The Crisis in Broadband Internet Access

Article excerpt

The online world is smack in the midst of a virtual bloodbath, with company after company going under and hundreds of thousands of dot-com workers losing their jobs. Now, for those desiring simply to access the Internet at acceptable speeds, the upheaval has begun to hit home, hard.

The recent announcement that Excite@Home at , the largest provider of high-speed cable Internet access in the country, was in danger of going out of business was the latest shock. On top of this, Covad at , the largest independent wholesale provider of high-speed DSL (digital subscriber line) Internet access, just filed for Chapter 11 bankruptcy protection.

Earlier this year, the second largest independent wholesale DSL provider, NorthPoint, folded completely, leaving 100,000 customers scrambling for alternate access.

Consumers and businesses who have grown accustomed to accessing the Internet at high-speeds are starting to panic, judging from informal conversations and discussions in online forums. Many would be affected. Excite@Home has 3.7 million users through its 21 cable company partners, including AT&T Broadband, Comcast and Cox, while Covad has 333,000 users through its 200 Internet service provider partners, including EarthLink and UUNet.

There is no need for panic. High-speed access, also called broadband access, is here to stay, as is the Internet in general as an invaluable business and personal tool.

With broadband, the problem isn't its usefulness. Sure, cable modem and DSL providers have received complaints about limited availability, installation snafus, and poor customer service and technical support. But broadband provides 10 times the speed for two to three times the cost, well worth it for the vast majority of users who have experienced it.

The problem, instead, lies primarily with larger economic issues: the collapse of the Web advertising model, the "irrational exuberance" of capital markets for anything related to the Internet and the slowing of the economy. In addition, the challenge of rolling out new technology to millions of people, understandably, has been daunting.

Excite@Home got into its predicament, which involves billions of dollars in recent losses, after the merger in 1999 of cable access provider At Home with Web portal Excite. This happened during the Internet's go-go times, when Internet companies were attracting huge sums of investment capital and seeing their stock valuations skyrocket by simply making deals and being visible.

Many people expected the system to sustain itself through advertising as Web suffers clicked through banner ads to other sites, where they would presumably make purchases or otherwise generate revenue. …