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Talk about an odd couple. Cable giant Comcast said Wednesday that it will work with Vonage to help ensure Vonage's Internet phone service works well over its broadband network.

The Comcast/Vonage alliance follows other similar announcements made with other Internet companies, as the cable operator tries to convince customers that it's not looking to kill competitive services that run over its network.

Last year, Comcast was discovered slowing down peer-to-peer traffic on its network. At first the company denied it was filtering traffic. Then it admitted it had slowed down some types of traffic to manage congestion on its network. Net Neutrality proponents and consumer advocates were outraged and feared Comcast's actions were attempts to control content flowing over its network.

The outcry against Comcast has been so strong, that the company said it would work with peer-to-peer companies BitTorrent and Pando Networks to find new ways to manage its traffic. And in March, it said that it would move to a protocol agnostic network management solution by the end of the year. And in June it began testing a network management system that will slow down during times of congestion for heavy bandwidth users regardless of the application they are using.

"This collaboration with Vonage, and our outreach to many key participants in the Internet community, demonstrate that we are committed to provide network management solutions that benefit consumers and competition" Tony Werner, Comcast Chief Technology Officer, said in a statement.

But what makes the alliance with Vonage interesting is that Vonage is a direct competitor to Comcast. Vonage sells a voice over IP phone service that competes directly with Comcast's own VoIP phone service.

"Although we're competitors with Comcast, this understanding helps our two companies work together to balance the needs of network management with consumers' ability to freely access the services, applications and content of their choice," Louis Mamakos, Vonage Chief Technology Officer, said in a statement.

Video may have killed the radio star, but it doesn't have to kill the Internet.

That is if Internet service providers can figure out how to keep up with the video-driven bandwidth demand on their networks. Peer-to-peer technology provider BitTorrent says it can help.

Video consumes more network resources than any other media distributed on the Web. Even poor-quality video from YouTube eats up more bandwidth than e-mail, music downloading, and voice over IP services. And when you throw full-length high-definition video into the mix, you're talking about even more bandwidth. Depending on the compression used, a single HD video stream can eat up 20 megabits per second worth of bandwidth.

And as consumers subscribe to faster and faster broadband connections at home and sites like YouTube and Hulu come online offering all kinds of video choices, more people are watching video on the Web. According to ComScore Video Metrix, Americans are currently watching upward of 10 billion videos online a month. By the end of 2007, online viewers averaged more than one video a day.

This is just the beginning. ABI research forecasts the number of viewers who access video via the Web will nearly quadruple in the next few years, reaching at least 1 billion in 2013.

This summer's Olympic Games in Beijing marks the first real test of online video as NBC embarks upon the most ambitious online video project ever. NBC plans to offer 3,600 hours of live programming from Beijing, which translates to about 212 live hours for each of the 17 days of the Olympics. The majority of this viewing will be delivered online.

All this video is great for viewers, who are able to pick and choose what they watch and when. But for Internet service providers like the phone companies and the cable operators, it represents a massive challenge. Some providers, such as Comcast and Time Warner Cable, are testing out new ways to deal with "bandwidth hogs" or individual users who use an inordinate amount of bandwidth.

Last month, Comcast began testing a new system that will throttle back or slow down traffic during times of congestion for heavy bandwidth users. The new system was developed after Comcast faced stark criticism for singling out and slowing down peer-to-peer traffic.

Meanwhile, Time Warner Cable, which says it faces the same capacity headaches, also began testing a new billing system that charges customers who exceed their limit for uploading and downloading material.

P2P as a solution, rather than a problem
Eric Klinker, chief technology officer for BitTorrent, which has commercialized the peer-to-peer technology, says that what the cable operators are doing is a good start. But more can be done to help operators deal with the onslaught of video.

For one, peer-to-peer protocols, such as BitTorrent, which are often cited as major headaches for network operators because of the big file transfers they enable, need to be utilized rather than singled out as a source of the problem, he said.

"I think what Comcast and Time Warner Cable are doing is a great first step," Klinker said. "It gets ISPs out of the business of deciding which applications are important and which aren't. But there are enhancements to the peer-to-peer protocol, in particular, that can make it easier on all ISPs."

Peer-to-peer technology has gotten a bad rap for years. Since the days of file-sharing networks like Napster, which allowed people to exchange songs on their computer hard drives with others on the Internet, peer-to-peer technology has been demonized in the press. But the truth is that peer-to-peer technology actually allows large files like videos to be distributed more efficiently. And as more video makes it way onto the Web, it's increasingly being used. In fact, peer-to-peer traffic accounts for about 43 percent of all traffic on the Internet, according to a recent study by the network management company Sandvine.

The way peer-to-peer works is that when a user requests a video, the peer-to-peer network queries other users in the network and takes pieces of the file from different peers and sends it to the user requesting the file. This distributed architecture means that content owners don't have to assemble large and expensive data centers. It also means that a content distributor doesn't have to pay for expensive high-speed links to serve up an entire file from a single server farm.

That said, peer-to-peer protocols in the wild can eat up lots of bandwidth because peers on the network can silently and continuously upload pieces of files from their computers all day and all night, seeding dozens or hundreds of file requests. And because upload capacities are generally much slower than downloads, it can create bottlenecks and capacity crunches on the last mile of service providers' networks. For network operators that are already capacity-constrained, this phenomenon can dramatically affect performance for all users.

The enhanced version of peer-to-peer
Peer-to-peer companies, such as BitTorrent and Pando Networks, have recognized this problem and have been working with service providers, such as Verizon Communications, Comcast, and others to come up with solutions. Verizon and Pando Networks have been working on a project called P4P, which advocates ISPs share information about their network topography and use an enhanced version of peer-to-peer to locate peers in close proximity to the file request. Getting files locally can help reduce the expense associated with carrying peer-to-peer files over long distances.

BitTorrent, whose founder created one of the most popular peer-to-peer protocols used today, has also been working on a solution. The company has developed its own enhancement to the peer-to-peer protocol that tells peer-to-peer applications to stop seeding the network with content when the network is congested.

For example, if a teenager starts playing an online video game at the same time his mother makes a voice over IP phone call and his little sister is downloading music from iTunes, the protocol will tell the peer-to-peer movie application that is running in the background on their family computer to stop uploading bits of the Spider-Man movie that had been ordered from an online movie rental service and is now stored on a hard drive in their home. Instead, the network will search for the content on another peer that is on a network that is less congested.

"If there is contention in the network, my application will back off," Klinker said. "And it will automatically and seamlessly find someone else in the network to complete uploading that content. The video quality is never disrupted, and the user never knows where the content is coming from."

BitTorrent has already tested the enhancement with more than 10 million users and it's currently working with the Internet standards body, the Internet Engineering Task Force, to standardize the technology so that other peer-to-peer companies can embed it in their software client.

Klinker said that new technologies, such as the one developed by his company, as well as efforts on the P4P enhancements will help ISPs manage and control their networks so that even more video can make it to the Web without crippling the infrastructure delivering it.

And once service providers learn how to harness peer-to-peer, they will be able to develop business models that reap the benefits of the technology. For example, Comcast, Verizon, or any other TV provider could add peer-to-peer software to the set-top boxes sitting in their customers' living rooms to create a distributed peer-to-peer movie network. Instead of serving up on-demand movies from their own servers sitting in expensive-to-run data centers, these TV providers could leverage the content already stored on their customers' set-top hard drives.

"The cable and phone companies are already spending capital to put set-tops in everyone's home," Klinker said. "They could use that same hardware as part of their content distribution model. Then the user pays the electrical bill. And they pay for the bandwidth. It's just much more efficient."

Klinker said a solution, such as this one, requires a slightly different business model from BitTorrent's current business model. But he said that it's something the company is investigating.

"It's interesting enough that we're in discussions and testing some scenarios with ISPs," he said. "In general, service providers move slowly. So nothing will happen overnight. But I think we'll see some interesting changes within the next three years."

In the Bay Area for the Connections conference this week, Comcast Interactive Media President Amy Banse stopped by the CNET Webware offices for a discussion on her division's Web strategy.

As was pointed out to me numerous times when I led our conversation into non-Web site territory (such as Net neutrality and customer support), Banse's Interactive group is quite separate from the Comcast video team, the Internet service provider business, and the telephone business.

It's her group that acquired the business-to-business video platform service ThePlatform, the movie ticket marketplace Fandango (which itself just acquired Movies.com), and the contact and personal content integration play Plaxo.

Internally, Comcast Interactive runs the portal site Comcast.net (not to be confused with the billing site, Comcast.com; why can't they just have one site?), and it built the media organizer Fancast, which strikes me as the most ambitious project in the group.

Comcast Interactive Media President Amy Banse

(Credit: Rafe Needleman/CNET)

Banse's goal is to "attempt to integrate the screens," by which she means the television, the computer, and the phone. Fancast will manage the first of those two. Right now, it's a useful service for finding professional video content that you can watch on your PC.

Eventually, the idea is that if a show you want is available on your cable box, either scheduled or via video-on-demand, Fancast will be able to connect to your box and record the show for you. Or stream a show from your PC to your living room. "I really want to get the 'record to DVR' button done," Banse said, indicating that we may get that feature in 18 to 24 months.

That's a long time from now, for those of us used to tracking Web 2.0 companies. Banse agreed with me that the cable television user experience is evolving at a rather relaxed pace, compared to the agility of what we see on the Web. She believes that consumers will eventually integrate their computer and television experiences by using their PCs to pick content they like and program their DVRs through them, and that when users' DVRs are more universally accessible from the Web, it will take some of the pressure off of them to evolve as quickly as Web apps are.

Other Comcast products also support Banse's integration vision. Comcast's SmartZone, announced last year, will merge e-mail and Comcast voice mail, as well as contacts from Plaxo.

Comcast doesn't yet offer much integration for mobile users. The company is betting on WiMax to open the mobile market up to it. Banse said Comcast will offer a handheld WiMax device. Presumably, the device will have access to Comcast voice service and also be able to play content that's been queued up on Fancast. See Comcast and Time Warner to bankroll WiMax joint venture.

We wrapped up by talking about Banse's acquisition strategy. She didn't lay out any particular problem she's looking to solve through acquiring a technology company, but rather repeated her overall strategy: "creating the best Internet video experience," which means looking at search technology, video technology, content management, and "profitability across screens."

When it comes to the goal of getting content to flow seamlessly between devices and screens, Banse thinks, "we're in the bottom of the first inning."

I'd say that's a fair assessment for Comcast, with companies such as Apple and Microsoft a bit further ahead. Neither of these companies have Comcast's presence in the living room, though. It's going to be an interesting to watch as the Web battleground continues to shift from the computer to the entertainment center.

Correction: This story misstated a quote from Tom Tauke, executive vice president of public affairs and policy for Verizon. Tauke said that it was in the best interest for the FCC to make a decision on the Comcast/BitTorrent case. He did not say that it was in the best interest for the FCC to make a decision against Comcast.

LAS VEGAS--Executives from AT&T and Verizon Communications said Tuesday that it's important for the Federal Communications Commission to take action in the Comcast debate over slowing down certain forms of peer-to-peer traffic in order to prove that legislation is not necessary when it comes to Net neutrality.

Jim Cicconi of AT&T (left) and Tom Tauke of Verizon (right) appeared on a panel together at the NxtComm trade show Tuesday.

(Credit: Marguerite Reardon/CNET Networks)

Comcast, the largest cable provider in the U.S., has been under fire for months after it was discovered the company had been slowing down peer-to-peer traffic on its network. The company claimed it had singled out peer-to-peer, file-sharing traffic, because it was eating up an inordinate amount of bandwidth, which caused degradation across the rest of its customers.

Consumer groups were incensed by the tactic, and the blogosphere filled with criticism. And as a result the FCC has been examining whether Comcast violated any of the agency's Net neutrality principles. A hearing was held earlier this year, and the FCC is expected to make a ruling on the matter sometime this summer.

Jim Cicconi, senior executive and vice president for legislative affairs for AT&T, and Tom Tauke, executive vice president of public affairs and policy for Verizon, told an audience at the NxtComm trade show here that it's important for the FCC to make a decision in this case to show that the agency's Net neutrality principles are enough to keep service providers honest.

"It's in the best interest of the industry for the FCC to make a judgment on the Comcast/BitTorrent case," Tauke said. "None of us want to be in a world where there is a sense that nobody is watching what is going on. We have the FCC and the Federal Trade Commission, which have authority to enforce some policies in this area. And if they do their jobs properly, they can make positive contributions on how the Internet develops."

Cicconi agreed, saying that the FCC has the opportunity to prove to Net neutrality supporters and Congress that it can enforce its own policies and keep the Internet open.

"The Comcast case has brought the debate over Net neutrality into specifics," Cicconi said. He added that this is important because up until now the discussion has centered on hypothetical problems. And creating new laws to deal with problems that haven't yet occurred could be disastrous for the industry.

Comcast will start testing a new method for managing traffic on its network this week that targets heavy Internet users.

Starting Thursday, Comcast will test a new system that will throttle back or slow down traffic during times of congestion for heavy bandwidth users. The initial tests will be conducted in Chambersburg, Pa. and Warrenton, Va. Later this summer the company plans to expand testing to Colorado Springs, Colo.

Comcast, the largest cable provider in the U.S., has been under fire for months after it was discovered the company had been slowing down peer-to-peer traffic on its network. The company claimed it had singled out peer-to-peer, file-sharing traffic, because it was eating up an inordinate amount of bandwidth, which caused degradation across the rest of its customers.

Consumer groups were incensed by the tactic, and the blogosphere filled with criticism. The Federal Communications Commission is currently looking into the situation to see if Comcast has violated any of its Net neutrality principles.

Comcast has since begun working with peer-to-peer providers and has said that it will not target specific applications on its network. But the company contends that it still must find a way to better manage traffic on its network. And these latest tests, which will run in each market for a month, are meant to help the company figure out the best method for managing its network.

This latest approach is focused on individual users and does not target a specific application. If the network is congested, Comcast will slow down traffic for customers who are using over a certain threshold of bandwidth, regardless the applications they are running.

Comcast isn't the only cable operator struggling to keep up with bandwidth on its network. Time Warner Cable, the second largest operator in the U.S., has expressed similar concerns. The company said earlier this week that it will begin testing a new metering system in Beaumont, Texas.

The way it works is that subscribers who go over their limit for uploading and downloading material will be charged $1 per gigabyte. The test will only apply to new customers in the test region. The tiered pricing will work this way for the Internet portion of subscription packages that also include phone or video use: At the low end, users will pay $29.95 per month for service at a speed of 768 kilobits per second, with a 5GB monthly cap. At the high end, users will pay $54.90 per month for service at 15 megabits per second, with a 40GB cap.

It will be interesting to see how customers react to the both tests. Will the Comcast broadband hogs even notice their traffic has been slowed? And will Time Warner's customers take a beating if they go over their limits? I guess we'll know more when these tests are completed. Until then, if you're a customer in either of these tests, please let me know how it's going. You can reach me at maggie.reardon@cnet.com or feel free to post your comments on this blog.

As cable and phone companies slug it out in markets across the U.S., improving customer care is becoming a core part of their strategies.

For the past few years, cable and phone companies have been neck and neck in many markets. Cable companies have introduced new phone services to compete with phone companies, and phone companies have started offering competing TV services.

On the broadband front, cable and phone companies now offer similar speeds in feeds in many markets. While cable has historically been priced slightly higher than services offered from phone companies, these too are evening out in many markets with various promotional service offerings.

Now, more than ever, consumers seem to be influenced by their perception of a particular company and their own experience with customer care. What's more, the Internet has changed things. It used to be that a single disgruntled customer would influence only a few friends and neighbors. But with the advent of blogs and forums all over the Web, unhappy consumers can find a much wider audience, potentially reaching thousands or even millions.

"Customers are making choices every day," said Rick Germano, senior vice president of Customer Operations for Comcast. "They are trying to figure out which company to go with to get TV, high-speed Internet service, and now phone service. And their perception of who is offering those services is a big driver in who they choose."

Unfortunately for Comcast, its customer service has taken a beating recently. Just last month, the company got the lowest score it's ever gotten on the American Consumer Satisfaction Index, a major customer satisfaction study conducted by the University of Michigan. And last week, it ranked as the second worst company in terms of customer care in an MSN Money customer survey.

These results follow publicized tales of a technician sleeping while on the job and a hammer-wielding grandmother going crazy due to poor service. And it also follows accusations that the company throttled BitTorrent peer-to-peer traffic.

Germano acknowledged the company needs to improve its service and perception.

"Comcast takes full responsibility for what these surveys are saying," he said. "We don't disagree with the results. And we're listening. We get it. But we look at this an opportunity for us to improve. As a business we have to do it."

Comcast's main competitors, AT&T and Verizon Communications, have faired better in these surveys than Comcast. But that doesn't mean that there aren't pockets of dissatisfied customers.

In fact, my sister who recently moved to a suburb near Boston chose to get her Internet and TV service from Comcast even though Verizon's new Fios service was available in her town. Why? The reason was simple. The Verizon technician who was scheduled to set up her basic phone service didn't show up twice for his appointment.

"I knew from the phone incident that there was no way I was going to get Verizon's Fios service, no matter how good or fast the service was supposed to be," she said.

My sister isn't the only dissatisfied Verizon customer I've heard from. Several readers have sent e-mails and commented on the "Talk Back" of some of my blogs saying they have had similarly bad experiences when trying to get Fios service installed. Verizon executives acknowledge the company has experienced some growing pains, especially as it rolls out its new Fios service. But Tom Maguire, the company's customer service czar, says the company is making improvements.

"I don't think anyone wants to be known for providing terrible customer service," he said. "Everyone wants to do the right thing for the customer. So we have to figure out how to remove obstacles that are preventing us from delivering great customer service every time. If we can't deliver the best product with the best service, the customer will go somewhere else."

Winning customers over
So what are these companies doing to improve?

Comcast has hired 15,000 new customer service agents and technicians over the past 18 months to help the company answer calls and provide service to customers. It has also rolled out new high-tech diagnostic tools for agents in the field and at call centers to help better assess problems. Comcast has also started re-dispatching field technicians if it looks like a certain technician may not be able to get to his next appointment.

Customer service agents are also starting to work on Saturdays and Sundays to schedule and serve customers when it's most convenient for them. And it's offering real time online chat services so that customers can talk live with a customer account executive.

Germano said the company is trying to listen to customers more, and that includes establishing a special team within the company to follow blogs, like the Consumerist.com and online forums where many problems are often reported by customers.

Verizon's Maguire said that his company is doing something similar. Like Comcast, Verizon has a team that monitors blogs. And Maguire himself often answers e-mails from customers with complaints as part of what the company calls a "you touch it, you own it" philosophy.

The phone company is also starting to roll out a new text-messaging system that automatically alerts customers when a technician has been dispatched to a location. It will alert customers if the technician is running late.

In addition, Verizon has made big improvements in its customer care centers. One major change is that it has been staffing the fiber solutions centers, which handle technical issues with the fiber-to-the-home Fios service, with customer care representatives who can resolve billing and enrollment issues.

Verizon also has improved its voice response system to help customers resolve certain issues on their own. And it's given customers who would rather reach a human representative a way to navigate out of the voice response system.

It's implemented a new queue-busting system that monitors the flow of calls into call centers. If a center is getting overloaded with calls, more representatives are added dynamically to handle the overflow calls.

"Our goal is to make it easier for customers to do business with us," Maguire said. "It's more cost effective and better marketing to take care of the customers you already have than to go out and try to acquire new customers. And the magic formula for doing this is really the golden rule. Treat customers how you want to be treated."

Another major trend that seems to be filtering into every major broadband provider is a greater focus on standardizing processes. While local branch offices will continue to handle local service calls and dispatch technicians directly to customers, bigger service providers, such as Comcast, Verizon, and Time Warner Cable, say that it's important to make sure that best practices are shared throughout the company.

"If someone calls with a problem, chances are good that they are talking to someone in their town," said Alex Dudley, a spokesman for Time Warner Cable. "But they will still have the big company experience in that we are sharing what we've learned from our 150 million calls a year to implement best practices that can be shared across the company."

Maguire, who took over as Verizon's head of customer care late last year, said he's already started seeing an improvement.

"Improving customer service is a journey that really has no end point," he said. "We're always striving to do better. But I do think things have gotten better. One indication is there are a lot fewer calls that get escalated to my level than there were when I started."

Updated at 12:15 p.m. PDT to clarify that Comcast wasn't technically hacked, but that its domain and Web site were hijacked.

Two teenagers who say they hijacked Comcast's Web portal on Thursday also say they expect to be arrested for their actions.

"I wish I was a minor right now because this is going to be really bad," 19-year-old "Defiant" told Wired's Kevin Poulsen, who managed to get a one-hour phone interview with Defiant and his 18-year-old cohort "EBK."

"I slept in my clothes, because the last time they came, I was in my underwear with my dong hanging out and shit," Defiant said of a past raid.

On Thursday, Comcast's portal was defaced, leaving some e-mail subscribers without service. On the site, the hackers referenced their group: "KRYOGENICS Defiant and EBK RoXed Comcast."

The teens say that after they initially managed to take control of Comcast's registrar account at Network Solutions, they called the company's technical contact to tell him, but he dismissed their claim and hung up on them.

That response angered EBK, who says he then decided to redirect traffic from Comcast's site to other servers. "I wasn't even really thinking," he said. "Plus, I'm just so mad at Comcast. I'm tired of their shitty service."

Meanwhile, the teens say they did not grab user names and passwords during the hack, even though they could have.

Comcast's Web portal has been hacked, leaving some subscribers unable to access their e-mail.

A company spokeswoman confirmed that the Comcast Web page had been hacked late on Wednesday. Subscribers who tried to access the site to check e-mail or access the company's official forums were greeted with this text instead:

The hackers apparently changed Comcast's registrar account at Network Solutions, which altered the DNS servers that were used to direct Comcast.net requests. In other words, the hackers essentially redirected traffic destined for the URL Comcast.net. Instead, the traffic went to IP addresses in Germany and elsewhere, reported the blog Broadband Reports.

Comcast has stopped the traffic from being redirected to bogus servers, but users were still having trouble accessing the page as of 11:30 a.m. EDT. The reason is that it could take hours for the redirected traffic to propagate through DNS servers throughout the Internet.

So far there is no indication that any of Comcast's customers' personal or private information has been jeopardized. But the incident serves as a reminder of how vulnerable users of Web e-mail can be. Security experts recommend that users change their passwords frequently. Ideally, people should change them once a week. If that seems too difficult, changing passwords once a month is still better than nothing. Experts also warn not to use birthdates, pet names or even family names as passwords. Instead, use mixed up letters and numbers.

It's mobile or bust for cable operators that seem to be trying anything and everything to get into the wireless market.

One of the biggest shifts over the next decade in the cable market is likely to be a move toward wireless services. As cable operators face stiff competition from phone companies, cable operators large and small are looking for ways to take their services mobile.

Brian Roberts, CEO of Comcast, the largest cable operator in the U.S., talked up his company's investment in a new joint venture to blanket the country with 4G, or fourth-generation, wireless at the industry's trade show in New Orleans this week.

Earlier this month, Comcast and Time Warner joined forces with Sprint Nextel and Clearwire to form a company that will build the next-generation wireless network using a technology called WiMax. Comcast is fronting $1.05 billion as part of the deal, and Time Warner Cable is putting in $500 million to help make the new network a reality.

Roberts said during his keynote speech Sunday that he sees the network as a way to open up new applications and devices for the company.

But Comcast and Time Warner aren't the only cable operators getting into the wireless game. Cablevision recently announced it will expand its Wi-Fi hot-spot service to create an outdoor Wi-Fi network throughout its existing cable footprint. The idea is to extend its Optimum broadband service to customers on the go.

So why are cable companies, which have no history of successfully doing anything in wireless, so hot to get into the market? The answer is simple. They have to if they want to compete with AT&T and Verizon Communications.

The phone companies have introduced TV service and faster, fiber-based broadband services into cable's territories. Services like Verizon's Fios are gaining market share. And even though the phone companies haven't integrated wireless into their offering yet, it's coming.

But with the cell phone market already 84 percent penetrated--according to the CTIA--the cable industry recognizes it needs to offer a new kind of wireless service. As wireless networks get faster, consumers are taking many of their broadband applications, like e-mail, Web surfing, and social networking, on the go.

"The delineation between wireline and wireless services is starting to blur," said Mike Roudi, group vice president of wireless services for Time Warner Cable. "And we think about mobility as a long-term opportunity that occurs when new networks are built that can deliver true broadband speeds wirelessly."

Roudi said this is why Time Warner has joined Google and Intel as investors in the new Clearwire.

Comcast's head of wireless, Tom Nagel, echoed Roudi's comments.

"Customers are already showing us that mobility and wireless are important," Nagel said. "And with wireless we can let them enjoy our products inside and outside the home with ubiquitous connectivity to a high-speed network."

Cablevision is taking a slightly different route. The company is using Wi-Fi to extend its existing broadband network to more customers, a smart choice considering the number of Wi-Fi devices already in the market. Not only do most laptops come with Wi-Fi embedded in them, many cell phones are also getting Wi-Fi. In fact, in the next three years some 1.2 billion Wi-Fi-enabled gadgets will be in the market, according to IDC.

"As more and more devices become Wi-Fi enabled, whether they be laptops, iPhones, BlackBerrys, or other portable devices, we believe we can create a compelling broadband wireless network throughout our footprint for our Optimum Online high-speed data service customers," Tom Rutledge, Cablevision's COO, said during the company's conference call with investors this month.

Cablevision will build the new network in the same footprint as its existing cable infrastructure. And the network, which will take two years to deploy, will deliver 1.5 megabits per second. The service will be an extension of it broadband service and will be offered free of charge.

Cablevision already has Wi-Fi hot spots up and running in 15 highly trafficked areas, such as tourist destinations. For example, Cablevision's Wi-Fi is available on all three Bridgeport & Port Jefferson Ferry boats that connect Long Island, N.Y., to Bridgeport, Conn., a popular summertime route for many Optimum Online customers.

Risky business for cable
While it makes sense for cable operators to get into the wireless market, there's no guarantee that any of the plans that have been announced will actually work. In 2005, Comcast and Time Warner, along with Cox Communications and Advance/Newhouse Communications, formed a joint venture with Sprint Nextel called Pivot that was supposed to develop wireless services that the cable operators could bundle and resell to their customers. Two and a half years later, Comcast and Time Warner have pulled out of the partnership and Pivot is essentially dead.

Executives at the cable companies say the new Clearwire deal is different from the Pivot relationship.

"When we did Pivot it was a co-marketing arrangement with Sprint," Time Warner's Roudi said. "From a retail perspective, Time Warner was selling a Sprint-branded service and device. But with Clearwire, we will control the customer relationship including the service and phones. We will handle pricing, marketing, customer care, and billing."

Comcast and Time Warner believe that they each learned a great deal from the Pivot experience. And the companies believe they won't make the same mistakes in the new Clearwire partnership.

But many of the same challenges that the companies faced before haven't gone away. For instance, Comcast and Time Warner still need to figure out how to integrate their existing services and platforms into a wireless network. And while they may be marketing and selling the service themselves, technological integrations are still difficult when working with a partner that controls the network.

Even AT&T and Verizon Wireless, which essentially own their wireless networks, are still trying to figure out how to integrate their services.

Cable's "plan C"
But if the Sprint Nextel/Clearwire investment doesn't pan out, Comcast and Time Warner still have another shot at the wireless market with 20 megahertz of spectrum they acquired from the Federal Communications Commission's Advanced Wireless Spectrum auction held in 2006. Through a consortium called SpectrumCo., Comcast, Time Warner, and other cable operators spent $2.37 billion on a large swath of wireless spectrum that covers about 99 percent of the country.

Comcast's hiring last month of Dave Williams, the former CTO of Telefonica O2 Europe and former vice president of strategic planning at Cingular Wireless, prompted speculation that the company may be considering building its own wireless network or even buying a wireless company. But so far the company remains mum on its plans for the spectrum.

"Wireless spectrum is a valuable commodity," said Comcast's Nagel. "It's like holding the rights to oil or water. It will always have value. And it gives us flexibility for the future. We don't have any specific plans now, but over time we'll understand how to best use or monetize the spectrum."

But as cable companies, like Comcast, look to invest in new wireless networks, they might be overlooking a big opportunity. In cities, such as Philadelphia and New Orleans, citywide Wi-Fi networks built by EarthLink are being shut down as the Internet service provider abandons the network service market.

Comcast, which serves Philadelphia, and Cox Communications, which serves New Orleans, could easily buy these assets for a fraction of what EarthLink paid to install them. (EarthLink spent $20 million to build Philadelphia's network, which is 80 percent complete.)

For example, Comcast could test new wireless services using the existing network. It could see how customers use wireless broadband services outside their home, and then apply the lessons learned to services it plans to develop for the Clearwire WiMax network.

But so far, Comcast has not shown any interest in the network. The reason is likely political. Comcast was among the most vocal opponents to the Philadelphia Wi-Fi network. So justifying the purchase of these assets might be too difficult to spin.

But as other citywide Wi-Fi networks falter, cable operators in different parts of the country might consider picking up the assets. According to The Wall Street Journal, MetroFi, a Wi-Fi service provider, is also struggling. It has networks in Portland, Ore.; Aurora, Ill.; San Jose, Calif.; and other Silicon Valley towns.

"These citywide Wi-Fi networks could let cable companies put their toe in the water," said Craig Settles, an independent consultant specializing in municipal Wi-Fi. "Wi-Fi networks in many cities have failed because of the business models, not because of the technology. Cable companies already have the customer base and the services that could be rolled out onto these networks. So it makes sense."