Early cable modem systems in the 1990s did not use hybrid fiber-coaxial networks, and they often had to rely on traditional telephone modems for upstream capability. Users could download media at speeds of up to 2 megabits per second—much faster than the dominant 28.8 kilobit telephone modem connections, but much slower than contemporary systems, which have potential download speeds of 10 or more megabits per second. Because customers share the cables in their local neighborhoods, speeds can vary according to the number and activities of other people in the customer’s neighborhood.

Cable modem technology allows service providers to use a 6 megahertz slice of bandwidth, the same size as a television channel, for downstream data. Up to a thousand users can use this 6 megahertz connection with the Internet, and this one channel is capable of throughput speeds of 30 to 40 megabits per second— very high speed indeed, although this bandwidth is shared among the system’s users. Online content comes over an Internet connection to the cable system’s head end and is routed through the cable modem termination system (CMTS). The CMTS sends downstream data to all cable modem users in the system, whose individual networks act as gatekeepers, recognizing whether or not the data is meant for them. On the customer’s premises, the cable is connected to the actual cable modem, which modulates and demodulates the signal. The cable modem can be internal or external to the user’s computer, and it can also be part of a digital system’s set-top box. Incoming data is de-modulated, changed from a radio frequency signal to the binary format of digitized data, which is then sent to the user’s computer. When the cable modem customer sends information upstream, the data is remodulated and converted from the computer’s digital format to radio frequency signals.

Cable modems generally provide asymmetrical access, allowing only a 2 megahertz channel of bandwidth for upstream use, assuming that customers are likely to need most of the bandwidth for downloads. Users sending data upstream send it in small bursts to the CMTS, where it is then uploaded to the Internet. Since most of these bursts of upstream data consist of mouse clicks and other small pieces of information, the narrow upstream channel is usually sufficient.

One of the earliest challenges for cable modem service was standardization. CableLabs, a nonprofit research and development consortium, established Data Over Cable Service Interface Specification (DOCSIS), as an internationally recognized standard in 1998. The adoption of DOCSIS1.0 smoothed the way for multiple vendors to enter the cable modem market, defining standard interfaces among cable modems and promoting interoperability for multiple system operators (MSOs) offering cable modem service. Currently, the industry is studying a new version, DOCSIS 1.1, which will allow cable modem service providers to offer tiered services and greater security.

Security has been a primary concern for cable modem customers, due to the shared nature of the local network nodes. Cable modem users in the same neighborhood share the local node, which can accommodate up to 500 customers. Because of this, subscribers with active file-sharing capability risk having their files viewed by other subscribers. The constant connectivity of cable modem technology compounds this risk, making it easier for others to access a customer’s computer, and also making the customer’s system more vulnerable to deliberate online attacks. While DOCSIS standard modems use data encryption to prevent other network users from reading private transmissions, other basic precautions include shutting off file-sharing capability and installing firewalls.

In 2001 the primary players in cable modem service included the largest cable MSOs, such as Time Warner, Comcast, AT&T, and Cox Cable. These systems offer broadband access via proprietary Internet service providers (ISPs) such as Time Warner’s Roadrunner system. Increasingly, however, competing ISPs are being allowed to enter these previously exclusive markets.

Originally, MSOs offered cable modem service with no choice of ISP. This meant that customers of AT&T’s system had to do business with @Home, AT&T’s broadband network, and customers of Time Warner had to do business with Roadrunner, Time Warner’s cable ISP. Other ISP companies protested this arrangement, arguing that cable modem networks should allow for competitive ISPs, allowing “open access” to the established cable networks. This suggestion was initially met with much resistance from traditional cable operators, who referred to the issue as one of “forced access” and argued that it was unfair for regulators to allow external ISPs to take advantage of MSOs’ hardware investments. The Federal Communications Commission (FCC) and Federal Trade Commission (FTC) mandated open access requirements in December 2000 and insisted that AOL and Time Warner agree to these regulations in order to receive approval for the companies’ 2001 merger. Since then, other large cable systems including AT&T and Comcast have agreed to participate in “managed access” agreements, providing a choice of ISPs to their customers while avoiding potential common carrier status. One of the most visible ISPs involved in such managed access contracts is EarthLink, formerly known as MindSpring, a national ISP.

In March 2002, however, the FCC announced that cable modem service would be classified as an interstate information service, subject to FCC regulation but distinct from telecommunications service and exempt from common carrier regulation. The National Cable and Telecommunications Association (NCTA) responded favorably to this announcement, suggesting that this classification, combined with the current competition in broadband services, will result in an atmosphere of regulatory restraint.

Traditionally, MSOs offer a standard package of broadband Internet access and cable modem rental for $30 to $50 per month. About 30 percent of this revenue goes to proprietary ISP partners, such as Roadrunner, but this billing system will change as multiple ISP choices are offered to the customer.