Fast Modems: All Dressed Up, With Only a Slow Way to Go

All About/Computers Talking to Computers

Fast Modems: All Dressed Up, With Only a Slow Way to Go

By John Markoff
The New York Times

February 25, 1990

Ever since personal computers became common in the late 1970's, users have wanted their computers to communicate. Modems answered their needs by allowing computers to exchange data over the telephone. During the 1980's, modems opened up a world of information, including electronic mail, computer data bases and services ranging from airline reservations to stock trading.

But computer technology has raced ahead so quickly that modems now seem like frustratingly narrow pipelines, restricting the flow of information. Though personal computers could send millions of characters of information each second, modem technology has been held back by the limitations of the telephone system and clashing industry standards.

Modems look like flat boxes or circuit boards about the size of books. They convert the computer's digital 1's and 0's into a series of audible tones. At the other end of the phone line a second modem converts the tones back into 1's and 0's - to be interpreted as numbers, letters or figures.

IN THE BEGINNING

Low Speeds, Lack Of Understanding

Modems were invented in 1954 by British Telecom but came into their own with the personal computer era. By the mid-1970's, the first personal computers used modems that could send 30 characters, or about 300 bits, per second.

Most modems still only communicate at between 120 and 240 characters per second. A new generation of modems ranges from 1,000 to 2,000 characters per second - but at a price. While today's standard modems can cost less than $100, the new high-speed versions can cost $1,500 or more.

Computer speeds, meanwhile, have increased phenomenally. Standard office computer networks can send data at hundreds of thousands of characters per second. Yet the theoretical limit of modem communications is just 5,000 to 6,000 characters per second because of the limited capacity of the telephone network.

There are other problems. Modems remain complicated to use. ''There is a long way to go,'' said John C. Dvorak, a computer columnist. ''Only about a quarter of those who own modems know how to use them.''

But there are reasons that modems might become much more common. International high-speed modem standards have been worked out to end a war that has left users with many incompatible products. And during the 1990's, the advent of a digital telephone network will boost data communications speeds significantly.

A MARKET SLOWDOWN

Competition and Incompatibility

Modems are of two general types: some connect to ordinary dial-up phone lines, others to dedicated high-speed lines or advanced computer networks. The United States market for dial-up modems - $420 million in 1989, according to Dataquest of San Jose, Calif. - is dominated by such companies as Hayes Microcomputer Products Inc., Microcom Inc., U.S. Robotics Inc. and Acer America Corporation. Some of their hottest products are laptop computer modems.

But industry competition over prices has hurt even the market leader, Hayes. Last year Hayes bought Practical Peripherals, a maker of inexpensive modems, and, in October, laid off about 10 percent of its own work force.

Although modem sales by units will continue to grow, many analysts say the rate will slow. And revenue is expected to stay flat as prices fall. Only one-third, or about 18 million, of all desktop personal computers have modems, a share analysts expect to remain constant. They say that other communications options, such as office networks that permit modem-sharing, will slow growth. Some even say that digital telephone networks will make modems obsolete. But several modem companies appear ready to exploit the new networks.

For years, the market for higher-speed modems grew slowly, despite the prospects of great savings in telephone time. The problem: Modems from one manufacturer often could not talk with modems from another. Each modem maker wanted to set the industry's standards. To the rescue came the Comite Consultatif International de Telephone et Telegraphie, the United Nations of the telecommunications industry. In 1984, the group issued standards to allow all 2,400-bit-per-second modems - which can send the equivalent of a double-spaced typed page in seven seconds - to communicate with each other.

All electronic information and mail services, such as MCI Mail and Compuserve, conform to the new standard, and compatibility has greatly improved sales. Larry Cynar, a market researcher at Dataquest, estimates that last year 1.4 million 2,400-bit modems were sold to consumers; he predicts sales of 2.4 million in 1993.

The new standard has been just fine for medium-speed communications, but manufacturers and modem speeds have raced ahead of the Comite. In the late 1980's, leading high-speed modem makers all introduced their own standards for communications at 9,600 bits-per-second and faster.

The Comite stepped in again in 1988 and issued new high-speed standards. The group also set standards for features that can, at times, quadruple modem speeds to 38,400 bits per second. Error-correction automatically resends information that has been garbled by noisy phone lines. Data compression uses mathematical formulas to speed data transmission.

A SHIFT TO DIGITAL?

Betting, Again, On New Technology

When the nation's telephone network goes digital, computer users will find they can send in one second a message that might now take minutes. An Integrated Systems Digital Network, or I.S.D.N., will allow computer communications at about 6,400 characters a second, or higher for an additional cost. With digital telephones, modems will be replaced by devices called terminal adapters that link computers to a digital telephone network.

The regional telephone companies are investing billions of dollars to replace existing telephone equipment with digital devices. But many analysts believe that customers will resist the expense of digital telephones.

Industry specialists say that by the end of 1992 there will be about four million digital phone lines installed in the United States, less than five percent of all telephones. By the year 2000, there might be 30 million.

Some modem manufacturers are already betting on digital telephones. Hayes has announced a complete line of terminal adaptors. They cost more than $1,000, but prices are expected to fall.

Other modem companies are more skeptical. ''I don't think anybody really knows how quickly the shift to I.S.D.N. will take place,'' said Casey Cowell, who founded U.S. Robotics in 1976. Mr. Cowell said Europe is likely to be first to offer a digital telephone network, followed by the Japanese; the United States is likely to be the last country in the industrialized world to offer the service.

Modem makers also are racing to adapt to facsimile technology, which has hurt their sales. And no wonder: Slipping a document into a fax machine and dialing a phone number is easier than learning to use a personal computer and modem.

But in the mid-1980s, the modem industry took document transmission one step further with facsimile modems for personal computers. A fax modem can transmit a computer document by telephone to a fax machine anywhere in the world. Every fax machine can serve as a remote printer. And new software allows facsmile modems to send sharper pictures than fax machines.

TRANSMISSION ON WHEELS

When cellular telephone technology meets modem technology, even cars will be able to exchange computerized information. Several modem manufacturers see a large new market for cellular modems. But building cellular modems is challenging: They require error-correction circuitry and software to overcome poor cellular transmission quality and handle the breaks when a cellular phone is handed from one cell to the next.

The first cellular modems were introduced last December by Telebit Corporation of Sunnyvale, Calif. Lewis F. Ellmore, Telebit's president, says that applications like the sending of medical data from emergency teams returning to a hospital from an accident scene will help the cellular modem market grow quickly. Insurance companies that want to report and approve claims at accident sites hope to use digital cameras and the cellular network to transmit pictures of damaged cars, houses and boats, he said. And if the telephone system fails, cellular modems would allow emergency data communications with areas where phones are working, he added.

Some analysts predict that data communications will account for 10 percent of cellular air time in the early 1990's. Perhaps harried executives will begin saying, ''Have my car call your car and let's do data.''

CORRECTION-DATE: March 11, 1990, Sunday, Late Edition - Final

CORRECTION: The ''All About'' column on Feb. 25, discussing modems, misidentified a company listed among those dominant in that market. It is Multi-Tech Systems Inc. of Mounds View, Minn., not the Acer America Corporation. The article also referred incorrectly to the Telebit Corporation. It was one of the first makers of cellular telephone modems, not the first.

GRAPHIC: Photos: Ancient history: A modem from the mid-1970's; The new high-speed modems can transmit 100 pages of text in a minute; graph: 1989 modem shipments, by Baud rate, (Source: Dataquest); Charts: modem price as gauged by its speed; cost and time of transmission (Source: Company reports)