Business in Vancouver: News that works for you

    Rogers, BC Tel promise to shake up Internet service industry by bypassing phone lines

    by Alan Zisman (c) 1996 First published in Business in Vancouver ,  Issue #331  February 27, 1996 High Tech Office  column

    For all the talk about the World Wide Web, very few companies are turning a profit on their new sites. But companies selling services to those who want to get onto the 'Net are viable businesses. Until now, it's been an easy market to enter: lease a high-speed connection to the 'Net, buy or rent an Internet server, put in a bunch of phone lines, and start to advertise yourself as an Internet service provider (ISP). With the huge growth in customers seeking dial-up access to the 'Net, it's been hard to go wrong.

    1996 could be the shakedown year, however. An early sign was the purchase of two of the Lower Mainland's most established ISPs, Mindlink and Wimsey, by Ottawa's iStar, creating Canada's largest ISP. And after persistent rumours that Vancouver's Internet Direct (ID) was working hard to build a large customer base in anticipation of a buyout, ID announced an agreement with BC Tel under which the utility would house the ISP's 2,300 lines and manage the hardware, leaving ID to provide customer service.

    No matter what their size, however, ISPs remain small to mid-sized businesses, and they're nervously looking over their collective shoulder, awaiting further moves into the market by corporate giants, particularly the phone and cable companies.

    Users could benefit by the entry of the phone and cable companies into the Internet service market, if only to break the bandwidth bottleneck. Bandwidth is how much signal can be pumped down the wire, and at what speed. Internet users are demanding more and more bandwidth--the 'Net that used to work fine with relatively few users sending low bandwidth e-mail and news groups is running out of capacity as a much larger number of users want to take advantage of graphics, sound and, increasingly, video. Promises of 3-D virtual reality and Java applications running in real time will become increasingly difficult for the Internet to fulfil. As well, while most traditional Internet users were connected to corporate, government, or university networks, most new users are connecting via modems over the phone lines.

    Although the modem speeds have tripled over the past few years from 9,600 to 28,800 bits per second, even this is much too slow for the sorts of services people are now expecting from the 'Net. Traditional modem technology is hitting the limits of speed possible on the copper-wire phone network.

    So the phone companies are slowly replacing the millions of kilometres of copper wire with fibre-optics to allow the high speed and capacity users desire. But while some new commercial and residential developments are being built with fibre-optic capability, it will be a couple of decades before BC Tel provides this capability in my east Vancouver neighbourhood, or yours.

    An alternative is the cable-TV network. The existing coaxial cabling doesn't provide the capability of fibre-optics, but it's far superior to copper phone line. As it is, this system isn't ready for the Internet--it needs to be upgraded to provide two-way signals--but this is a much smaller job than replacing all of Canada's phone cable.

    Rogers Cable is currently testing this technology in Newmarket, Ontario, promising speeds up to 1,000 times as fast as current modems. Dubbed cable modem, it is actually a variation of ethernet, a technology widely used in business-computer networks. Users add an ethernet card to their computer, and the cable modem connects the ethernet card to the standard TV cable connection.

    Dave Masotti, Rogers' vice-president of business development, hopes the hardware costs drop to about $400 soon after becoming generally available late in 1996.

    Initially, service will be offered at a maximum rate of 27 million bits per second (Mbps) while receiving data (with a slower rate of 128 kilobits per second while responding). Eventually, service could increase to up to 38 Mbps.

    Price for the service, dubbed WAVE by Rogers, has been estimated at $39.95 per month, after a $99 installation visit--more expensive than with many current ISPs, but providing a much more powerful service. And just as TVs are always connected to the cable-TV signal, Internet users could be always connected to the 'Net, with no more need to log on for each use. Rogers expects to rent cable modems to users.

    What do these developments mean to the local ISPs, faced with one or the other of these corporate giants moving in on their market? Many are evolving into content providers, consulting with businesses that want to establish a presence on the Web but have no idea what it takes to create and maintain a Web page.

    Some will successfully make this transition as this new market evolves. Others...?

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Alan Zisman is a Vancouver educator, writer, and computer specialist. He can be reached at E-mail Alan