IN THIS ISSUE:
Western Cable Show
A New Category Emerges
We started writing our report about the Broadband Home in April 2000, under the sponsorship of pulver.com. We also created and organized a series of Broadband Home conferences for pulver.com, through which we had the pleasure of meeting many of you.
System Dynamics is no longer associated with pulver.com and the organization of their conferences. However, we remain enthusiastic and supportive of the potential of this market. Many things we wrote about early on have moved from hypothetical to real. And it's just beginning!
The report has a new name, and we have a new Web site - come visit us at ( www.broadbandhomecentral.com ) or more simply ( www.bbhcentral.com ). The new report is sponsored by System Dynamics Inc. which provides consulting services and writes this report as a service for the Broadband Home community.
In response to many requests from readers, we'll soon begin issuing the newsletter as an HTML summary with links to the full report on the Web. This will also enable us to include pictures and make the report richer in content. However, you'll also have the option to receive a text-only version, if you prefer. If you have suggestions you'd like us to consider, don't be shy. Please drop us a note at email@example.com with your ideas.
We'd like to pause for a moment and thank our readers for sharing our enthusiasm about the potential of the broadband home market. This has been a difficult year for many people, companies and countries. We expect that with the new year will come renewed vigor and growth, both for individuals and companies as we address things that matter.
We wish you all health, happiness, peace and prosperity in 2002.
Bernd Lutz has left CableLabs and is in the process of entering the M&A business with a focus on mid-cap technology companies. The CableHome project is now being led by Rouzbeh Yassini. ( www.cablelabs.com )
Robert E. Day and Larry W. Richards have been appointed to sales management at C-COR.net. Day was previously at Aurora Networks and Richards was with Philips Broadband Networks. ( www.c-cor.net )
Richard R. Hamilton has been appointed VP of worldwide sales at nCUBE Corp. He was previously at Partminer Inc. ( www.ncube.com )
Karl Savatiel has been named President and CEO of SkyBridge LP, an Alcatel company. Savatiel was previously president of Astrolink, VP at Lockheed Martin Global Telecommunications and had been with AT&T for 25 years. ( www.skybridgelp.com )
Matt Siemens has been named Executive Director of Business Development at NuVox Communications. He was previously with Maple Optical Systems. ( www.nuvox.com )
Ben Verwaayen has been named CEO of BT Group PLC. He was formerly vice chairman of Lucent Technologies. ( www.groupbt.com )
(Please email firstname.lastname@example.org to report a change in your position.)
Company News --Acquisitions
ARRIS is acquiring Cadant for 5.25 million shares of common stock and will assume $17 million in liabilities at the closing, as well as paying up to 2 million additional shares based upon future sales of CMTS products. ( www.arrisi.com ) ( www.cadant.com )
Williams Communications has received approval by the U.S. Bankruptcy Court in Delaware to purchase the assets of iBEAM Broadcasting for $25 million. ( www.williamscommunications.com ) ( www.ibeam.com )
Bergana Communications, a developer of semiconductor products for broadband-wireless applications, has secured $12 million in first round funding. ( www.bergana.com )
Digital 5, Inc. (D5) has received a $2 million investment from Texas Instruments as part of D5's $11 million second round of funding. D5's embedded systems are primarily used in digital entertainment products that sell in high volume. ( www.digital5.com ) ( www.ti.com )
Grande Communications has raised an additional $20 million in equity from new and previous investors. ( www.grandecom.com )
NexVerse Networks, Inc. has raised $15 million in private financing and acquired the ipVerse ControlSwitch product. ( www.nexverse.com )
Internet Photonics, a new company focused on optical Ethernet networks, has gotten $31 million in first round financing. ( www.internetphotonics.com )
Liberty Media Corporation has raised its stake in UnitedGlobalCom Inc., Europe's second-largest cable operator. Under a revised agreement, Liberty will own about 76 percent of UnitedGlobalCom. ( www.libertymedia.com ) ( www.unitedglobal.com )
M-TEC WIRELESS has obtained additional funding of 1.3 million Euros. The company focuses on the emerging wireless LAN market with speeds of 54Mbps and higher, using OFDM and 5GHz technology. ( www.mtecwireless.com )
Mimix Broadband, a maker of integrated circuits for broadband wireless access, has raised $7.5 million in first round funding. ( www.mimixbroadband.com )
Opthos, a provider of IP-managed, optical products for metropolitan core networks, completed a $21.6 million second round of funding. ( www.opthos.com )
Proxim has completed a $30 million private placement of shares of common stock and warrants to institutional investors. ( www.proxim.com )
SkyPilot Network Inc. secured $24.4 million in second round financing, led by Mobius Venture Capital. The company is a next-generation broadband access provider. ( www.skypilot.com )
USA Broadband, Inc., a provider of digital television and high-speed Internet services, has completed a private placement financing of just over $5.1 million.
AT&T Broadband's saga continued this month. Earlier, AT&T received and rejected competing bids from AOL Time Warner, Comcast and Cox Communications (with Microsoft backing the non-AOL bids). Just at press time, AT&T Corp. confirmed that it will sell its Broadband unit to Comcast for $72 billion in stock and debt. The decision ends five months of negotiations and creates a huge cable operator with over 22 million subscribers. The new company will be called AT&T Comcast Corp. It will have about $19 billion in revenues and will include both companies' cable TV systems, AT&T's interest in the Time Warner Entertainment joint venture, and Comcast's interests in various entertainment businesses. AT&T Chairman C. Michael Armstrong will serve as its chairman, Comcast President Brian Roberts will be CEO. ( www.att.com ) ( www.comcast.com )
B2 (Bredbandsbolaget in Sweden) has adopted the "try it, you'll like it" approach to broadband. Since the buildings they operate in all have wired apartments, they'll send you the Ethernet card and other things you need; if you're not hooked after one month, you just send it back. ( www.bredbandsbolaget.se )
The Broadband Service Providers Association has been formed by thirteen facilities-based broadband network providers, chaired by Rodger Johnson, CEO of Knology . Other founders include WideOpenWest, ClearSource Inc., RCN Corp. and Starpower Communications. The contact is Darena Huguley email@example.com. ( www.knology.com )
Cablelabs is adopting Multimedia Home Platform specs for the OpenCable Application Platform (OCAP). OpenCable is a CableLabs initiative that seeks to standardize set-tops for retail distribution. CableLabs said that North American cable operators have agreed to use "the bulk of the MHP 1.0.1 and MHP 1.1 specifications for the OCAP portion of advanced OpenCable boxes." Although the hardware portion of OpenCable specs is complete, the middleware spec is still being finalized. ( www.cablelabs.com ) ( www.opencable.com )
Cedar Point Communications, which is developing a PacketCable based telephony technology for cable system operators, announced implementation of the solution's first lab trial with Comcast Corporation. ( www.cedarpointcom.com ) ( www.comcast.com )
Cermet Inc. is the newest member in Yamacraw, Georgia's high-tech economic development initiative designed to make Georgia a world leader in the design of broadband communications systems, devices and chips. Cermet is a semiconductor focused on technologies for next-gen telecom systems. ( www.cermetinc.com ) ( www.yamacraw.com )
Covad's restructuring plan was approved by a U.S. Bankruptcy Court of Delaware judge. The company will emerge from its bankruptcy around Dec. 20. The pre-negotiated plan will eliminate about $1.4 billion in bondholder debt and pre-existing shareholders will keep nearly 80 percent of the company. ( www.covad.com )
EarthLink has announced a partnership with Circuit City to sell its broadband services throughout the US. Depending on availability in the area, EarthLink DSL, EarthLink 2-way Satellite and EarthLink Cable will be featured in Circuit City's Broadband Station kiosks, which provide information, demos and service activation. ( www.earthlink.com ) ( www.circuitcity.com )
Espial has announced availability of the Espial Suite of iTV software applications which complements established TV middleware platforms and is targeted for set-top box OEMs. ( www.espial.com )
Excite@Home's saga is coming to an end. As we wrote last month, specialized cable ISPs which were needed at the start of the industry are becoming a thing of the past as MSOs bring the capabilities in-house. Unfortunately, AT&T's customers had a far from smooth transition after Excite@Home cut off their Internet service; AT&T Broadband migrated customers to its new network over a period of a week--but not without some pain and disruption. Meanwhile Cox, Comcast, Insight, Mediacom, Midcontinent and Rogers made various deals with Excite@Home to pay for uninterrupted service for the next three months so they can implement their transitions. Excite@Home is liquidating and will shut down at the end of February. ( www.home.net )
Gemstar International lost when the U.S. FCC ruled that Time Warner Cable's analog must-carry obligations don't include Gemstar's vertical blanking interval (VBI) technology. Although FCC rules say that cable operators must retransmit program-related material in the VBI, the FCC said Gemstar's VBI material did not meet criteria for being "program-related". ( www.gemstartvguide.com )
Hughes Network Systems (HNS) announced formation of the Hughes Broadband Alliance Program with Sun Microsystems and Polycom. Sun and Polycom will develop applications and services to operate on Spaceway, Hughes' broadband satellite platform, which launches service in 2003. HNS also announced establishment of a Spaceway application center to work with HNS customers and partners to build new applications. ( www.hns.com )
NTL, Britain's largest cable operator, is expected to be taken over by its banks in the new year, leading to a likely merger with Telewest as early as the summer, according to The Observer. The company is currently struggling under debt of £12 billion. ( www.ntl.co.uk ) ( www.telewest.co.uk )
NextWeb has announced deals for providing high-speed fixed wireless Internet access to Holiday Inn Express, Ramada Limited and Quality Inns in the San Francisco Bay Area. ( www.nextweb.net )
Pace and OpenTV have partnered to integrate OpenTV’s middleware and application technology with Pace’s interactive cable home gateway, providing an integrated ITV solution for cable operators. ( www.pace.co.uk ) ( www.opentv.com )
PentaCom, a Russia Broadband Communications' subsidiary, is deploying Motorola CMTS, cable modems, VoIP residential gateways and other equipment to offer voice and data services in their 27 city network in the Moscow region. The network plans to serve approximately one million homes over the next four years. ( www.pentacom.ru/en_index.phtml ) ( www.mot.com/broadband )
Picotent has announced their Maestro service infrastructure which can be used by broadcasters to create new revenue streams from interactive television. The service is used in conjunction with an ITV platform such as Liberate and broadcasters such as Fox Sports. ( www.picotent.com )
Predictive Networks, a maker of TV "personalization" software, announced a memorandum of understanding with Microsoft TV to provide products for targeting viewers of interactive television. Predictive's technology is intended to predict what television ads and content should be directed at viewers based on their TV-watching history. ( www.predictivenetworks.com ) ( www.microsoft.com/tv ).
Texas Instruments has introduced a cable modem reference platform consisting of TI's DOCSIS 1.1 cable modem and a 802.11b processor. The residential gateway solution will include third party software for support of a firewall, NAT, DHCP server, and web-based management. ( www.ti.com )
The UPnP Forum has created the UPnP Implementers Corp. to certify compliance with UPnP and use of its logo. They also completed the standard for Internet gateway devices. Companies with plans to support UPnP Internet gateways include: ARESCOM, D-Link, Intel, Linksys, Microsoft, NETGEAR, and Virata. ( www.upnp.org )
Verizon Wireless and Wingcast LLC are teaming to deliver a variety of voice-activated services, including emergency services, high-speed data and location-based applications to certain Ford and Nissan vehicles. ( www.verizonwireless.com ) ( www.wingcast.com )
Vivendi Universal Chairman Jean-Marie Messier, speaking at a recent NY conference, indicated the possibility of teaming Canal Plus assets with those of John Malone's Liberty Media. Liberty Media controls UPC, Europe's largest cable operator, and pending regulatory approval will become Germany's biggest cable player. Meanwhile, Vivendi announced plans to invest $1.5 billion for approximately 10 percent of EchoStar, or less than 5 percent of the combined EchoStar – Hughes following the proposed merger, which is subject to regulatory approval. Vivendi is also acquiring the entertainment assets of USA Networks. ( www.vivendi.com ) ( www.libertymedia.com ) ( www.echostar.com )
Yahoo and SBC Communications are teaming to provide high-speed Internet access to customers in SBC's 13-state region, launching in mid 2002. The service will include a suite of Yahoo! and SBC customized products and services, including many optimized for broadband. The deal gives SBC a share of Yahoo's non-subscriber revenue on advertising, e-commerce and premium features and services on the portal and gives Yahoo monthly per-subscriber payments from SBC. ( www.yahoo.com ) ( www.sbc.com )
--Broadband airplane: Good idea -- bad timing?
Several months ago we read that the age of "the broadband airplane" was on the horizon. A Wall Street Journal article included a chart comparing what US carriers are doing in first or business class to attract and retain passengers. Notable in the list is "on-demand movies" which only one US carrier in the list provided. However, Singapore already provides on-demand movies even in coach and was introducing CyberCabin, which will add Internet access and email. We were intrigued with the thought that just as many users first got hooked on broadband in the workplace and then wanted it at home, airplane video-on-demand users would soon be wanting it at home.
After the events of September 11th and the ensuing financial woes of the airlines, it looks like the effort has evaporated. Boeing's in-flight broadband service, called Connexion, suffered a potentially crippling blow on news that three major airlines -- Delta, American and United -- have decided to abandon the project. One more casualty of September 11th -- at least for now.
U.S. - The Federal Communications Commission (FCC) announced a "Notice of Proposed Rulemaking" to determine what the incentives are for incumbent local exchange carriers (ILECs) to deploy broadband services in the United States. The FCC will ask about relevant product and geographic markets for broadband services; ILECs' market power in those areas; and whether ILECs' provision of service should have any restrictions. ( www.fcc.gov/Speeches/Powell/Statements/2001/stmkp144.html )
On the legislative scene, the U.S. House of Representatives postponed its decision on the controversial Tauzin-Dingell bill, putting off a vote until March.
UK - E-commerce Minister Douglas Alexander unveiled measures to speed up growth of the UK broadband market. He also published the Government’s response to the first report by the Broadband Stakeholders’ Group, established to advise the Government on the steps necessary to facilitate the rollout of broadband services across the UK. The reports are available at ( www.e-envoy.gov.uk/ecommerce/broadband/bbsgrep_menu.htm )
Also from the UK comes a report from Oftel, the UK regulatory telecom authority. It contains a benchmarking study of dial-up, DSL and cable modem Internet services in the USA, France, Germany, Sweden and the UK. ( www.oftel.gov.uk/publications/research/2001/dslb1201.htm )
In other UK news, British Telecom announced early feedback from a trial project in Cornwall on the economic problems of rolling out broadband services to rural areas. The "Act Now" project, a joint initiative between BT and several government organizations, is funded by U.K., European government sources and BT. ( www.bt.com )
Wales also has a campaign for a broadband Wales and to build a Welsh New Media. The recent Digital Matrix Cymru Broadband/Content/Convergence conference promoted a proactive broadband agenda for Wales. ( www.digitalmatrixcymru.org.uk )
Late last month, we visited the Western Cable Show, traditionally one of the industry's two big shows. Cable shows of the past were amazing -- especially for anyone who came out of a telco background. As befit an industry which was as much about content as it was about delivering it, shows were filled with all the glamor and glitz of Hollywood. The convention floor included provocatively attired models from adult channels, celebrities signing autographs, beer and wine flowing freely, energetic young things from the outdoor channel climbing ersatz rock walls, and evenings full of competing parties.
Of course there was technology stuff too, and over the last few years it grew in scale and scope. But content was the backdrop against which everyone came, built and renewed relationships, in the family industry that cable had been. Those days are gone.
It wasn't only 9/11 and the down economy that caused the change. Industry consolidation played a huge role. If you can personally visit a handful of key decision makers to sell your products, why spend lots of money selling yourself and your company to people who don't pay your bills?
WCS attendance was down 48% over last year and the organizing committee has the challenge of determining whether and how to go forward.
Despite that gloomy description, lots still happened at this years' show. Although the specifics are about cable, many of the technologies and vendors cut across the larger context of broadband. Much of this year's show was about formation of the value chain for the next stage of industry development. Many told us that while they hadn't had much opportunity to sell to cable operators, they were delighted to be doing business development with other vendors exhibiting and attending. For some of those present, the big issues were surviving until the next show and how to get real revenues and the next round of funding.
Cable's Magic Trick: How Bandwidth Keeps Growing
How much life is left in the cable plant? There's been lots of discussion, both in this newsletter and in debates with fiber providers who think that fiber to the home is the only way to offer the full range of digital services in the future. While we remain convinced that anyone building in a greenfield environment should have their heads examined if they don't use fiber, the reality in North America is that cable passes the vast majority of residences and that over the past five years, cable operators have made large investments in upgrading and rebuilding their physical plants. Although fiber deployments are happening in new communities, it's hard to see how anyone could get the funding to build a new FTTH plant in North America, where telephone and cable company wires each pass almost all homes and most families already subscribe to both.
But how will cable operators deploy all the new services and accommodate the growing traffic which eat up their bandwidth resources? How will they carry increasingly symmetrical services in the face of limited upstream bandwidth?
While we were at the Western show, we looked at several developing technologies designed to expand the digital carrying capacity of existing cable plants and came away thinking that cable operators may be able to get enough extra capacity to phase in a lot more digital services over their existing cables.
This magic trick of creating more bandwidth comes from three technologies, and have a multiplicative effect. The first (BigBand) addresses broadcast video and increases the channel carrying capacity of existing digital multiplexes; the second (Narad) moves data services away from the traditional cable bandwidth and claims to carry additional gigabits per second over the existing physical plant; and the third (Rainmaker) claims to double the efficiency of any service through wavelet modulation.
BigBand Networks - Squeezing more video into existing channels
At the show, we met with Sylvain Riviere of BigBand Networks, which provides technology to make better use of the bandwidth assigned to current digital broadcast multiplexes.
Today's digital cable multiplexes are created by taking existing multiplexes from satellites and combining them with individual digital and encoded analog channels. With today's technology, this requires separate boxes for each incoming and outgoing multiplex, and complex and often manual systems to keep track of the channel assignments.
BigBand has a line of "broadband multimedia-service routers" which cable operators use to carry broadcast-quality video, audio and data throughout a cable system's backbone network. These routers move all the de-multiplexing and re-multiplexing into a single box, with a management software suite that includes dynamic control of variable bitrate encoding to fit more channels in a fixed bandwidth, and scheduled changes of channel assignment.
Sylvain discussed with us some additional methods they plan to add to their software. These promise to further increase the carrying capacity of existing channels for broadcast and on-demand video.
Narad Networks - Taking advantage of unused bandwidth
While BigBand squeezes more digital video into the existing channels, Narad Networks moves other IP services out of the bandwidth assigned for traditional cable delivery and into unused portions of the cable frequency spectrum.
In North America, the typical "hybrid fiber-coax" (HFC) cable plant assigns the bandwidth from 50 to 750 or 860 MHz to "downstream" delivery (from the cable system to the home) and assigns 5 to 35 or 42 MHz to "upstream" delivery (from home to the cable system). This bandwidth allocation works fine for television services, but is a problem for data services (which share the bandwidth with other cable services). The allocation is not only highly asymmetric (much more bandwidth is downstream than upstream), but even worse the upstream bandwidth is comparatively noisy; thus fewer bits can be transmitted per Hertz upstream than downstream. As more homes install cable modems, cable operators are forced to limit the upstream data rates even as users want to share music, digital photos and videos with their family and friends.
Narad's approach is to carry switched IP services in the bandwidth above the high end (750 or 860 MHz). Since cable amplifiers don't transmit the higher frequencies, Narad replaces them with combined amplifiers and GigaBit Ethernet switches. The amplifiers handle the lower frequencies in the traditional way, while the switches handle bidirectional data.
Narad's "Virtual Fiber Architecture" offers two options for switched IP services. The first uses the bandwidth from 860 MHz to 1 GHz to derive bidirectional 100 Mbps ("Fast Ethernet") service; the second uses 1 to 2 GHz to derive bidirectional 1 Gbps ("Gigabit Etherner") service. They claim that both will operate on existing cable plants without any effect on existing cable services running below 860 MHz.
Narad's approach, when and if proven by upcoming field trials, promises cable operators that they will be able to provide switched Ethernet services to business and residential customers without having to rebuild the physical cable plant (but needing to replace the amplifiers and other boxes between cable segments).
Rainmaker Technologies -- Getting more bits from existing bandwidth
Any approach to transmitting data -- whether video, voice, or data -- depends on a modulation scheme. In North American cable systems, the downstream modulation is either 64 QAM or 256 QAM, which operate in 6 MHz channels at 30 and 40 Mbps respectively. The ratio of bits per second to Hertz is the "efficiency" of the modulation scheme - thus their efficiency is about 5 and 6.5 bits per Hertz, respectively.
At the show, we met with Paul Chin and Mark Laubach of startup Rainmaker Technologies. Rainmaker proposes to use wavelet modulation rather than the traditional QAM modulation, and to operate digital services in wider channels than the traditional 6 MHz allocation. They claim that this approach will provide 170 Mbps downstream in 18 MHz (combining three 6 MHz channels) and 100 Mbps upstream - at a cost similar to today's DOCSIS modems operating at much lower data rates. This provides an efficiency gain of nearly 2:1 downstream and 4:1 upstream.
Rainmaker's modulation approach, when and if proven, applies both to traditional services carried in the existing bandwidth, as well as to new services such as those proposed by Narad. While their emphasis to date has been on cable, they are agnostic as to type of broadband access - the same modulation approach could be applied to DSL, fixed wireless, and satellite delivery of broadband services.
A note of caution: Narad is just about to roll out its first trial systems so we'll need to stay tuned on how well they actually do in the field. Rainmaker is even further from actualization -- they are seeking funding to build units and run trials. Other companies are also active in this "bandwidth magic" space and we'll be tracking how they do in the harsh real physical world.
Interactive Content: The Bandies
Although the Western Show is increasingly dominated by technology, the creative side of new media was highlighted by one mini-Hollywood-style event. The Bandies is an annual awards show, started last year by the efforts of a small group led by Michael Collette, formerly at ICTV (still a marquee sponsor) and now an SVP at OpenTV. The event is put together largely by volunteers from the industry and recognizes excellence in interactive content. Awards were given in such categories as best two-screen content, best enhanced TV content, killer app and newest new thing. The awards have their own Oscar-type trophy: designed by artist Al Honig, the trophy isn't the familiar knight standing on a reel of film, but instead mimics the shape of a TV remote.
We strongly support the Bandies efforts to promote really great interactive content. From the limited clips we saw during the awards, the industry is still taking its first baby steps toward producing such content. To be fair, we suspect that judging interactive content and applications by viewing short video clips is akin to judging a movie by still photos of a few frames. For the record, we really liked Karaoke by Oddcast.
An interesting postscript: After the awards, we left the theater to have a late dinner. As we got into the only visible taxi, we were approached by a couple of people also leaving and agreed to share the cab with them. During the ride, they told us that they'd been contestants, and said we really couldn't appreciate their application from the clip that was shown. In the back of the cab one of them proceeded to pull out his PC and demoed the real thing for us, while the other continued to sip the drink he conveniently still had in hand! They were clearly the creative types the industry hopes to attract!
Migration to DOCSIS 1.1 -- Underpinnings for new revenue
We've written before about DOCSIS, the standardized and now dominant cable modem technology in North America. As readers will remember, the original DOCSIS 1.0 has been superseded by DOCSIS 1.1, which adds QoS and the ability to carry tiered services. While the 1.1 standard has been around for some time, the first DOCSIS 1.1 cable modem termination systems (CMTSs) and cable modems were approved by CableLabs only recently. (See "Cable Broadband Maturing" in BBHR 11/14/2001 for more on DOCSIS 1.1 and new services.)
At the Western show we talked to several companies to get a feel for how long it will take to get the 1.1 technology out in the field so operators can start generating new revenue from its features.
Cadant Inc. -- A "carrier class" DOCSIS 1.1 CMTS
We talked with Tim Doiron of Cadant, whose C4 CMTS was specifically designed for DOCSIS 1.1 and its services. The Cadant C4 was one of the first two CMTSs recently "qualified" by CableLabs.
Primary telephone service is the most important new revenue stream enabled by DOCSIS 1.1, and it's no surprise that Cadant is based in the Chicago suburbs -- home to many telephone switching companies -- and that its lead technical staff come from Bell Labs. Lots of companies use the term "carrier class" and it has started to feel like so much marketing fluff; unlike some others, we suspect that these claims will be justified by Cadant's product.
Cadant's equipment is already installed at several major cable operators, and we expect to see major deployments of IP-based telephone service next year.
In last month's issue, we observed that the "next generation head-end equipment" suppliers were being acquired at a rapid pace by established infrastructure providers to provide QoS and advanced services. Cadant was the last of the independents.
At the Western show, Cadant and ARRIS announced an "agreement in principal" for ARRIS to acquire Cadant. ARRIS is the leader in "HFC" (circuit-switched) telephony over cable and makes the other CMTS qualified for DOCSIS 1.1.
We think this acquisition is good for the cable industry. It combines Cadant's technology with ARRIS's respected position, installed base with major MSOs, and widespread sales organization. The combination promises to accelerate the rollout of DOCSIS 1.1 CMTSs and the launch of new services.
Will Cable Modems Be Ready?
More than two years elapsed between the publication of the DOCSIS 1.1 specifications and the certification of the first compliant modems. During this time, many modem vendors introduced products which were said to be "upgradeable" to DOCSIS 1.1. We remember that some of the pre-DOCSIS 1.0 modems proved not to be upgradeable, so we were interested in what the key vendors had to say about the reality of 1.1 upgradeability.
At the show, we met with Chris Boring of Toshiba , whose DOCSIS modems are widely deployed by the cable industry and which makes one of the two modems certified for DOCSIS 1.1. Chris told us that Toshiba has shipped about two million DOCSIS 1.0 modems, and that 1.6 million of these (80%) can be upgraded to 1.1. Toshiba plans to put the earlier modems in for certification with 1.1 firmware -- once they are certified, Toshiba can upgrade existing modems to 1.1 with a firmware download.
We also talked at the show with Dan Moloney of Motorola , which also has a large installed base of DOCSIS 1.0 modems. Dan said that around 80% of the Motorola 1.0 modems could and would be upgraded to 1.1 once their new firmware has passed certification testing.
We found these discussions very encouraging. While some DOCSIS 1.0 modems (including many from other vendors) cannot be upgraded, we believe that the majority can be upgraded with a firmware download. Therefore many homes (three million between Toshiba and Motorola alone) already have the equipment to receive the new services once DOCSIS 1.1 CMTSs are deployed.
CedarPoint Communications - Simplifying new telephone service
We observed earlier that telephone services are the most promising source of new cable revenue. While some operators (such as Cox and AT&T Broadband) have rolled out circuit-switched "HFC" telephony, others decided to start with packet-switched telephony and have been waiting for DOCSIS 1.1. Now that 1.1 is ready, operators will need to decide which systems to deploy to support telephone service. The 1.1 CMTS is an important component but provides only the transport; many other systems are required for full-blown telephone service.
At the show, we met with David Spear, CEO of startup CedarPoint Communications. CedarPoint thinks that the full array of systems for cable packet telephony is very complex, and has created what they believe is a new category of equipment to simplify deployment. Their Cable Media Switching Systems integrate all the functionality for cable telephony -- both packet and circuit-switched -- into a single box. Instead of buying each subsystem from a different vendor and integrating all the systems, the cable operator can buy a single standards-based package from CedarPoint. Once proven, this approach should make it much easier for operators to start to generate new revenues from telephone services. If CedarPoint is correct about the need for such an integrated system, expect to see other vendors challenging them in this space.
As with many other vendors we met at the show, CedarPoint is access agnostic. While they're focused on cable, their technical approach is applicable to any form of residential broadband access.
Network Management -- Keeping services working for the customer
In the previous issue, we expressed our concerns about cable plant reliability. We've been waiting a long time to see operators ready to install systems to provide the kind of availability expected for telephone service and for mission-critical business data services.
C-COR.net -- Tying the pieces together
At the show, we met with Paula Weaver, Doug Engerman and Tom Burke of C-COR.net's Broadband Management Solutions group. C-COR is a long-time player in the cable industry, and has been assembling a portfolio of companies to provide a comprehensive approach to network management.
We were very impressed with their demonstration of the new "COR-Convergence" network management system. It ties together all the pieces -- physical plant monitoring, data from SNMP MIBs, system maps, the billing and customer care system -- to do root cause analysis and link to dispatch to fix the problem.
They mentioned that the demo was based on a system currently in a field trial, and we couldn't help noticing that the map on the screen looked just like Tampa Bay. That's the flagship system for Time-Warner Cable, so it's a good bet that TWC will take the industry lead in deploying integrated network management systems -- as they have in many other technical innovations.
( www.c-cor.net )
We also met briefly with Stargus . Stargus is not attempting to build an integrated system like the C-COR system, but rather is building the element management system to process data from the DOCSIS MIBs (in our previous issue we mentioned that Stargus has brought together the key people who developed these MIBs). Their demo showed that poor system performance as perceived by the customer could come from two distinct causes: problems in the physical cable plant, or congestion caused by user demand exceeding plant data-carrying capacity. Their systems use a balanced approach to analyse both and isolate the cause. ( www.stargus.com )
In the new year, we plan to visit both C-COR.net and Stargus, and we'll report in more depth in a future issue.
The idea is very simple. Take a big hard drive. Add a processor and lots of software. Stir in some great human interface design. Garnish with appropriate connectors and networking to audio/video components and a broadband connection. You've got a new, wonderful, money-making category! Unfortunately, neither the process of doing this, nor explaining its capabilities to consumers, nor its installation in the home is so simple.
A new category of consumer electronics products is emerging. Variously positioned as a personal video recorder (PVR) or digital video recorder (DVR), it's also appearing as a home audio center. In Sweden, it's appearing as a portable media recorder/player. It's growing into a home media server for all media.
DVRs, PVRs, Digital Audio Centers, Home Media Servers
TiVo and ReplayTV have had PVRs in the market for a while. Families that own them swear their lives have been transformed and they rarely if ever engage in "appointment viewing" (seeing shows on someone else's schedule). But it's hard for people to understand what it's all about without using one at home, and TiVo and ReplayTV's sales to date have disappointed their creators.
The satellite entertainment industry has integrated DVR functionality into their set-tops as a way to distinguish themselves from their cable competitors.
Cable is behind because it relies on buying and leasing set-tops rather than letting the consumer make the purchase decision. Cable set-top manufacturers are rushing to build DVR into their boxes -- it was featured in lots of set-tops at the Western show.
The patent lawyers will have their hands full. TiVo was granted one US patent in May, for a "Multimedia Timewarping System." This month it was granted two additional patents. The first covers functions that let DVR subscribers pause live TV, and rewind, fast-forward, play, adjust play speed and play in reverse. The second, home networking patents, cover a method for connecting TiVo's, DVRs and other streaming media devices to a home network.
Meanwhile, SONICblue (which now owns ReplayTV) was granted a patent covering "the fundamental concept of using a program guide or other user specified criteria to select TV shows for recording on a digital video recorder" and announced that it will file a lawsuit alleging TiVo’s infringement of a SONICblue patent and demanding that TiVo cease production of infringing products and pay damages on existing products.
Last month saw Disney, Viacom and GE filing a lawsuit seeking to stop SONICblue from shipping the ReplayTV 4000. They claim its ability to let users automatically delete commercials and send digital copies of shows over the Internet will hurt their revenues, and letting viewers send stored programs to others infringes their copyrights.
It's more than just video. In our October report we wrote about Luminati and SONICblue's previews of home media servers which store many hours of digital audio and video for listening and viewing throughout the home, and about Ucentric's trials of a server integrating phone calls and email as well.
This month, SONICblue unveiled its Rio Advanced Digital Audio Center, a home stereo component to store, organize and access music for downloading to portable Rio players or playing on companion Rio Receivers in the home. At a retail price of $1,499.95 it's not a mass market item. It contains a 40GB hard disk drive, integrated HomePNA and USB, integrated CD-RW drive, an LCD display, high-end MP3 encoding and is (naturally) upgradeable to emerging digital standards through future software releases.
From Blokks Comes Bokks: A Report from Sweden
We have been intrigued for some time by a Swedish company called Blokks , which has been developing a family of products for broadband service distribution in the home. We used their "broadband soap" in a recent speech to illustrate the diversity of services beyond web surfing (see "Building Blokks" at the Blokks website.)
Blokks has now introduced a new product called Bokks™ which represents somewhat of a change of focus from media distribution to a portable media server. The product won't be shipped until next year but we were invited to visit their office in Lund, Sweden for a pre-release demo.
Our friend Stefan Tordenmalm, who lives in Stockholm, was able to visit Lund to take a look at the demo, and wrote us as follows:
"There has been a lot of talk about how we will consume media in the age of convergence, and what type of devices we will be using. Many companies launch concepts with which they hope to set a de-facto standard, thereby influencing the direction of the industry. One company that went from talk to action, from future to here-and-now, is Blokks who recently launched a broadband media device called Bokks.
"Rather than launching a complete concept that is sold to operators as a system, Bokks is a product that lets today's broadband users handle their media files in a flexible way. It's a media storage/player and a set-top box at the same time. Download a movie, save it on your Bokks, and then connect Bokks to your TV to view the movie. Or transfer your mp3 music to the Bokks, bring it to the party and connect it to the stereo and play the songs. Or use it as a stand-alone unit that lets you surf the net and download files when plugged into your TV.
"Bokks supports all common media and output formats and is equipped with Ethernet and USB ports for input, and Scart and RCA connections for video and stereo output. It's powered by an x86 266 MHz CPU running Linux 2.4 and has a 20 GB hard drive. Being only slightly larger than a pocket book and weighing in at a bit more than half a kg it is easy to bring anywhere. No installation procedure is necessary, neither when connecting to a broadband network, or to a TV or stereo.
"The unit is priced at USD 500 and Blokks consider broadband users globally to be potential customers, especially those into P2P networking. Currently the unit is marketed through the Blokks website, but the company envisions that broadband service providers would offer packages consisting of broadband service and a Bokks.
"Blokks started out developing a concept, also with the name Blokks, that was based on the idea that broadband service providers would like to be complete Multi Service Providers, delivering all types of content and communication services to their customers. Over the past two years the people at Blokks became convinced that things wouldn't quite turn out like that. Rather what was happening was that many different content owners started to offer their services independently, and many broadband service providers were hesitant on how to take on a complete service offering. In this picture, one piece was missing; a convenient way for consumers to watch and listen to the media they download. That's where Blokks hopes Bokks will fit in."
Broadband Home Labs
After all these theoretical words you may wonder about the user experience of installing and using some of this equipment. Our home is a great test bed for this type of equipment -- we think of it as "Broadband Home Labs". We've got lots of PCs and audio and video equipment, a broadband connection, category 5 and A/V wiring -- plus Dave's technology skills and Sandy's impatience with things that aren't easy to set-up, learn and use. For a while we've been testing some of the broadband products we write about, and going forward we intend to do more. We'll leave detailed benchmarking to professional labs and focus on understanding and writing about how products and services fit in the context of a broadband home.
We've borrowed one of the ReplayTV 4000s mentioned above, thanks to Product Manager Lance Ohara. Next month, and on the Broadband Home Labs section of our Web site, we'll share feedback about the device, its operation and its effect on our video viewing habits.
We enjoy meeting our readers face to face, so if you're planning to be at one of the following conferences where we're scheduled to speak, please stop by and introduce yourself.
4th IEEE International Workshop on Network Appliances January 15-16, Gaithersburg, MD ( www.cmr.nist.gov/iwna4 )
Builder Magazine's Technology Conference June 11-12, Washington, DC ( www.builderonline.com )
For the past six years, we have focused our consulting services almost exclusively on the Broadband Home community. We bring to bear decades of broadband experience with big corporations like AT&T and IBM, and as independent consultants to the industry.
As analysts and writers, and as frequent speakers in and organizers of broadband conferences, we are perceived by many people as "Broadband Gurus", so we decided to adopt the name and register the domain.
We get great satisfaction from working with companies that are addressing various segments of the Broadband Home and its potential. If your company is interested in our consulting services, you can learn more at ( www.broadbandgurus.com ).