Remember the utopian world of residential broadband services? It was a world in which competitive regional Bell operating companies (RBOCs), ISPs, and competitive local exchange carriers fought tooth and nail for the opportunity to string our homes together with monster data pipes. In the ideal world, there would be seamless network connectivity to enable us to work from home, where we could engage in videoconferencing, download multimedia conference presentations, or perhaps use Internet telephony to call Asia.

Those lucky enough to live in the elite areas targeted for the earliest broadband deployment are already enjoying a dose of bandwidth. But for most of the world, the broadband fantasy has been painfully slow to develop.

Experts predict that competitive pressures in the broadband marketplace will speed the delivery of residential broadband services in the next couple of years. The dominant cable companies, among them AT & T, Media One, and Charter Communications, are expected to make tangible progress in upgrading and building their digital networks, thereby increasing pressure on the leading providers of competitive DSL services.

MODEM OPERANDI

Much attention has been paid to the competition between cable modems and DSL. Despite the resurgence of DSL providers in recent months, cable-access modem technology is the favored winner in the race to provide more bandwidth to the home.

For example, according to the research firm Renaissance Worldwide, in 1999 4 percent of households worldwide were using cable compared to only 2.5 percent of households using DSL to access broadband services. By 2004, Renaissance estimates that 12.6 percent of households will use cable for broadband access and 9 percent will use DSL. And they're not the only research firm claiming cable's market leadership. According to the consultancy firm Broadband Intelligence, there were an estimated 1.6 million cable modem users and only 700,000 DSL users by the end of 1999.

Experts note that such numbers indicate that the competitive landscape for broadband services is still in its infancy, and that the most nimble providers will be rewarded early on. "I'm glad we have cable -- otherwise nothing would be happening," says Tom Burnett, founder and president of Merger Insight. "Do you think we would have DSL offerings if cable wasn't heading toward it? The cable competition has forced the telephone companies to work on broadband."

Service providers are aware of the pent-up demand for broadband. Many expect to focus on the residential customer, which analysts once considered strictly a "consumer" play. DSL providers may have underestimated the demand for business services in the home and are expected to readjust their strategies next year. For example, many of the DSL providers that only deployed their services to branch offices expect to shift their efforts this year toward residential services, resulting in wider availability and lower prices.

So what's the delay? Well, there are a number of issues. The DSL providers, which include a combination of wholesalers, ISPs, and RBOCs, have had to deal with the distance limitations of DSL, which can only be extended a few miles from the central office. Also, regulatory barriers in the local loop have slowed ubiquitous access to the Internet. Telecommunications carriers have been feverishly running fiber to the curbs and upgrading switching equipment in their central offices in order to prepare their systems for state-of-the-art digital services. In the meantime, cable operators have struggled with the capital and time constraints of upgrading obsolete analog equipment in their aging cable plants.

Jeanne Schaaf, an analyst with the market research firm Forrester Research, says that these bottlenecks are expected to be overcome this year, as DSL providers shift their focus to residential customers, and cable players like AT & T finish upgrading their cable plants. "We'll see a lot of broadband rolling out to employees who want to work at home," says Ms. Schaaf. "It looks like a residential market, but it's a mobile business market." She says that in 1999 both cable and DSL providers were busy "pushing fiber out to the curb," and she expects those efforts to position the companies for residential access within the year.

The recent agreement between SBC Communications and IBM to provide 15,000 IBM employees with home DSL access -- along with SBC's plans to spend $6 billion on DSL service -- is indicative of corporate efforts to push broadband access to residential customers.

CABLE CZAR

Although cable companies have lost some momentum in the last year, once their technical issues are resolved they stand to be as well positioned as their competitors to feed large amounts of data over coaxial cable into living rooms. "The whole proposition is very labor intensive," says Tim Horan, research director at CIBC World Markets, regarding the efforts to upgrade cable systems for digital purposes.

Analysts believe that if any single company has the potential to change the entire broadband landscape, it's AT & T. Chairman Michael Armstrong has promised to spend $1 billion to upgrade the company's cable plant, which now includes the assets of TCI (the company AT & T acquired last spring). As recently as last November, Mr. Armstrong claimed that the complicated task of digitizing TCI's infrastructure was on schedule and on budget.

Although AT & T's stock price has languished since the company announced last summer that it plans to merge with Media One (the merger is still pending), several analysts believe Mr. Armstrong's claim that AT & T has made substantial progress in the digital upgrade of its TCI assets. Many experts believe it is still on track to become the broadband powerhouse that Mr. Armstrong predicts it will be.

Cynthia Brumhall, president of Broadband Intelligence, sees broadband services "very quickly becoming mainstream." She estimates that by the year 2008, among those users with PC connections, there will be approximately 33 million cable modem subscribers and 14 million DSL subscribers. Those numbers don't include subscribers accessing the services over a television set. With all of the delays in the various broadband strategies, many experts say the market still remains wide open for the company (or cast of companies) that fills the immense appetite for bandwidth in that last mile to the home. As Mr. Horan puts it, "We haven't even started yet."