WIRED FOR SPEED

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He had better wire them up quickly. The telephone companies, eyeing the same potential subscribers, have begun introducing their own high-speed services, including ISDN (integrated-services digital network), which offers four times the bandwidth of a standard modem, and ADSL (assymetrical digital-subscriber line), which approaches cable speed. And the telcos are good at running the complex switching and billing systems required to bring the Net to millions of customers.

The cable companies, by contrast, have a lot to learn. @Home's launch was delayed for months as it struggled to find a way to mesh its high-bandwidth system with the rest of the Internet, which is like an old mansion filled with narrow, twisty corridors and data-clogging culs-de-sac. One @Home innovation is to store data from frequently visited sites in giant computer files called caches--a solution that may not work if those sites change too quickly.

A bigger headache is that unlike the telephone system, cable networks were designed for one-way communication: a single strong signal transmitted down a tree-and-branch system to thousands of passive users who aren't sending any data back. Sending a high-bandwidth signal from head-end to home in such a system is easy; getting thousands of individual signals back upstream--which is what a neighborhood of people E-mailing one another represents--turns out to be a nightmare.

The main culprits are the amplifiers that sit along cable lines, keeping signals strong and clear during their downstream journey. Not only do these amps not work when messages are funneled upstream, they actually degrade signals already under assault from radio interference. "There's far more noise in the coaxial system than any of us expected to see," says a hardware executive who has been close to the cable-modem industry since its inception. "It's really difficult to drive the signals out over these lines. Every trial to date has run into that as a significant problem."

What's unclear is how effectively the problems have been solved. Jim Chiddix, Time Warner Cable's chief technical officer, acknowledges that it's taken the company longer than expected to work out glitches, but adds that "our new network works. Akron is the real deal." The solution to balky coax networks? Replace the balkiest portions with gleaming fiber-optic wire. The Akron system and those that follow, says Britt, will run fiber from the head ends to local nodes serving 500 homes apiece.

The fiber solution, though, comes only at dreadful expense. Time Warner, says Britt, spent close to $175 a home upgrading Akron for the Road Runner launch. At 300,000 homes, that comes to $52.5 million in fiber alone for one midsize market. At that rate, upgrading Time Warner's entire 11.8 million-home empire would cost more than $2 billion--and that doesn't include the cost of the modems ($400 a subscriber, but probably dropping fast) and other expenses.