Comparing Cable to DSL

Cable Modem:

One of the most cited disadvantages of cable modems is the shared bandwidth to the cable head-end. You and your neighbors share the same cable which should be able to carry about 30 MBit/sec total bandwidth. However, in my experience this is not the real bottleneck. The access point to the Internet (gateway) as well as the Internet itself turn out to be slower than the local cable loop. You should see speeds 'as advertised' (multiple MBit/sec) as long as you stay within the local system.

Another problem of shared bandwidth is security. There are still some cable modem systems in existence that do not encrypt/filter traffic within the local cable loop. In this case, you will be able to look in on all the traffic sent by your neighbors (so will they be able to look in on your traffic).

The main disadvantage in my opinion is that you don't have a choice of ISPs. Cable TV lines do not have 'common-carrier' status as do phone lines. However, there are some efforts underway to change that.

xDSL:

xDSL comes in a variety of different versions (e.g. ADSL, UDSL ...). Speed should be comparable to cable modems. However, speed will depend on your distance to the next telco switch.

All solutions will provide you with a dedicated, always on, line to your ISP. You will not have any shared bandwidth or security problems. However, as you hit your ISPs gateway to the Internet you will have the same problem as cable modem users. Your ISP has to provide for the necessary upstream connectivity to accommodate all the high speed users it serves.

xDSL is likely to be more expensive than cable modems. You will have to pay for the DSL line as well as for interned access. From what I have heard this will run about $80 all together as compared to $40 for cable modem access.

(UPDATE: DSL pricing varies widely. In some areas, you may be able to get xDSL service and ISP account as a package for about the same price as cable modem access. Usually, you have the choice of a wide range of speeds. IMHO, 500 kBit/sec should be compared to  a cable modem)

Recommendation:

I use a cable modem and like it. For private use, a cable modem is most likely better. For commercial use you should compare if you get all the services you need using a cable modem (e.g. ability to run servers). Otherwise, try whatever is cheaper first and switch later if you don't like it. I don't think you will see a fundamental speed difference between the two technologies.

The Future:

It is hard to predict what will happen tomorrow on the Internet. But let me try to outline some of the trends. Cable modems may become slow as more people sign up and cable companies don't upgrade capacity. Or, alternative providers will be allowed to offer Internet service over cable and you will see the same price war that pushed ISP rates. xDSL has the ability to grow with less pain. You can always switch ISPs in case yours does not upgrade its Internet connection as fast as it should. Phone companies may improve phone lines to make higher speeds available to more remote locations. Don't use the ISDN as a reference for xDSL. So far it looks like xDSL has a much broader base of support.

Right now not many people have choice between cable and xDSL. So get whatever you can, but avoid long term commitments. Don't expect bandwidth to be free. Think about how much you actually need and get the solution that provides that bandwidth at a reasonable price. Don't ignore other factors like reliability and customer service, something that is best evaluated by talking to other users in your area.

Further Reading