multipurpose platforms cost in the range of $100 to $150. Costs are rapidly dropping for cable modems necessary for PC-based data services, and should reach the $200 to $300 range in the next year or two. Capital investment for such services is incremental, and will be matched to new revenue streams, which may in turn expand capital available for further technology deployment. Costs for telephony service over cable are difficult to quantify because they are highly dependent on penetration assumptions. Interactive television applications may require server and other technology costing as much as $500 per subscriber when widely deployed. Again, investment will be incremental and matched to new revenue streams.
The cable platform is steadily evolving to a hybrid digital and analog transmission system. Data modems already exist, and improved models are under development by such companies as Intel, LANcity, Zenith, General Instrument, and Hybrid Networks, Inc. Return path issues that have been raised in connection with cable plant upgrades do not appear to present obstacles to customer generation of content. Bandwidth demand for return signals may be very dynamic, requiring cable systems to be able to allocate frequency in an agile manner. Upstream, broadband transmission over cable is expected to be fully supported within 5 years.
Current modes of telecommunications regulation hamper cable efforts to enter the telephony business. In particular, a number of states still prohibit or hinder any competition to the entrenched local telephone company monopoly. The cable industry is seeking to safeguard competition by careful removal of regulatory restrictions. The cable industry is supporting telecommunications reform proposals currently before Congress. These proposals will clarify the rules governing the development of the NII. Regulatory relief from some cable pricing regulation will permit rational capital investment. Ultimately, competition will best stimulate development of new technology and services, and further, domestic competition will best build U.S. competitive strengths.
Current legislative proposals can provide a rationally managed transition to foster facilities-based competition for telephone service. Permission to enter the business must include provisions for reasonable access to unbundled elements of the public switched telephone network, as it is in the public interest for interconnection to be as fair and as seamless as possible.
The ability to make decisions in a competitive environment in turn will stimulate appropriate investments in R&D and technology deployment. Presumably, appropriate allowances can be made for joint ventures and mergers, especially for small companies serving lower density areas, to permit the capital formation necessary for building a truly national information infrastructure.