,000 each, and handle between 24 and 2,000 lines, according to reports.

But the scene is beginning to change: by the end of this year, between seven and ten per cent of European homes will have fixed access to a broadband network, according to Jupiter Communications. Somewhat more conservatively, Forrester Research believes that broadband penetration won't be much more than 15 per cent by 2004.

The attraction of broadband pipes is the 'always on' connection allowing streamed video, interactive gaming and bundled services with pay-TV, telephony and Net connections all together. Although these services will likely stimulate similar demand in both the US and in Europe, here, the tradition of Teletext TV and the high penetration of direct-to-home digital TV services means that more Europeans may get their high-speed access via a TV satellite dish rather than through a terrestrial line. Or, given the high penetration of digital mobile phones, through these. Mobile technologies like WAP (Wireless Application Protocol), which adapt Web content for small mobile device screens, are spurring linkups between BSkyB and Vodafone, and separately, between Italy's Omnitel Pronto Italia and Lycos. Video clips to live broadcast news could be coming to a mobile near you. Nokia estimates that by 2003 there will be more wireless browsers in Europe than tethered ones! The potential of digital satellite networks to deliver rich, two-way content has caught the eye of some big players. Rupert Murdoch's News Corp. is re-organising his satellite assets with a view to creating a global wireless platform that he can float as a new company. The new company will likely include BSkyB, Star TV in Asia, Australia's Foxtel network, plus stakes in Japan Sky Broadcasting and Sky Latin America operations, and through BSkyB, the 25 per cent stake in German pay TV company Premiere World.

The new venture would have a footprint over four continents, rivalling Hughes-backed satellite network DirecTV.

Meanwhile, Richard Li, founder Pacific Century Cyberworks, is assembling a satellite-based broadband Internet network to feed multimedia content to cable systems and mobile phones across Asia.

So, who will win the broadband race? Probably a mix of players. The point is it's a big business, given the rising demand by consumers and businesses for faster, always-on access to a rich multi-media world.