Major cable operators are gearing up to deliver Internet access, touting CD-ROM quality graphics and data downloading 50 to 100 times faster than a 14.4 modem.
"In some ways, the Internet is going to supplant cable TV," said Michael McGrath, managing director of Pittiglio Rabin Todd & McGrath, a high-technology consultancy in Waltham, Mass. "Many people now would rather surf the Internet than cable. It will compete for share of the mind, so if I were a cable TV person, I would try to get into it."
Internet access could be a billion-dollar industry for U.S. cable operators.
The industry believes it has an entry with customers because it can package online access with premium cable TV channels. Tele-Communications Inc. executives say cable operators can generate 7 million customers in five years.
The Jones Interactive division of Jones Intercable already is offering access to the Internet as part of a demonstration project in Palmdale, Calif.; Alexandria, Va.; and Littleton, Colo.
"The things we're doing in the broadcast media, like taking a full video channel to deliver school lunch menus, don't make sense for that medium any more," said Jim Ginsburg, senior information officer for Jones Interactive.
Right now, the Internet project is aimed at schools and public libraries, but it could serve as the framework for a commercial service.
Time Warner's publishing and cable units also are working to create a high-speed online service.
Commercial rollout will start next year in an unspecified number of markets, said Paul Sagan, senior VP at Time Inc. New Media. The service has been testing with 500 modems in Elmira, N.Y., since last summer.
Connectivity alone is not a sufficient wedge into the marketplace, Mr. Sagan said.
For $25 a month, the Elmira offering includes local information from a newspaper, library, advertisers and the Chamber of Commerce; a Web browser; and several Internet accessories such as file transfer protocol, newsgroups and gopher. The cable operator also will sell access to such commercial services as CompuServe and Prodigy.
TCI is placing its long-term Internet future into the hands of a joint venture known as @Home (see related story on this page). When it begins its rollout in Sunnyvale, Calif., next spring, @Home will feature Internet access along with an ambitious collection of content providers.
For now, TCI is testing its TCI-MET service in East Lansing, Mich. (http://www.tcimet.net).
The service has about 20 commercial customers and earlier this month launched its consumer service. Residential charges range from $45 to $95 per month depending on speed; competitive Internet access services run from $19.95 to $29.95 a month.
Commercial service runs $69.95 per month for one computer hookup and $450 per month for eight computer hookups.
TCI-MET's Web site carries advertising from several local businesses as well as the TCI Mall, an advertising marketplace. The company also is working with the Dating Network, a singles club, to create an online version.
"As @Home is not launched yet, this project coincides nicely. But @Home is probably going to be a much more marketable project," said John Liskey, director of governmental and public affairs for TCI North Central.