Observation: AT&T purchases MediaOne and T.C.I. and announces by end 2000 it will have 400,000 – 500,000 cable based telephony customers. As of March, the company had 20,000 customers.

Inference: By deploying the technology before consumer demand was evident, companies were open to losing a costly bet.

Observation: MediaOne reports that between 4 and 5 percent of its customers are accounting for 85% of system usage.

Observation: T.C.I. discovered that customers were using cable modems to operate entire Web sites, gobbling bandwidth and slowing speed for other users.

Observation: Cox@Home contacted Napster users on their system to insist they stop using the program.

Observation: Typical cable nodes serve 10,000 homes. To address the capacity problem AT&T and other cable companies began adding infrastructure to reduce the number of homes at each distribution point in order to deliver the speed they promised. Each alteration requires a half-day of crew time and $5,000 in materials (directly cutting profitability).

Observation: AT&T was deploying DSL broadband service at $25.95 per month, hoping to build a customer base for future wireless broadband deployment. The DSL price was 25 percent less than Southwestern Bell’s regular phone service (further cutting profitability prospects).

Inference: As cable modem usage increases, transmission speed decreases, reducing customer satisfaction. Unanticipated "bandwidth hogs" added unforeseen expenditures for industry players.

Observation: When various individuals installed BlackIce Defender software they discovered hackers trying to access their computers, sometimes several times per day. One such user, a lawyer, filed suit against Pacific Bell, his ISP, after receiving no help from them.

Observation: A Montreal engineer discovered a Trojan-horse virus embedded in his system after he installed Symantec’s Norton Internet Security 2000.

Observation: Broadband-based computers always "on" Internet connections leave users vulnerable to intrusion and security breaches.

Observation: A family composed of an MBA wife, "computer whiz" son and (literally) rocket scientist husband, tried to install and network DSL service, but experienced technical, service and infrastructure problems. They contacted Pacific Bell to install the service and learned that the company staff did not know much about the technology.

Inference: Home deployment was not user-friendly.

Observation: Nortel Networks and Lucent Technology joined to form the Broadband Content Delivery Forum (along with Enron, AT&T Broadband, British Telecommunication, NBC Interactive and Qwest).

Observation: Lucent also funded independent GeoVideo Networks to deliver programming, real-time video and other applications over fiber networks.

Observation: Broadcom Corporation, the integrated circuits manufacturer, invested in Broadband Interactive Group to expand the availability of broadband-based content.

Inference: The system lacked the content necessary to drive any real market demand.

Conclusion: Industry expectations for consumer demand for broadband were not reflecting reality and rollout could be significantly slower and costlier than anticipated.