Last month, I discussed Andy Kessler’s idea that we are all billionaires now. His point relates to the exponential rise in the power of technologies, as measured in terms of capability-per-dollar. One of his examples relates to T-1s.

Up until the late 1990s and before the cable modem, if you needed anything more than the 56 kilobits per second (Kbps) available through telephone dial-up, T-1s were your only option. Developed in the early 1960s to deliver several dozen voice calls over copper wire, the T-1 later referred more generally to any data circuit running at the original 1.5 Mbps line rate. Twenty years ago it sold for about $12,000 per month, as Kessler recounts. Now consumers who have gigabit fiber to the home can receive more than a thousand times as much data, at a tiny fraction of that earlier cost.

DOCSIS and Yassini

The cable modem’s history, much of which resides on this Cable Center site, has a similar story. The first products were big and expensive. According to Rouzbeh Yassini, who founded LANcity in 1990, they consisted of eight, fifteen-by-fifteen circuit boards and were “half the size of a refrigerator.” These big LANcity boxes took several months to install, were not compatible with all cable systems and cost $15,000. But they solved real networking problems facing universities, military bases and large hospitals.

Yassini commissioned a new design and more efficient silicon, which brought the price down to $5,000. By 1995, LANcity had built a third-gen “plug-and-play” modem for less than $500.

Then the market shifted. First, the cable industry established the initial Data Over Cable Service Interface Specification (DOCSIS) standard in 1997. (Yassini drove that project for several years, becoming CED’s “Man of the Year” in 1998). Then the cable modem became an interoperable, mass market consumer electronic device. Common early configurations included downstream speeds of 128 Kbps, 512 Kbps and 2 Mbps.

Over the past two decades, as the price for modems has remained relatively stable, speeds have dramatically increased. The latest generation DOCSIS 3.1 technology supports up to 10 Gbps (or 10,000 Mbps) downstream speeds, with the full-duplex version promising multi-gigabit symmetrical services. Demand for 10 (or even 1) Gbps remains more a function of business than residential customers, and pricing is tiered accordingly. But as with as with fiber, cable modems now outperform legacy T-1s in both cost and speed by many orders of magnitude. That’s progress, on an exponential scale.