BBH Report Home Page
January 21, 2002 Provided by System Dynamics Inc.

IN THIS ISSUE:


Heard on the Net

News about People and Companies Influencing The Broadband Home


People News

Bari Abdul has been named VP of Marketing at SONICblue. Abdul has held executive positions at such consumer companies as Procter & Gamble, PepsiCo and Egghead.com. ( www.sonicblue.com )

Jeff Abramowitz has joined Broadcom to support marketing efforts for their wireless LANs. Jeff previously headed WLANA. ( www.broadcom.com )

Anthony Armenta has become Executive Director of the Wireless LAN Association (WLANA). ( www.wlana.org )

Jay (J. W.) Braukman III joined BTI Telecom as chief financial officer. He was previously CFO of GE's Information Technology Solutions business unit. ( www.btitele.com )

Hong Sun Lee was appointed CEO of Korea Thrunet Co. Ltd. Lee has been representative director and vice chairman of Korea Thrunet since February 2001 and was previously president and CEO of Softbank Korea Co. Ltd. ( www.thrunet.com )

Dave Marples has joined Global Inventures as VP of European Operations. He was formerly with Telcordia. ( www.globalinventures.com )

Pat Russo has joined Lucent Technologies as President and CEO. She had previously been Eastman Kodak CEO, but her long-term background had been with AT&T and Lucent. ( www.lucent.com )

Steven West was named COO of nCUBE Corp. He was previously president and CEO at Entera Inc. ( www.ncube.com )

(Please email people@bb-home.com to report a change in your position.)


Company News

--Acquisitions

Coller Capital has purchased 80 percent of Lucent New Ventures Group. Terms of the deal were not disclosed, but industry speculation put the amount at about $100 million. ( www.collercapital.com ) ( www.lucent.com/newventures )

Covad Communications bought the assets of InternetConnect for $7.35 million in an auction by a US Bankruptcy Court. Covad has indicated that end users on the InternetConnect lines will be offered similar Covad services and will experience minimal service disruption. ( www.covad.com )

CSG Systems International is buying the billing and customer-care assets of Lucent Technologies for about $300 million. These assets consist mainly of Lucent's previously acquired Kenan Systems. ( www.csgsystems.com ) ( www.lucent.com )

Echelon has agreed to buy BeAtHome , a platform provider for web-based monitoring and control applications to the home, commercial and utility markets. ( www.echelon.com ) ( www.beathome.com )

Lantronix has acquired Premise Systems Inc. The companies are in synergistic businesses related to adding intelligence to and managing devices that have been network- and Internet-enabled. Terms of the agreement were not disclosed. ( www.lantronix.com ) ( www.premisesystems.com )

Netro Corp. is buying the fixed wireless assets of AT&T Wireless , formerly known as Project Angel, in a deal valued at $45 million. The acquisition includes the development team, a license to intellectual property, equipment and proprietary software assets. Netro intends to market the technology to international customers and will begin adapting the technology immediately. ( www.srtelecom.com ) ( www.attws.com )

Paradyne Corp. acquired Elastic Networks for approximately $28.8 million in stock. ( www.paradyne.com ) ( www.elastic.com )

Western Multiplex and Proxim agreed to merge their businesses under the Proxim name. The deal is valued at roughly $216 million. The officers of the combined company will include Jonathan Zakin, currently Western Multiplex's chairman and CEO, who will retain those titles and David King, currently Proxim's Chairman and CEO, who will be president and COO. ( www.wmux.com ) ( www.proxim.com )

--Funding

Boingo Wireless has raised $15 million in first round financing (see below). ( www.boingo.com )

Ensemble Communications , a supplier of systems for broadband wireless access, announced $25 million in additional equity financing. ( www.ensemble.com )

Everest Broadband Networks , a metropolitan broadband services provider, completed its fourth round of financing of $16 million, bringing their total capitalization to $88 million. [Editors Note: We really like the positioning of broadband on their opening Web page: "The new essential. Electric lights, indoor plumbing, broadband?"] ( www.everestbroadband.com )

Motorola has made an investment in Magis Networks to help fund the continued development of its 802.11a wireless chipsets. The companies also announced a technical services agreement to accelerate adoption of Magis' 5 GHz wireless technology as part of a broadband-cable home networking standard. ( www.motorola.com ) ( www.magisnetworks.com )

Radiant Networks , a wireless broadband technology vendor, received $23 million in its third funding round. ( www.radiantnetworks.com )

SBC Communications agreed to purchase a 3 percent stake in Yahoo from Softbank America Inc. The deal expands on an earlier agreement to offer a co-branded, premium DSL and dial-up service to be launched in mid- 2002. Financial terms were not released. ( www.sbc.com ) ( www.yahoo.com ) ( www.softbank.com )

--Other News

AT&T Broadband launched its home-networking service using networking equipment from Linksys. AT&T Broadband will charge an additional $4.95 a month for each additional IP address on the home network and reportedly gets a cut on Linksys equipment sold via the program. ( www.attbroadband.com ) ( www.computers4sure.com/linksys/store/att_startup.asp )

Boingo is a new Wireless ISP headed by Sky Dayton, the founder and chairman of EarthLink. The company will give customers access to over 750 US public high speed Internet connections in places like hotels, airports and coffee shops, using Wi-Fi (802.11b) wireless broadband "hot spots". Boingo software will locate a signal in these locations and connect to the Internet at speeds of up to 11 Mbps with a single log-on. Boingo is partnering with local Wi-Fi networks and connecting them. ( www.boingo.com ) ( www.earthlink.com )

Broadjump has added European cable company NTL to its list of customers using their software for installation and customer service. This is Broadjump's first European win after being adopted in North America by operators such as AT&T Broadband, Bell Canada, BellSouth, Charter, Cox, SBC, Sprint, and Time Warner Cable. ( www.broadjump.com ) ( www.ntl.com )

CableLabs published the OpenCable™ Application Platform (OCAP™) software specification, OCAP 1.0. OCAP enhances the ability for consumer electronics manufacturers to build and market set-top boxes or integrated television receivers directly to consumers. Informal interoperability tests will start in March. OCAP is the product of several year's work by the cable industry to hammer out open specification for interactive entertainment applications running in digital set-top boxes. Leading cable operators have committed "to support CableLabs-certified, OCAP-enabled devices once such equipment becomes commercially available". ( www.cablelabs.com ) ( www.opencable.com/specifications.html ).

CableLabs also announced completion of DOCSIS 2.0 specifications for an advanced generation of cable modems. Test plans are being finalized for interoperability testing in Q1 and possible certification testing in Q3. The goal of 2.0 is to add throughput in the upstream portion of the cable plant - enabling bi-directional 30 Mbps capacity. [Readers will know that we have been enthusiastic about DOCSIS 1.1 which is just coming to market. Since DOCSIS 2.0 modems will require different chips, 1.1 modems cannot be upgraded to 2.0. Several sources have expressed concern that cable operators may delay deploying 1.1 and instead wait for 2.0.] ( www.cablelabs.com )

C-COR.net made official the announcement that they have an agreement with AOL Time Warner Inc. to implement their Integrated Service Management System (ISMS) application software at three Time Warner Cable systems during 2002. As we reported last month, AOL Time Warner's initial deployment is in its Tampa, Florida system. ( www.c-cor.net ) ( www.aoltimewarner.com )

DirecTV and EchoStar have both expanded the number of local TV channels they provide in the markets where they provide local channels by satellite. This lineup expansion enables them to meet the Satellite Home Viewer Improvement Act's federal "must carry" requirement that went into effect on January 1. ( www.directv.com ) ( www.echostar.com )

The Future of Music's second annual Policy Summit was held in Washington, DC during the same week as CES. It brought together an unusual mix of attendees including musicians, members of Congress, copyright lawyers, recording-company executives, computer experts and Internet entrepreneurs to discuss and debate the impact of the Internet and new technology on musicians and the industries surrounding them. ( www.futureofmusic.org/events/summit0102/ )

i-CABLE Communications, InnoMedia and Cybersys Computer Ltd announced a market trial of VoIP phone service on i-CABLE's cable network. The market trial will use Innomedia's H.323 broadband voice solution and will target 45,000 Hong Kong households. Cybersys will provide maintenance and support. ( www.i-cablecomm.com ) ( www.innomedia.com ) ( www.cyber-sys.com.hk )

IDC released a new report on broadband Internet access in Latin America. It reports that broadband Internet access accounts in Latin America grew by 175% in 2001 [it should be noted that they include ISDN as well as DSL, cable and other higher speed alternatives in their definition of broadband]. The report says that 2001 was the first year when DSL Internet access surpassed the sum of all other broadband technologies, partly because of the great adoption of ADSL in Brazil. ( www.idc.com )

LinCsat Communications, a subsidiary of Imark Corporation, has agreed to offer DirecWay high-speed Internet broadband services to customers in Canada. LinCsat is Hughes' first "Powered By" partner in Canada and plans to launch the service nationwide in that country during the 1Q2002. ( www.lincsat.com )

Lugh Networks, a development firm specializing in home powerline networking solutions, has signed deals with several different players in the powerline networking field including Inari, ITRAN and Cogency Semiconductor. ( www.lughnetworks.com ) ( www.inari.com ) ( www.itrancomm.com ) ( www.cogency.com )

The National Cable & Telecommunications Association (NCTA) won an important case for cable when the US Supreme Court ruled that the Pole Attachments Act does cover attachments that provide high-speed Internet access at the same time as cable TV. This means that utility companies cannot charge higher prices for cable attachments to utility poles just because cable operators provide customers high speed Internet as well as video services. ( www.ncta.com )

OpenTV and AT&T’s Headend In The Sky (HITS) have signed a multi-year agreement for the delivery of an interactive television solution for HITS affiliates. OpenTV will bundle its interactive TV middleware with content from its content subsidiary. Through HITS, more than 275 affiliated cable operators can build their own suite of interactive offerings for local deployment. ( www.opentv.com ) ( www.hits.com )

SerCoNet CEO, Yehuda Binder, has indicated that the company expects to be moving into retail distribution of their "home outlets" with Leviton . SerCoNet develops Ethernet backbone networking solutions for homes and small offices over existing telephone wires. ( www.serconet.co.il ) ( www.leviton.com )

Speakeasy and Listen.com have teamed to distribute a digital music subscription service, called Rhapsody, to Speakeasy's DSL customers. Rhapsody is targeted to broadband subscribers and offers online radio, on-demand music playback, music information and recommendations. Listen.com has signed three licensing deals with major record labels, most recently with Sony Music Entertainment. Rhapsody is in competition with pressplay (backed by Sony Music Entertainment and Universal Music Group) and MusicNet (backed by RealNetworks, AOL Time Warner, Bertelsmann and EMI Group. ( www.speakeasy.net ) ( www.listen.com )

Western Power, the main power company in the state of Western Australia, is planning to begin a 12 month broadband services pilot, including high-speed Internet access and video-on-demand to homes and small businesses. Perth, the state's capitol, doesn't have as extensive a cable TV infrastructure as cities like Melbourne and Sydney. The utility is planning to install optical fiber at the same time as it replaces its aerial power lines. Marconi has been chosen to supply Western Power with broadband networking equipment for the pilot. ( www.wpcorp.com.au ) ( www.marconi.com )


Public Policy

US: The Technology Network (TechNet) , a network of senior management from hi-tech companies, released a report calling on the federal government to develop a national broadband policy with a goal of 100 megabits per second to 100 million homes and small businesses by the end of the decade. As an interim step by the end of 2004, the group calls for at least 6 Mbps from two or more providers to at least 50 percent of U.S. households and small businesses. ( www.technet.org )

We agree with TechNet's view that policies encouraging investment in new broadband infrastructure and encouraging a truly competitive environment are critical for the United States in maintaining a leadership role. ( www.technet.org/news/newsreleases//2002-01-15.62.phtml )

Germany: German telecom regulators at RegTP opened an investigation of Deutsche Telekom's broadband Internet access fees, which it claims have been set below cost. DT has now announced it will be raising prices by about one third. The monthly DSL access fee will go from EUR10.18 to EUR12.99 for new customers, starting in February. The one time connection fee is also being raised. Dow Jones reports that Deutsche Telekom has 2.2 million DSL customers, equivalent to 97% of the German broadband market. ( www.telekom.de )


Report on the 2002 Consumer Electronics Show: Connectivity and Convergence

So here's the scene. Sandy is lying on the chiropracter's table. He's asking what stressed out my back and I tell him it was too much walking the huge halls at the Consumer Electronics Show (CES) in Las Vegas. Puzzled, he asks what consumer electronics has to do with broadband. Here's what I said (plus lots more)...

The big news from CES is that lots of consumer devices (TVs, stereos, digital cameras, digital video recorders, PDAs, etc.) are being built to connect and communicate. With many of these devices using huge numbers of bits to communicate and users wanting instantaneous response, that implies fat, always-on pipes -- in other words, broadband. These new network-ready devices are coming from big consumer electronics manufacturers like Panasonic, Sony and Samsung, not just the geek-oriented companies that want all devices to speak IP.

The good news is that multiple functions are being combined into integrated units -- you can find gizmos that will enable interconnections between all kinds of different devices (PCs and TVs and digital cameras and MP3 players and audio speakers and phones and...). The bad news is that this is all in the early stages of development and changing constantly - it's hard to keep track of what everything does and interconnects with. If it's difficult for us in the industry to track all the functions and inter-relationships, just imagine how confusing it is for consumers!

We'll give you more detail, but for those wanting the bottom line, here's what we think:

  • Devices create the pull for networking: The pull for home networking will increase exponentially as consumers get more devices that beg to be interconnected. Increasingly they will be saying: "why can't I ... (fill in your favorite example--e.g. play my downloaded MP3's on my speakers all over the house)". Since consumer electronics devices have been selling well, lots of devices are being bought that create the pull.
  • Digital packaged media (CDs and DVDs) are exerting a huge influence on everything else. Consumers aren't satisfied with just listening to CDs or watching DVDs. They want more information; want to convert them to different formats so they can listen to or view them on different sound systems and screens in different places; want to create their own collections of them; and want to share their views and the media themselves with other people. Many companies in the CE and PC industries are working hard to understand these needs and create devices and services to satisfy them.
  • Broadband TO the home is intimately tied to the consumer electronics story. Broadband addresses consumer needs to be entertained, and to communicate and share with friends and family. Broadband to the home creates the desire for advanced communications, information and entertainment devices inside the home; the more broadband-capable devices there are in the home, the more valuable the connection to the outside. The two elements enhance each other's value.
  • The Power of the PC and Microsoft will be significant in the home: Because PCs are in a high percentage of US homes and they have increasing capability to handle audio and video, they are a strong force in the mind set of many consumers. Combined with Microsoft's strength and intent as shown with thrusts like e-Home, and projects like Freestyle and Mira, they will be a major influence in the home market.
  • There will be multiple types of screens in the home: What a user sees on a screen will increasingly be a function of the size, location and form factor of the screen and not closely tied to single kind of application. PC screens will display TV content and will be navigated using the remote control. Pictures taken with a digital camera and edited on the PC will be shown to the family on the big screen TV.
  • Although home gateways and home media servers are generating great interest in the industry, the mix of functions they will include and the path by which they will get into consumers' homes remain to be seen.
  • Customer confusion will increase with the plethora of networking choices available: Anyone who goes into most retail stores and looks for advice on how to sort thru the home networking choices will understand how daunting it is for both the customer and the channel. Some things -- like Wi-Fi in the wireless market -- seem to be coalescing, but new standards battles are brewing in areas like power line networking. Networks will go from being single purpose to carrying multiple media, but there's unlikely to be a single networking winner; multiple types of networks will likely coexist and interconnect within a house.
  • The multiplicity of choices and confusion creates openings for at least two types of solutions as the market evolves: specific products addressed to the "technically adept" market, and services from "broadband plumbers" who take over the job for everyone else.
  • The family automobile is becoming part of the extended home network.

Here's more detail behind each of our conclusions.


Devices create the pull for networking

The more devices people buy, the more they need home networks to connect them together. And people are buying lots of devices.

It used to be simple. A telephone wire came into the home from the phone company; telephone wires were strung through the walls to connect the telephones to each other and to the incoming telephone line. A cable wire came into the house from the cable company; coax cables were strung through the walls (or outside the house) to connect TV sets and VCRs to the incoming cable line.

But now customers with PCs are subscribing to high-speed Internet services; broadband modems also connect to the incoming telephone or cable lines. It's simple for the customer to connect one PC to the DSL or cable modem. It's harder when they have more than one PC, and they're in different rooms: the home needs a new kind of network so the PCs can share the connection to the outside, share files and share peripherals.

People bring notebook PCs home from the office. These are increasingly equipped with wireless network cards, and it's natural to want to connect them to the home PC and the broadband modem. Lots of people are setting up wireless networks just for this purpose.

Many people are "ripping" CD tracks and downloading MP3 tracks to their PC hard drives, and are tuning into Internet radio on their PCs. They would like to listen to music and Internet radio on their home stereo systems and they will need new networks to connect them to their PCs or directly to the Internet.

People have bought lots of PDAs, digital cameras and digital camcorders. They want to transfer information between them and PCs anywhere in the house without having to unplug from one place and plug into another.

More new devices come along every day and create yet more demand for home networking. The Escient Convergence Fireball (see below) creates a home jukebox of MP3s and CD tracks, and is designed to fit into a home network. Families that buy a ReplayTV 4000 want to network it to their PCs so they can load photos for slide shows on the TV screen. At the CES show, we saw many new devices, including "home gateways" and "home media centers" that assumed they'd connect to other devices through a home network. We'll talk about them throughout this story.

One device that intrigued us was the iCEBOX, a "web-enabled kitchen entertainment and communications center" from a subsidiary of Salton, a big manufacturer of branded consumer products. The FlipScreen version (see picture) is designed to fit under a kitchen cabinet, and includes a flip-down screen to watch TV or a DVD; loudspeakers to listen to CDs; connection to a video camera for home monitoring; and a broadband connection to a broadband modem and to other devices in the home. We like the idea of an integrated device in the kitchen; while the current device is a "high-end" product, we assume it will evolve into lower priced products. iCEBOX has solved one of the real world problems of a kitchen computer--in their demo, they immersed the keyboard in a sink of water, pulled it out and used it! (However, we didn't see a peanut butter and jelly immersion demo.) ( www.iceboxllc.com )


Digital packaged media

Consumers aren't satisfied with just listening to CDs or watching DVDs. They want more information (song lists, cast members, etc.); want to convert them to different formats so they can listen to or view them on different sound systems and screens in different places; want to create their own collections of them; and want to share their views and the media themselves with other people.

There are lots of PC applications to help with this, and Windows XP includes support for audio and video media. But some think that the home entertainment center is a more natural place for dealing with CDs and DVDs.

We met with Bob Pankratz, President of Escient Convergence, to discuss their FireBall "distributed music system" (see picture). FireBall is designed to integrate all handling of the music in the home - from CDs, MP3s and Internet radio - without needing a PC. It can control CD changers from many manufacturers, rip CDs, arrange collections of tracks on its hard drive, and download tracks to MP3 players. Fireball has won lots of awards, including the "Best of CES" award in the home audio category. ( www.escientconvergence.com )

FireBall leverages other assets of parent Escient Technologies. A sister company, Gracenote, created the CDDB database with information on over a million CD albums and 12 million songs. CDDB is incorporated into many PC music players for title recognition and music text data, and is integrated with FireBall. ( www.escient.com ) ( www.gracenote.com )

OpenGlobe, another sister company, provides Fireball with its TV-based user interface and user-customized content, and Internet radio stations through an Internet connection. OpenGlobe's interface and services are also used in two other new devices shown at CES -- the Compaq iPAQ™ Music Center and the Kenwood Sovereign Entré™ Entertainment Hub -- emphasizing how the lines between the PC and CE industries are getting blurred. ( www.openglobe.net ) ( www.compaq.com ) ( www.kenwoodusa.com )


Broadband TO the home tied to consumer electronics

Consumer electronics devices and broadband have always been interlinked. Cable television was the first instance of broadband to the home, and it's interesting to look at its origins. In TV's early days, people in small towns beyond the reach of big-city broadcast signals coudn't receive any TV. Small-town appliance stores couldn't sell TV sets without programs they could receive. Alan Gerry, an appliance dealer in Liberty, New York, solved the problem in 1955 by building a cable system, making TV signals available to the community -- and enabling him to sell TVs. That system became the foundation for Cablevision Industries, one of the pioneering cable operators. Similar stories were repeated in small towns across America and cable broadband was born.

In the later 1990s, as cable industry growth slowed, many homes had PCs and the Internet was growing fast. Dial-up connections made it hard to get to the vast information on the Web. Cable operators started adopting cable modem technology, and the lines that previously carried broadcast TV were modified to handle high speed data and two way communications as well. Telephone companies saw the same opportunity to adapt their telephone lines for DSL service.

The PCs in the home and the content in the Internet together created a pull for additional broadband capabilities. Three inter-linked elements formed an expanding "virtuous circle": the content available out in the world (broadcast programs, Internet, etc.); the devices in the home which receive the information (TVs, PCs, etc.); and the "fat pipes" (broadband access) that connect them together.

While the need for entertainment and information is one consumer need driving consumer electronics and broadband, the powerful urge to communicate and share with friends and family is another. New digital consumer electronics devices like digital cameras and camcorders make it easy to capture family events and include pictures in documents. Content starts being created by users of the new CE devices, not just by professional organizations. This new category of people who create their own content has been called "prosumers" and CE devices make it increasingly easy to be one. The desire to share these big files across distances makes broadband connections to the home more important and valuable. It's not surprising that promotion of more broadband connections is a big agenda item for consumer electronics companies like Sony, Samsung and Philips.


The Power of the PC and Microsoft

While Escient and others add PC-like applications to CE devices, Microsoft is moving fast to extend the PC into CE devices. In his "pre-opening" keynote address, Bill Gates (see picture) discussed a wide variety of applications coupling PCs and consumer electronics devices in the home. His talk and demonstrations included PDAs, web tablets, mobile phones, TVs, set-top boxes and VCRs.

We thought the most interesting part of his talk was the announcement of two new technologies -- code-named "Freestyle" and "Mira" -- that will be added to Windows XP. "Freestyle" is designed to "put the power of the PC into a long-distance viewing experience." It adds support for a remote control, and provides a TV-like interface to view photos, home movies or DVDs. Add a TV tuner card and a large display and you've turned the PC into a TV and PVR.

"Mira" is designed "to extend Windows XP experiences" to smart displays "anywhere in the home." One demonstration of Mira showed the user undocking the LCD monitor and then carrying it to the living room couch and using it as a touch-screen to continue running applications. Microsoft mentioned that companies like ViewSonic and Wyse are developing Mira-enabled devices. ( www.microsoft.com )

Although Gates didn't mention it in his talk, Universal Plug and Play (UPnP) is another key element in Microsoft's strategy to extend the reach of PCs in the home. UPnP is designed to make it easy for devices to join and leave networks, removing the need for user to administer home networks. Microsoft has joined forces with many other companies in the UPnP Forum, a cross-industry initiative that includes nearly every company in PCs, consumer electronics, and networking. Built on open Internet technologies, UPnP defines the protocols by which "control points" communicate with "devices". While Microsoft undoubtedly views PCs as the main control points, the UPnP specs don't require PCs and indeed describe how camcorders and other devices can act as control points. ( www.upnp.org )

The Microsoft connected home display included many devices and appliances connecting via UPnP. These were especially prominent in Premise Systems section which demonstrated control of home entertainment equipment, appliances, lighting, security and environmental control systems. ( www.premisesystems.com )

Another company supporting UPnP is MetroLink, which develops protocol stacks for UPnP devices, control points and gateways. Manufacturers embed MetroLink's stacks in their devices. We saw a demo of a UPnP-enabled digital set-top box with a built-in PVR, based on MetroLink's software. Their demo with GlobespanVirata also included a Webpad and a UPnP bridge to X-10 controlling a light. Sitting on the couch, the user could use the Webpad to select TV channels, set up the PVR to record, and turn the lights on and off.

MetroLink is an interesting example of a company which, though a big UPnP advocate, is building its software on Linux rather than a Microsoft OS. Many of the new residential gateway companies, such as Ucentric and newcomer Moxi Digital, have chosen to build on Linux. ( www.metrolink.com ) ( www.globespanvirata.com )

Microsoft's influence was obvious in numerous displays and demos across the show floor. From big players like Samsung to small comapanies like those mentioned above, there were frequent references to XP, Pocket PC, Windows Media, X Box, etc. Microsoft's intent to play such a prominent position in linking the PC and Windows to other devices in the home, and to make the PC a central part of home entertainment, is an item of concern to many people. To succeed technically, Microsoft needs to overcome three challenges. First, it needs to prove that PCs based on Windows XP are really crash-proof - nobody wants to have to reboot the TV every time they want to watch a program. Second, Microsoft needs to fill the well-known security holes that make knowledgeable people scared to use their products -- and Gates announced a strong refocus in this direction just after CES. Third, Microsoft needs to provide a good "Version 1.0" of Freestyle and Mira in a timely way.


Multiple types of screens

In his keynote, Bill Gates talked about three "form factors" for Mira-enabled home displays:

  • the "primary monitor" such as a 15" LCD display, used either docked with a keyboard or mobile with a touchscreen;
  • a "small format" secondary display in a cellphone, PDA or web tablet; and
  • a "large format" secondary display in a TV. The remote secondary displays can be used simultaneously with the primary monitor, with a single Windows XP system supporting all the displays. Thus a TV or web tablet can access and use all the applications on the PC and doesn't need its own memory or processing power to run the applications; in effect, the resources of the single PC are time-shared among users at several displays.

When Microsoft rolls out Freestyle and Mira, the lines betweeen PCs and other CE devices will blur quickly. A single PC will support multiple screens of different sizes, each with appropriate interfaces. The primary monitor will play the role of the "PC" for individuals, the TV screen will provide entertainment for groups, while PDAs and Webpads provide mobility.

While Microsoft tries to extend the PC into consumer electronics devices, other consumer electronics vendors are packaging PC-like functionality into their devices: Escient takes a lot of the functions usually done by PCs - such as ripping CDs and downloading to MP3 players - and puts them into boxes designed to sit in the home entertainment center with a TV interface. Still other vendors are trying to find a middle ground: SONICblue's new ReplayTV 4000 makes it easy to copy pictures from a PC into a folder on its hard drive and then view them on the TV screen.

We were particularly intrigued by Mira's implications for Web tablets. We've long believed that these small wireless touchscreen devices (also called webpads) will play a major role in the home. The dramatic reduction in the price of wireless access points has removed a major hurdle to the acceptance of tablet devices: they can now be sold as add-on devices for homes that already have wireless networks. But we've been concerned about the idea of tablets as fully functional Internet clients, since that makes them very exposed to Moore's Law: a low-cost device would be weak compared to a low-end PC, while a device with some room for growth would probably be priced out of the consumer market.

Mira solves this problem by making the tablet a "thin client" to a PC. This puts all of the Moore's Law effects on the PC, while the tablet acts as an intelligent display. We met at CES with a colleague from Taiwan and he shared our hypothesis that Mira may provide the impetus to jump-start the webpad from a nifty concept to a widely-used home device.


Residential gateways: Lots of smoke but is there fire yet?

One big news item from CES was that home gateways were very much present. Home gateways (also known as residential gateways or RGs) and home media servers have moved beyond technology shows and into the consumer electronics world. How many were on display at this year's CES depends upon how broad your definition of the category is, but they were certainly part of this year's mix. See 9/10/2000 BBHR (http://www.broadbandhomecentral.com/report/backissues/Report0009.html#link4) for our previous thoughts and definitions.

Although people use the term "home gateway" or RG to mean several (sometimes differing) things, we believe a home gateway is a device that enables users to share a broadband connection (ie, a physical interface terminating external access networks to the home) with multiple devices in the home. As such, it has core data capability for NAT, firewall, DHCP, and some type of home network transport such as Wi-Fi, HPNA, Ethernet, to connect other devices, potentially both IP and non-IP devices. In addition, it can be an enabling platform for consumer residential services. Finally, it may include the functions of a home media server, storing multiple types of digital content such as video and audio for use throughout the home.

Many of these products have specific orientations depending on their company heritage. For example, the simple home gateways now coming from Linksys and D-Link are a natural evolution of their cable/DSL routers and are real and here today (see http://www.broadbandhomecentral.com/report/backissues/Report0108.html#link4). RGs from companies like Motorola, Pioneer and Philips derive from their position in digital set top boxes to which additional functions have been added; they still mostly in the "deploying soon" stage. ( www.motorola.com/broadband ) ( www.pioneerelectronics.com ) ( www.philips.com )

The most all-encompassing RGs are from new entrants, staking out the market for more extensive functionality. In this group we would include Ucentric, which we covered previously (http://www.broadbandhomecentral.com/report/backissues/Report0111.html#link5) and newcomer Moxi Digital. Both are focused on selling their products to broadband service providers who will be the channel to the consumer. Ucentric is in trials with several service providers now, while Moxi is still in the prototype/development stage. ( www.ucentric.com )

The Moxi Media Center attracted great media attention at CES. Moxi Digital (previously known as Rearden Steel Technologies) was bound to get lots of attention because of its well-known founder, Steve Perlman, and its impressive list of investors. Their primary focus is digital home entertainment and they've positioned the device as a home media server rather than as a home gateway. The Media Center's functions include digital set top box, hard drive providing digital video recorder and music jukebox functions, DVD player and Cable/DSL Modem and Internet Gateway. This is an impressive (and expensive) list of functionality and the way they intend to get it deployed by cable and satellite providers is by serving multiple TVs (at least two and up to four) -- justifying the costs on a per-TV basis as compared to individual digital set tops. Moxi won the TechTV awards for both Best of Show and best of category for home video. ( www.moxi.com )

Other companies showing RGs at CES included:

  • Samsung's Home Media Center is another of the future products previewed at CES. Based on an agreement with Microsoft's eHome division to develop products based on Samsung hardware and Windows, it includes Microsoft's new "Freestyle" technology and aims to provide digital media content on multiple types of video displays, play music anywhere in the house in a variety of formats, store and edit digital photos, etc. ( www.samsungelectronics.com )
  • Everex's RG incorporates Gatespace's OSGi software, and is directed toward providing incremental revenue for network operators and service providers. ( www.everex.com )
  • Uniden, known largely for their telephones, bought RG company Broadband Gateways, which had a strong telephony focus. According to Art Tsubaki, Director of Product Planning and Greg Fadul, VP Broadband, their Evolo gateway will leverage their voice capabilities and they will use it as a springboard to move into data applications. ( www.uniden.com )
  • BeAtHome's RG provides Web-based monitoring, security and home automation control. ( www.beathome.com )
  • DoBox: From our conversation with Brad Davis, CTO, we learned their primary focus is security, privacy and parental control. They are currently targeted toward broadband service providers and and professional installers. ( www.dobox.com )

Home networking choices still generating confusion

Back last April we wrote an article called "Top Ten Ways to Confuse the Consumer". Number 1 on our list said: "Trumpet the fact that this is the year of home networking. Then create so many competing ways of acomplishing it, with names that sound so similar, that even those in the industry aren't sure what to choose for their own homes."

We saw lots of types of home networking technology at CES, and spent a lot of our time there assessing the future of various wireless and powerline networking solutions. Net-net, it's still not clear what home networking technologies will be in the home five years from now.

Wireless Networking

We went to CES thinking the situation was getting better, since it has become obvious that the near-term battle for wireless networking of home PCs is over. But the situation seems to be as murky as ever.

Wi-Fi (IEEE 802.11b) (see picture) has decisively beaten HomeRF and Bluetooth for the current generation of wireless networking for PCs and broadband modems. But HomeRF hasn't given up. Since HomeRF has an advantage over Wi-Fi in its ability to carry voice as well as data, it could be embedded in cordless phones and extended for additional networking functions. Wayne Caswell of Siemens points out that there are lots more cordless phones sold than PCs; Siemens clearly intends to keep HomeRF alive with this approach. ( www.wi-fi.org ) ( www.homerf.org ) ( www.bluetooth.com ) ( www.siemens.com )

The next generation isn't as clear as we thought. The HomeRF and Wi-Fi camps appear to agree that 802.11a will be the basis for the next generation wireless network. But some companies believe that 802.11g -- a higher-speed version of .11b, still running in the 2.4 GHz band rather than the 5 GHz band of .11a -- will get there first and will be better accepted in the market. Some technical experts think that a new technology called "ultra wideband" will provide a superior solution for wireless digital television.

Powerline Networking

Meanwhile, powerline networking (known as PLC for Power Line Carrier technology) is getting ready for prime time at higher speeds. PLC makes all sorts of sense for things that don't need to be mobile: stationary devices are generally powered from an electric outlet, and what could be more sensible than using the same wiring to interconnect devices in multiple rooms? We met with several member companies of the HomePlug Powerline Alliance, and were glad to hear that real products will be shipping very soon. ( www.homeplug.org )

In discussions with Guy Standing, Director of Sales & Marketing at PhonexBroadband, we had the opportunity to learn more about their HomePlug-based NeverWire 14 Powerline Home Networking System, which won the Best of Innovations Award for Home Data Networking. While the "14" in the name stands for its raw data rate, we quickly learned that actual throughput is more like 5-7 Mbps. We also learned that although the technology has performed well in test homes, it's been tested in only a small number of homes. We're planning to try NeverWire 14 in our own "broadband home" to see if it works in all the outlets and what data rates we actually get; we're hoping to see a good match between promises and experience. ( www.phonex.com )

The HomePlug members act as though the PLC game is over, and HomePlug has won. As we learned more, we began to understand that the verdict is not in yet. HomePlug is an industry consortium, not a standard, and other vendors pointed out that the process of establishing industry standards for powerline networking is well under way. CEA R7.3, the data networking standards committee of the Consumer Electronics Association, is about to start an elaborate in-home evaluation of competing PLC technologies. If CEA chooses a technology other than HomePlug, there will probably be another battle similar to that between HomeRF and Wi-Fi. ( www.ce.org/Technology_and_Standards/Technology_and_Standards_Committees.asp )

We learned more about non-HomePlug PLC through conversations with Yochi Dahan and Stuart Melnick of ITRAN. The company produces both high-speed and low-speed power line modem chips for communicating data, voice and video over existing electrical wiring infrastructure. Their focus is low cost and high reliability. Although their current high speed technology only runs at 2.5 Mbit/s, this is close to their actual thruput. Their next generation will increase the speed.

ITRAN has worked jointly with Microsoft to create and implement SCP (Simple Control Protocol), a lightweight, royalty-free networking technology for devices such as smart appliances and home-control products. SCP is complementary to Universal Plug and Play (UPnP) and is designed to bridge the capabilities and usage scenarios for UPnP networks to networks and devices not capable of supporting TCP/IP, such as low-speed PLC networks commonly used for home control. ( www.itrancomm.com )

In their suite, ITRAN displayed the power of SCP-based PLC in a demo by Lugh Networks. It shows an audio home network in which the audio content is distributed to any location in the home by ITRAN PLC chips -- the music is piped from the stereo system through the electrical system to powered speakers located in other rooms. ( www.lughnetworks.com )

Multiple networks carrying multiple media

During all the debates about home networking, we've heard advocates claim that their technology is (or will be) most appropriate for all the applications in the house: data, voice, audio and video. We've heard this about wireless networking and all the flavors of wired networking.

While it seems very appealing, we don't think this "one technology carries all" approach is going to work; instead, we believe the home will have multiple networks carrying multiple media. Wireless networks seem most appropriate for mobile devices like notebooks PCs, PDAs, phones and web tablets. Powerline seems most appropriate for home automation and control. Coax seems most appropriate for digital video. In larger homes, structured wiring based on twisted pair copper or fiber seem most appropriate as a backbone linking the other networks together.

With all these continuous changes in technologies it's no wonder that it seems daunting for both the customer and the channel. We often walk into stores handling home networking and play the role of a confused consumer asking for help to connect several PCs to a cable modem. If our experiences are any indication, we're a long way from being ready for the mass market.


Are we getting closer to having real "broadband plumbers"?

If all the questions and confusion we hear from friends, relatives and colleagues are any indication, this array of new CE and computer equipment and the various home networking choices is creating a growing need which is largely unmet. For the technologically adept, DIY (do it yourself) will continue to be an option. The success of low-cost cable/DSL routers and Wi-Fi access points shows that products that address well-defined customer needs, have affordable price points for the consumer and get good retail shelf space can do well for the "technically adept" market.

As we have written before - see "It's Time For the 'IP Plumber'!" ( www.broadbandhomecentral.com/report/backissues/Report0103.html#link3 ) - we believe there is a opportunity for "broadband plumbers" to do the home networking job for the customer. Electronics/computer retailers, cable operators, and A/V home theatre installers are all exploring taking on this role.

Two groups represented at CES are taking an active role in promoting this agenda. One is the Internet Home Alliance, which is teaming with CompTIA on an individual certification program for residential systems integrators. The program will launch in late summer of 2003 and expects to have certified about 25,000 installers by the end of next year. Supporting companies include Cisco, Panasonic, Sears, Best Buy and CompUSA.

The other group is CEDIA (Custom Electronic Design and Installation Association) whose installer training programs are expanding beyond home theater and are starting to include an increased focus on home networking.

We hope that this move toward creating the broadband plumber will continue and in the future we'll be able to talk of even more sources of help for consumers in assembling the pieces of this complex jig-saw puzzle.

( www.internethomealliance.com ) ( www.cedia.org )


Cars are an extension of the home

Anyone who has visited CES knows that an entire hall is devoted to equipment related to the automobile. We spent some time looking at the electronics and the cars (see the picture of Sandy with one of the cars) and found that the line between what people expect at home and in the car is increasingly blurring. It's not surprising that some companies providing capabilites for home gateways and consumer electronics are very involved with devices for the automobile. Although our report is mostly focused on broadband to and in the home, we'll take a look at a few things we found interesting in the new field of "telematics".

SAE (Society of Automotive Engineers) has a very active telematics effort, and organized the "Digital Car" pavilion at CES. They're holding a "digital car conference & exhibition" in March on the subject "Telematics: Who do people really want?". ( www.sae.org )

InfoMove provides "software and services ... to safely deliver personalized information to consumers while in the vehicle." They showed us a system which integrates the PC at home and a GPS-equipped PDA in the car. They plan to integrate with the information delivered to the PDA while driving to re-route in case of traffic jams. The picture shows a PDA with a map downloaded from a PC and updated while driving. InfoMove is conducting a trial in Germany and expects it to evolve into a commercial service later this year. ( www.infomove.com )

The OSGi (Open Services Gateway initiative) consortium aims to provide open specifications for the delivery of managed broadband services to networks in homes, cars and other environments. OSGi chose to place their booth in the Digital Car pavilion because of its relevance to this market. While the dominant broadband service providers in the US have been reluctant to embrace the concept of "open services", auto manufacturers seem to like the idea. This would enable interoperable devices in cars and provide a way (for example) to link a handheld PDA with a car's navigation system. ( www.osgi.org )


Broadband Home Labs -- ReplayTV 4000

Last month we wrote about DVR's, PVRs, home media servers, etc., saying: "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!"

This month we write about the reality--at least as seen thru our experiences. Lance Ohara, Product Manager of the ReplayTV line at SONICblue, kindly loaned us one of their new ReplayTV 4000 units for an in-home trial. Dave did the set-up and connection of the unit into our audio/video center (see picture) and home network and Sandy was the "user", putting the unit into action.

The goal of our "lab" trials is to understand how products and services fit in the context of a broadband home. We want to see if new broadband gizmos are easy to set-up, learn and use for mere mortals, as opposed to geeks who are willing (and even happy) to spend hours fiddling with set up and "fiddling".

So how did it go? While we really enjoyed the simplicity that ReplayTV provides for capturing shows and removing the need for appointment viewing, we've so far used only one capability enabled by the 4000's broadband connection. Downloading digital photos from a PC to the 4000 so we could show a slide show on our media center big screen didn't sound like an important feature, but we were surprised by how much fun it was: the big screen experience is really different fom seeing the same pictures on a PC display (see picture). SONICblue hasn't provided many features which leverage the external broadband connection or internal networking, although there are potential adders which could provide real value.

Here's more on what we experienced and how we reached our judgments.

Setting it up

Hooking up the 4000 proved to be somewhat of a challenge. Our media center has a big tangle of wires, but we suspect we're pretty similar to the market SONICblue is addressing with the 4000. Getting all the connections right took several hours and a few phone calls to make sure we understood the functions of all the jacks.

We had an odd problem setting up the "IR blaster" between the 4000 and our cable box. The on-screen directions were very clear, but the 4000 kept insisting it couldn't control the box. We eventually decided to lie and say that it had successfully turned on the cable box, and found that it controlled the box perfectly!

In all fairness, we tested a pre-production unit. It came with pre-release software, and we didn't have a copy of the "Quick Start" guide; we might well have avoided both of these problems with a production version.

User perspective

First a disclaimer: we're not really big into either movies or TV. Our only serious encounter with appointment viewing has been The Sopranos, which caused us to subscribe to HBO.

On the other hand, our married daughter in Silicon Valley has the perfect demographics (heavy TV/movie watcher, computer science degree, young baby at home) for ReplayTV and indeed has been a user almost since the beginning. We've heard her claims and seen how ReplayTV has changed the way she and her husband watch TV. "You don't really get it until you live with it" she says.

Setting up to record shows is really easy and playback is simple. We like the user interface. One new feature in the 4000 that has generated backlash from advertisers is its "commercial advance" which you can set to automatically skip ads. We really liked recording movies from TV and not having to fast forward thru commercials or even do 30 second skip forwards as in other units; it felt like watching a DVD or videotape instead of a program recorded from TV. Since we had just briefly used our daughter's earlier ReplayTV we weren't that sensitive to the improvements the 4000 has over the original versions. Those improvements include more storage, parental control and better conflict resolution when you instruct it to record something at a time it is already schduled to be busy recording.

But the real reason we were testing the ReplayTV 4000 had to do with its external broadband connection and its ability to connect with PCs over your home network. Here's our assessment of the things the 4000 allows you to do because it is broadband enabled:

1. You can send recordings over the Internet to friends with a 4000. However, without knowing/finding other people who have units you don't have anyone to exchange recordings with. (While it's still on loan to us, we'd be delighted to hear from readers who have a ReplayTV 4000 unit and want to exchange recordings with us).

2. You can share video recordings between multiple rooms in the home. Since this requires two 4000s in a home and they are not cheap, this is a limited high-end market. (Other vendors promise to share video recordings using one main unit and cheaper auxiliary devices for additional TVs. However, devices with these capabilities are just future promises--the 4000 is real and available today.)

3. The ability to create digital slide shows by transfering photos from your PC to your 4000 is a really nice feature. It was very easy to set up a PC to network with the 4000. We took our digital photos from CES, did a bit of editing on a PC, transferred the pictures to a folder on the 4000 and showed them on our media center large screen. Intellectually it doesn't sound like a big deal, but the emotional impact of seeing the slide show on a large screen was huge. We would expect that this is just the start of features from SONICblue that allow media to be accessed on the TV screen from the PC.

4. The Web site and literature talk about something called IChannels, which is intended to let you receive programs you can't get elsewhere. At the current time this is not yet implemented. However, because of the 4000s broadband connection, automatic downloads of future software releases for such capabilities should be very easy.

In markets like DVRs, once a company makes significant advances, you can expect that competitors will announce something that has "all that and more". TiVo has done so for their new Series2 digital video recorder. Their Web site says it is "Enabled for future services in home entertainment, including digital music, digital photos, party games, broadband video on demand, and more!" They plan to integrate RealNetworks' RealOne Player in all of the Series2s, letting users make and manage music collections on the hard disk. There is a big "but" in this however: the capabilities like RealNetworks music collections will not be available until the 2002 holiday season and by then we would expect SONICblue to have played its next chips in the leapfrogging game.

Meanwhile, congratulations to SONICblue for receiving numerous awards, including being named in Fortune Magazine's "Products of the Year" list. And thanks again to SONICblue for letting us borrow the 4000.

( www.sonicblue.com )


Networked Appliances Workshop

We were invited to speak at the 4th IEEE International Workshop on Network Appliances (IWNA4), held last week in Gaithersburg, MD. The speakers addressed many aspects of networked appliances, including architecture, protocols, security and applications.

In our speech Setting a Context for Networked Appliances ( www.broadbandhomecentral.com/presentations_archive.html#iwna4 ) we observed that broadband networked PCs are establishing a context for networked appliances, and we suggested that designers of such appliances leverage the evolving broadband home ecosystem. We said that "networked appliances seem more likely to succeed as members of the evolving 'broadband home' ecosystem than as members of competing ecosystems or as stand-alone systems". We suggested that appliance designers assume that homes have broadband connections, home networks and UNnP capable control points -- probably but not necessarily PCs.

There were many interesting speakers at the conference. We were particularly interested in the paper by Steve Ungar of Telcordia on what is now called the Versatile Home Network. VHN is an EIA standard for a "home intranet" to "tie together other home LANs ... allowing any device on a home network to communicate with any other device." Since we think there are going to be multiple networks in a home (see the CES article above), we agree there's a need for a backbone network playing this role. VHN is not competing against other protocols; instead, it incorporates them. The next version, to be issued soon, incorporates IEEE 1394 (the standard for interconnecting digital video devices like camcorders, digital set-top boxes, and digital TVs); UPnP (for device discovery and control); SIP-based telephony; OSGi (for open services); and HAVi (home audio-video interoperability).

( www.cmr.nist.gov/iwna4 )


Events On Our Calendar

We enjoy meeting our readers face to face, so if you're planning to be at one of the following conferences we're scheduled to speak at or cover as press, please let us know if you'd like to meet.

Broadband Outlook 2002
January 23, Washington, DC
( www.broadbandoutlook2002.com )

The 2002 International Builders' Show
February 8-11, Atlanta, GA
( www.buildersshow.com )

Builder Magazine's Technology Conference
June 11-12, Washington, DC
( www.builderonline.com )


Broadband Gurus

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 corporations big and small, as well as acting as independent consultants to the industry.

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 by visiting ( www.BroadbandGurus.com ).