Wiring for the 21st Century
Competition in the cable television industry and recent mergers between telephone and cable companies likely mean two things for consumers: better service and higher prices.
The scramble is on among cable-TV, telephone, and Internet companies to connect with the latest word in fast, convenient technology for delivering consumer communications.
That word is "broadband," and it means a wider, faster information superhighway - a single home connection that carries television, telephone, and Internet services at lickety-split speed.
But at a price.
AT&T's recent purchase of broadband king MediaOne means 8 million new homes will have access to this communication technology of tomorrow.
And more recently, America Online's agreement with Direct TV will provide Internet access on customers' TVs over phone lines or via satellite.
Soon more than 25 million Americans will gain access to the Internet with only a television set and a set-top box, like the ones cable TV companies provide today.
That box will provide faster Internet access, extra phone lines for pennies a month, and interactive TV - where you can choose among 500 channels, talk back to hosts, buy products or services, and ask for more information about events.
It also means monthly telephone, cable TV, and Internet service bills will be wrapped into one.
"I think people would be drawn to one service for one price," says AT&T spokesman Mark Segel.
But it's likely to be a whopper of a price: $200 a month, says Brian Adamik, a consultant with the Yankee Group, a Boston-based firm that focuses on the communications industry.
AT&T wants to charge a premium for the convenience of bundled services, says Mark Cooper, director of research at the Federal Communications Commission.
While Mr. Segel won't speculate on what AT&T's high-speed cable Internet access may cost, he argues that many people who currently use premium Internet, cable, and long distance services already pay more than $200 a month combined.
"Initially, bundling doesn't necessarily equate to lower prices," Mr. Adamik says. "In the long term, prices should come down," as companies begin to compete for individual customers.
Meanwhile, wealthy communities, whose residents can afford $200 a month, will get the technology first - what Mr. Cooper calls "electronic redlining."
"The economics are such," says Adamik, "that [utilities will install the services] in neighborhoods with the heaviest use" of Internet and phone services, he says.
The first customers to get "broadband" service, he says, will live in major metropolitan markets and scattered small towns served by aggressive providers such as AT&T.
Rural areas - more expensive to service -may have to wait up to 15 years.
In addition, it will take at least three years before cable companies begin competing for local phone service, Adamik says. Such competition won't become widespread for 10 to 15 years
Even then, competition will reach only perhaps 75 percent of US households, he says, while people in rural areas may have only one provider -and thus higher rates.
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