Technology Giants Unite to Control High-Speed Internet Access

Strategic Insights -

At a meeting in San Francisco, representatives from Compaq, Intel, and Microsoft warned local telephone companies that unless they joined their new consortium, they would be left behind in the high-speed Internet revolution. The technology giants' aim was to control access to the Internet by standardizing digital subscriber line technology, a faster alternative to cable modems. Most local telephone companies signed on, with Bell Atlantic expected to join soon.

Key Takeaways:

  • Compaq, Intel, and Microsoft formed a consortium to control high-speed Internet access through digital subscriber line technology.
  • The technology giants aim to standardize digital subscriber line technology to compete with cable modems and gain leverage over future markets.
  • Local telephone companies, including Bell Atlantic, were coerced into joining the consortium to avoid being left behind in the high-speed Internet revolution.
  • The consortium has attracted dozens of technology companies, many of which have joined in the last few weeks.
  • The group's standardization of digital subscriber line technology has alleviated concerns among local telephone companies about the costs of upgrading equipment and deploying the technology.
  • Compaq, Intel, and Microsoft have promised to take responsibility for most marketing and retail distribution, reducing the burden on local telephone companies.
  • Cable television companies had been threatening the dominance of local telephone companies, and the consortium's formation promises to standardize the technology and cooperate with local telephone companies.
  • U.S. West was an early adopter of subscriber-line technology, having deployed it in the Phoenix area earlier in the year.
  • Bell Atlantic is expected to join the consortium soon after making a bet on a rival subscriber-line technology.
  • Negotiations over hardware have been more difficult, with companies like Alcatel and Aware Inc. playing key roles in the consortium.
  • The consortium has delayed its announcement to allow for the resolution of patent disputes and disagreements among its members.

Statistics:

  • Only 100,000 households, less than 1% of Internet users, are connected to cable modems.
  • A few thousand households are connected to digital subscriber lines, the technology whose development the consortium wants to shape and accelerate.
  • The remainder of connected households (15 million) are connected through phone lines, averaging speeds of 28,800 bits per second.
  • Digital subscriber line technology could allow consumers to link to the Internet up to 30 times faster than current speeds.
  • The new technology promises speeds of up to 1,500 kbps, matching that of cable modems.

Sources:

  • Meeting in San Francisco between Compaq, Intel, Microsoft, and local telephone companies.
  • Speeches at the Networld conference in Atlanta.
  • Executives from Compaq, Intel, and Microsoft.
  • U.S. West.
  • Bell Atlantic.
  • Lucent Technologies Inc.
  • Alcatel.
  • Aware Inc.
  • Yankee Group.