The nation's largest cable companies will begin offering access to the Internet and other online services next year at speeds hundreds of times faster than regular telephone lines.
Online access has replaced interactive TV and local telephone service as the most important short-term growth opportunity for cable companies, executives said Wednesday on the third day of the annual PaineWebber Inc. media conference.Tele-Communications Inc., Comcast Corp. and Cablevision Systems Corp. will all have online access in a few cities next year. Cox Communications Inc., which is experimenting with the idea, hasn't set a firm timetable for rolling it out.
"This is a market opportunity now," said Brian Roberts, president of Comcast. "Computers are raging. This is a lob ball we should be able to hit out of the park."
The small signal capacity of telephone lines means data are delivered slowly, something that has hindered online services and the Internet. Many people try online services, grow frustrated with the speed and quit.
Personal computer industry executives for more than a year have exhorted the telecommunications industry to step up the pace of change. Speed has taken particular significance with regard to the World Wide Web, where sophisticated graphics, represented by many data bits, are common.
"The speed issue is the biggest thing holding back the Internet today," said Eric Schmidt, chief technology officer at Sun Microsystems Inc. "It's the difference between driving on the highway and flying on a jet airplane."
He said access through cable will make it possible to deliver video on the World Wide Web and create other new uses.
The confidence expressed by the cable executives is unsettling to telephone companies, which will have to spend billions to upgrade their lines to have the signal-carrying capacity of cable.
In the meantime, phone companies are trying to make it simpler for consumers to get ISDN lines, which can carry twice as much data as ordinary copper phone lines but still fall far short of cable's capacity.
By providing data services soon, cable companies could get an edge in selling a person or family on voice and advanced video offerings when they are developed.
TCI is the furthest along in its data service plans. Its joint venture called "home," formed with the San Francisco venture capital firm Kleiner Perkins, will begin service next spring in the San Francisco-San Jose area.
The company plans to charge around $30 a month for the service and an extra $10 a month to provide modems to people who don't already own them, said Barry Schotters, senior vice president of TCI.
It will offer its data service in at least two other cities, possibly more, by the end of the year. Candidates include Chicago, Dallas, Denver, Hartford, Miami, Salt Lake City, Seattle and Portland, Ore.
Schotters noted the profit potential for data access services is very high since they can be added to cable systems at little cost.
Both TCI and Comcast, which plans to offer cable access in Baltimore first, will develop their own software "front door" to the Internet and provide support services to customers. Cablevision and Cox executives said they are still considering several options.