Cable Or DSL? Who Is The Winner?

JRP Reflecting

Reflection – written January  11 , 2002

The single question that I get asked the most in my travels is which is better, DSL or cable? The related question often asked is which will win? The short answer is — the consumer. However, the questions are part of the bigger issue of “speed”. The Next Generation of the Internet has many new characteristics that we will gradually begin to experience. The obvious one is Fast – more speed. The term bandwidth has become the common way to refer to the speed, or responsiveness, we experience when we are connected to the Internet. Soon we will be awash in bandwidth! If, like me, you have been in a hotel room recently and got connected at 19,200 bits per second or less and were relieved to get even that much speed you may wonder how I could make such an assertion. Bandwidth galore? At times it seems like we are starving for bandwidth; however, these are short-term limitations that we are experiencing and that will soon seem like history.

You are probably thinking that maybe where “you” live it is fast or going to get fast but where I live it doesn’t seem to be in my future to have fast Internet access. The reasons to be optimistic are two; technology and competition.

Information that travels across the Internet is broken into packets of between five and ten thousand zeroes and ones. The nice thing about the packets is that they don’t care what media they travel through. They are agnostic. Copper wires of the telephone network, fiber optic cables under the ocean, coaxial cable of cable companies, in radio waves through the air from antennas, or from satellites, or even through the power grid of the electrical system. All of these media — telephone, cable, radio, and satellite — are competing to become the primary conduit of the Internet. Given what we know about competition — how it encourages innovation in the mad scramble to grab market share — this is nothing but good news for consumers and businesses. In some ways each of the medias threaten the others and the result is that we have Adam Smith’s “invisible hand” at work on bandwidth.

Dozens of players are already placing their bets and investing in the delivery infrastructure and this will accelerate the role-out of bandwidth galore. Telephone companies in many parts of the world are aggressively rolling out DSL. When telephone companies can deliver video that provides a threat to cable companies. Cable companies meanwhile can also deliver fast Internet access through their upgraded digital cable systems. The cable “head ends” can also be connected to the PSTN (public switched telephone network) and thereby they can deliver telephony over the cable. In fact by using only a small percentage of the bandwidth available over the cable, they can offer multiple lines of telephone service to a home or small business. How many lines would you like one, two, six? With no noticeable degradation to your web access speed it is possible to have crystal clear digital telephony. This, of course, is a threat to telephone companies.

And then there are companies who are delivering high-speed Internet access through wireless and optical technologies. A technology called Local Multipoint Distribution Service (LMDS) can provide two-way Internet access at very high speed using radio waves. Using LMDS, transmission speeds of several billion bits per second (gigabits) is possible along line of sight distances of several miles. That means that a wireless antenna in the parking lot of an apartment complex or a campus will be able to deliver very high speed Internet access to thousands of users within a radius of several miles. Meanwhile there are satellite companies such as DirectPC that are aggressively entering the market for high speed Internet service. In some communities this will be a threat to telephone companies, cable companies, and wireless companies.

So who is the winner?

Many questions involving the Internet beg a binary yes/no answer. Who will be the winner, cable or DSL? The answer is Yes. We are at the very beginning and things are going to heat up. Telephone and cable companies are learning how to quickly replicate the installation process with good customer satisfaction. The speed that you get is somewhat a function of how fast the local rollout of service is. If you are the first in your neighborhood to get a cable modem you will enjoy a higher speed than DSL. As your neighbors join you the total bandwidth available is shared. As the neighborhood gets more and more users the cable company will need to upgrade the bulk capacity available to the neighborhood. Telephone companies seem to be better prepared to rollout even levels of service. Speaking of service the telephone companies are used to responsiveness when you have a problem. At least compared to some cable companies. My experience in the past has been that when I call the cable company with a problem and have to schedule a service call I get asked, “will someone be home from one to five in the afternoon a week from Tuesday?” Wireless and satellite companies are even less mature in their service capability. On the other hand the wireless companies can offer an un-tethered environment and satellite companies have a significant advantage in the many rural communities where DSL, cable modems and wireless services are unlikely to be available for quite some time.

In summary we have Adam Smith’s invisible hand at work on bandwidth. The battle is just about to heat up. This is a very good thing for consumers and for businesses. And it is happening now. If you are lucky enough to live in an area that offers more than one of the competing services you will likely see speeds go up and cost go down. If you think of a “twenty-eight-eight” connection as a one inch in diameter garden hose delivering a “stream” of content to your PC, a 1.5 million bits per second (megabit) DSL connection is like a pipe three feet in diameter! Imagine what that will mean to the content you will be able to receive. Full screen video for example. So, when will broadband be here? It is here now. Everyone doesn’t have it yet but each day more and more do. There are many implications. And, what about “WiFi” (802.11) wireless? More on both those key topics coming up in near future web log entries.

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