Death knell for residential non-cable access?

I’m getting more info, but it looks as if even access to the Internet may be offered for free. Free ISP services are being contemplated by AOL and MSN, as a response to low-cost offrerings from the RBOCS, and more notably, from TCI and other broadband cable operators. The battle-ground is the residential access market.

Currently, dialup modem acces is dropping to $9US per month in order to compete with cablemodem offerings. Considering the cost per kilo-bit ratio (CKb), cable-modems are still a better value at this time, for residential customers. There are technical and contractual reasons why cable-modems are not suitable for business use. In that arena, xDSL is making serious in-roads and there is still a market, if you are a DSL re-seller/provisioner.

As you can see in the accompanying chart, even at zero ISP cost, modems can no longer compete as an access media, unless the telco charges are dropped. This is not going to happen any time soon. Evenso, the local telco’s are the only ones able to do it.

This presents a serious threat to direct access providers like AOL and MSN, even the WebTV system is being threatened by this cable-modem roll-out, as they use dial-in modems to provide their services. Coupled with restrictive practices, by cable operators, it is difficult to even provide ISP services as a third-party on the cable-modem network. The cable-modem customer is required, contractually, to use the ISP services of the cable operator. What this means, for third-party access providers, is a serious loss in residential business. Possibly, a decimation of that market.

The consideration, of the major players, in giving Internet access away, at no cost, should be viewed as an extreme measure on their part. The collateral damage in this attempt at saving their market is to utterly destroy the local access ISPs, whose primary revenue is local access services. Granted, they won’t survive the cable-modem threat on their business, once cable-modems become available in their area, anyway.

Note that in the following chart; Monthly costs are estimated, based on California rates, and include local telco service charges where appropriate.