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The February 25, 2002 Issue Provided by System Dynamics Inc.
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In This Issue

Heard on the Net

New Homes
How "Broadband Ready" Are They?

Georgia
Peaches, Peanuts and Broadband?

Your Voice -
Readers' Comments

Conference and Report Tidbits

Events on our Calendar

Broadband Gurus


Heard on the Net

News about People and Companies Influencing The Broadband Home


People News

Matt Alden has been named Senior VP and General Manager of Motorola Broadband Communications Sector's newly created Digital Media Group. Carl McGrath will head DMG's consumer gateway business, and Denton Kanouff will lead their digital media system efforts. ( www.motorola.com/broadband )

Rita Brogley has become President and CEO of Moxi Digital, replacing Founder Steve Perlman. ( www.moxi.com )

Blaine Burnie has been appointed VP Sales and Network Integration of Internet Cable Corporation. He was previously President of the company's subsidiary Cable Systems Technical Services Inc. ( www.internetcablecorp.com )

Isabelle Bussel has joined Sigma Systems, based in their newly opened Paris office, to head their sales initiative across Southern Europe. Previously she was at Ceon. ( www.sigma-systems.com )

Catherine Duenas and Jeff Rosenberg have formed i-modulo, providing PR and strategy for broadband, digital entertainment and cable TV. Previously each ran independent public relations and advisory businesses. ( www.i-modulo.com )

Derrick Fitzgerald has joined Pace Micro Technology Americas as Director of Product Management to target their digital set-tops to North American cable operators. Prior to Pace, Fitzgerald was with NetSpeak. ( www.pacemicro.com )

Jeffrey M. Goldthorp has been appointed as chief of the Office of Engineering and Technology's network technology division for the US Federal Communications Commission . He was previously at Telcordia Technologies. ( www.fcc.gov )

Sarah Hackforth has been appointed VP and general manager of Terayon's Europe, Middle East and Africa operations (EMEA). Previously she was with RiverDelta Networks. ( www.terayon.com )

Brian Hickey has been promoted to President of Wavexpress. He was previously their General Manager. ( www.wavexpress.com )

Allen S. Horwitz and Del Willis will head Pacific Coast Cabling's new cabling networking subsidiary. They are responsible for design and engineering and sales management, respectively. ( www.pccinc.com )

Chuck Kaplan has been appointed VP of marketing for Narad Networks. He was previously at PowerTV. ( www.naradnetworks.com )

Scott C. McDonald has been appointed EVP and CFO of Hybrid Networks. ( www.hybrid.com )

Ed Nafus has been named president of the Broadband Services Division for CSG Systems. He was previously EVP of operations. ( www.csgsystems.com )

Jim Ramo has been named CEO of Movielink, an Internet VOD service formed by 5 leading studios. Ramo had previously headed Geocast Network Systems. ( www.movielink.com )

M. Jay Sinder has been appointed CFO of Focal Communications Corp. ( www.focal.com )

David Sugishita has joined SONICblue as EVP and CFO. Sugishita was previously with RightWorks. The company also promoted John Todd to EVP and COO. ( www.SONICblue.com )

Also noted: A friend pointed us to a January 22 article in Investor's Business Daily on Leaders & Success, called "Paul Baran Changed The World". We have the pleasure of knowing Paul and believe that everyone in broadband should know his name and contributions. Although IBD doesn't have the article freely available, there are many Web sites that can fill you in, including http://www.wired.com/wired/archive/9.03/baran.html .

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


Company News

--Acquisitions

Alcatel is acquiring Astral Point Communications, which develops technology to manage optical bandwidth for metro area services. The transaction has an implied value of Euro 153 million. ( www.alcatel.com ) ( www.astralpoint.com )

Ciena Corp. is acquiring ONI Systems Corp. for $1.2 billion in stock and debt. ( www. ciena.com ) ( www.oni.com )

MetaSolv Software has acquired certain operations support system (OSS) assets of Nortel Networks for $35 million. These include the previously acquired Architel Systems software. ( www.metasolv.com ) ( www.nortelnetworks.com )

New Edge Networks has acquired certain assets and the customer base of Excite@Work customers for $1.5 million. ( www.newedgenetworks.com )

REMEC Inc. has purchased the assets of Spike Broadband Systems Inc. from a bankruptcy court for $4 million in cash. ( www.remec.com )

STMicroelectronics has acquired the intellectual property and DSL chipset products from Tioga Technologies for $10 million. ST was also granted an option to purchase all outstanding shares or assets of Tioga by January 15, 2003 for an additional $12 million. ( www.st.com ) ( www.tiogatech.com )

Sunrise Telecom Inc. is acquiring Agilent Technologies' CaLan Cable TV Test business. Financial terms were not released. ( www.sunrisetelecom.com ) ( www.agilent.com )

--Funding

Artel Video Systems closed a new round of financing for developing its Interactive TV and VOD applications. Investors include BancBoston Capital, Charles River Ventures and Commonwealth Capital Ventures. ( www.artel.com )

Atrica, a provider of optical ethernet equipment secured $75 million in its third round of funding. St. Paul Venture Capital led the round. ( www.atrica.com ) ( www.stpaulvc.com )

Catena Networks has raised $75 million in a fourth round of financing. Catena is focused on enabling mass-market deployment of broadband DSL services and access network convergence. ( www.catena.com )

Cedar Point Communications, developer of a PacketCable-based telephony technology for cable system operators, announced completion of an initial round of $19 million in private equity financing. ( www.cedarpointcom.com )

Cox Communications received a $500 million investment from Bill Gates, via Cascade Investments and the Gates Foundation. ( www.cox.com ) ( www.gatesfoundation.org )

Hyperchip Inc. has secured $70 million in its fourth round of financing. Calling itself "The Petabit Routing Company" the funding will enable contining carrier trials for its core router. ( www.hyperchip.com )

Ishoni Networks received a $25 million equity investment from Royal Philiips Electronics giving Philips a 51% majority stake in Ishoni, a silicon and software solution provider for broadband CPE and devices. ( www.ishoni.com ) ( www.news.philips.com )

Magis Networks received funding from existing investors, including Paul Allen's Vulcan, joining Motorola in Magis' second round. Magis develops 802.11a wireless chipsets. ( www.magisnetworks.com )

NEC Eluminant Technologies finalized a $5 million funding agreement with Yasuda Enterprise Development to support its growth in fiber-based, broadband products and services. Yasuda is one of the largest venture capital companies in Japan. ( www.eluminant.com ) ( www.yedvc.co.jp )

NETGEAR Inc. repurchased all of Nortel Networks' 68.6 percent interest in NETGEAR for an undisclosed amount. NETGEAR was a 100 percent owned subsidiary of Nortel until March 2000. ( www.netgear.com ) ( www.nortelnetworks.com )

ProSyst Software AG has added 5 Million Euro to its capital base. Two new investors joined the earlier investor group on funding for further product and market development. ( www.prosyst.com )

Xanboo Inc. has received a $20 million investment from investors including Motorola Ventures. ( www.xanboo.com )

--Other News

Broadjump has continued their success in winning customers for their configuration, installation and maintenance software. With their latest addition of TELUS, they now claim to have 90 percent of the Canadian DSL market and 70 percent of the total North American broadband market as their customers. ( www.broadjump.com )

EarthLink is aggressively pushing to add new high-speed Internet access customers, with a year-end goal of adding 250,000 customers. They completed a deal with Compaq Computer to offer EarthLink High Speed Internet service to new Compaq Presario Internet PCs in the US. Another promotion offers a free gateway for their DSL customers who sign up for 12 months of EarthLink's home networking service, costing $9.95 monthly. The offer provides 2Wire's Home Portal gateway. A Ziff Davis report indicated that of their approximately 4.8 million subscribers, 471,000 (about 10%) use high-speed access. ( www.earthlink.net ) ( www.compaq.com ) ( www.2wire.com )

Guthrie Telecom, a competitive local exchange carrier owned by Panora Cooperative Telephone Association, has launched their fiber-to-the-home (FTTH) network for delivering a bundled package including high-speed data, entertainment video, and multiple phone lines per home. They are using Optical Solutions' "FiberPath" platform, based on a passive optical network (PON). ( NONE ) ( www.panoratelco.com ) ( www.opticalsolutions.com )

Intertainer announced an agreement with MGM allowing them to include MGM titles as part of their broadband video-on-demand service. ( www.intertainer.com ) ( www.mgmhomevideo.com )

ITRAN Communications announced a joint venture, named PREMINET, Inc. with Kinden, Alps and Macnica for a complete power line communications (PLC) solution in Japan. Initial products will be released coincident with the revision of Japanese regulations regarding PLC and will provide data communication rates of 2.5 - 24 Mbps. ( www.ITRANcomm.com )

MetaTV launched its new interactive TV platform and announced an agreement to host and manage Cox Communications iTV service in selected markets. ( www.metatv.com ) ( www.cox.com )

Motorola's Broadband Communications Sector and digeo announced an agreement to manufacture and market new broadband media centers designed collaboratively with Charter Communications. The devices will include capabilities for digital video recording, telephony and other advanced communication services. Charter will begin deploying the new units this fall. ( www.motorola.com/broadband ) ( www.digeo.com ) ( www.charter.com )

Panasonic Digital Concepts Center (PDCC) announced its new incubator company, Rainmaker Technologies, Inc. See previous Rainmaker information at our December 19, 2001 issue at http://www.broadbandhomecentral.com/report/backissues/Report0112.html#link4 . ( www.panasonic.com ) ( www.RainmakerTechnologies.com )

Rogers and Shaw, Canadian cable operators, are rolling out a "lite" offering which provides up to 128 kbps download and 64 kbps upload speeds and unlimited time online, for the same price as dial-up services. ( www.rogers.com ) ( www.shaw.ca/litespeed )

Sprint has teamed with GateHouse Networks to market GateHouse's video services in conjunction with Sprint's voice and data communications. They will be marketed to new residential developments in Sprint's local territory, which has more than 8 million access lines in 18 states. GateHouse, a division of Lamont Digital Systems, designs, builds, operates and finances customized telecommunication systems for communities. ( www.sprint.com )( www.gatehousenetworks.com ) ( www.campustelevideo.com )

--Public Policy/Regulatory News

US: Broadband has been big news in Washington, D.C. over the past month. Here are a few of the items.

  • Computer Systems Policy Project (CSPP) representatives met with government officials to discuss their broadband vision for the US. Executives from Motorola, Dell Computer, NCR and Intel called for a national effort to promote broadband deployment like those in South Korea and Sweden or fear falling farther behind in the global broadband race. Their report, "Building the Foundation of the Networked World: A Vision for 21st Century Wired and Wireless Broadband", said US economic expansion is dependent on broadband deployment. It recommended that by the end of 2003, 80% of U.S. homes should be able to get data at 1.5M bit/sec., and 50% of the nation's homes should be able to receive data at 6M bit/sec. They also called for nationwide 100M bit/sec. access by the end of the decade. ( www.cspp.org )
  • The Federal Communications Commission (FCC) granted limited approval for using ultra-wideband (“UWB”) technology at very low power levels. The technology has been backed by companies such as Intel and Sony Corp and can be used for short-range wireless high-speed data connectivity. The FCC is permitting its use in stages. If the low power version does not produce interference with other systems, higher levels of power may be approved. ( www.fcc.gov )
  • The FCC has tentatively concluded that broadband Internet access provided over phone lines are information services, with a telecommunications component, rather than telecommunications services, which could lead to less regulation of ILEC broadband services. The action has sparked lots of reaction. The FCC's notice of proposed rulemaking (NPRM) asks numerous questions about the impact of reclassifying DSL provisioned by the Bells and other ILECs. The FCC said the proceeding would parallel a similar one underway for cable modem service. They are seeking comment on whether facilities-based broadband Internet access providers should contribute to support universal service just as facilities-based telecommunications carriers currently are required to do. All this raises many questions for the US broadband industry.
  • A U.S. Appeals Court has struck down the FCC rules barring companies from owning cable operators and TV stations in the same markets. They also ordered the FCC to reconsider its rules prohibiting companies from owning stations that together reach more than 35% of the national TV market. This is expected to lead to more consolidation and vertical media integration.
  • The Tauzin-Dingell bill is expected to come to a vote this week in the US House of Representatives. Although it may pass there it faces far more difficult odds in the Senate.

Miscellany: Broadband Airplane Redux

When commercial markets fizzle, whom do you target? The government, of course! We had written previously about "Broadband Airplanes" and Boeing's plans for Connexcion. After September 11th, support largely evaporated for those plans. Recently Boeing won a $112 Million deal to give US Vice President Cheney, cabinet members and other US government officials the broadband service in C-32As, specially configured Boeing 757-200s. Even if you and I won't have it, the big guys will be able to have real-time, two-way broadband connectivity in the air. ( www.boeing.com )


New Homes: How "Broadband Ready" Are They?

A Visit to the International Builders' Show

Our report on the "broadband home" often concentrates on the "broadband" part of the topic, its technology, its applications and its suppliers. Since "home" is the other half of our subject, we thought it was time to take a closer look at what's happening there. Specifically, we wondered whether and how new homes are being equipped with built-in wiring and electronics systems so their owners can readily enjoy broadband-enabled applications, both today and in the future.

The International Builders' Show (IBS), sponsored by the National Association of Home Builders (NAHB), was a great place to get some perspective on what developers, builders and their suppliers are doing to incorporate technological capabilities enabling home entertainment, PC networking and Internet sharing, communications, home security and control. Since this is a big show (over 71,000 attendees) that includes things like doors, roofing, bathroom fixtures, and masonry products, we were delighted to find that many of the exhibits and vendors we wanted to see were grouped together in a section called tecHOMExpo.

New homes are only a small fraction of the housing market, but historically have been the place where new technologies first take hold. Air-conditioning went into new homes first, since it was so much simpler to build in than add-on. Eventually the demand grew, the methods for retrofitting became simpler and the huge base of existing homes became part of the potential market. In the US, about 1.2 million new single-family homes are built annually, in a country with a base of about 75 million single-family homes. New homes are a small fraction of total housing, but a leading indicator of where the market is going. ( www.buildersshow.com ) ( www.nahb.com )


So what did we learn? -- A summary

1. We're early in the life-cycle of the industry focused on building technology infrastructure into the home -- It has a long way to go till maturity, but is headed in the right direction. If we liken it to the stages of human development, the baby has mastered crawling and is into the toddler phase.

2. We're moving toward critical mass for broadband TO the home and the demand for the right "plumbing" within the home will follow -- As Malcolm Gladwell wrote in "The Tipping Point", "ideas and behaviors and new products move through a population very much like a disease does". We've seen that phenomenon with consumers using the Internet. And that use is a part of what is driving home infrastructure. Today 60% of US homes have PCs and over 30% of those with PCs have more than one. Those correlate highly with the 10% of US homes having high speed Internet access and also with the homes that have adopted some form of computer networking (among multiple-PC households with broadband, nearly 60% already have a network).

3. Educational barriers must be overcome -- Most consumers don't know the benefits of putting in the appropriate broadband plumbing when their house is being built, so they may not ask the builder about it. The builder hears the customer asking about things like kitchen cabinet upgrades but not necessarily about A/V wiring to multiple rooms or computer networking, so isn't being pushed by the average consumer to think about home technology infrastructure. In addition, it's unfamiliar territory for the builder, with unknown margins and problems, so why offer it? These factors are beginning to change. Younger buyers and others who take technology for granted are starting to ask about technology infrastructure. Some builders are looking to technology as one of the ways to distinguish their homes from the competition.

4. Complexity is a big impediment -- The complexity of the technology, the number of different technology suppliers and fragmentation of the builder and installer industries are all impediments. The signs are again hopeful for progress. Aggregators who bundle and simplify technologies into clearly targeted packages are starting to appear.

5. The TechHome Rating System is a great educational tool -- The TechHome Rating System developed by the Consumer Electronics Association (CEA) is part of an excellent effort to educate buyers, builders and realtors about the technology elements that can be built in to enable audio, video, voice, data and security applications. Its early impacts are being seen in a few cities, and with continuing support we expect the number of areas to grow substantially.

6. Developers are of mixed minds on whether to offer broadband services -- Some land developers and builders are starting to participate in the broadband services market, either on their own or in partnership with others. They see putting fiber to the home and offering services over it as an additional way to distinguish themselves from other communities and to gain annuity revenues. Others see the many levels of complexity -- from technology, competition, regulation, etc. -- and don't want to consider offering services.

7. Despite the general economic downturn, the US housing industry looks strong, the show was well attended and results reported by vendors in this market were positive. We expect the move toward incorporating new technology infrastructure has a healthy home building climate to flourish in.


The Home Electronics Systems Infrastructure

Modern homes include electronics systems for a wide range of applications. As we've discussed in previous issues of this report, these applications fall into several broad categories: data, telephony, audio, video, and telemetry/control (see http://www.broadbandhomecentral.com/report/backissues/Report0105.html#link3 for more detail).

In new construction, the trend is to prewire the infrastructure to support the electronic systems while the house is being built. Telephone wiring has long been included in new homes, and coaxial cable was added several decades ago.

Structured cabling systems have emerged as the preferred way to centralize technology distribution. These systems are evolving to span the full range of applications, with increasingly elaborate electronics included in the infrastructure.

The major elements of the infrastructure include:

  • An enclosure to centralize the wiring at the center of a star configuration;
  • Outlets in each room (or several places in a room);
  • Wiring, typically a mixture of Category 5E twisted-pair cables and RG-6 coaxial cables, running from the enclosure to each of the outlets;
  • Electronics in the enclosure, including audio and video distribution modules; data networking switches and hubs; and lighting, security and heating systems.

More elaborate systems include additional elements:

  • Touchscreen displays mounted on walls and portable webpads to control the electronics
  • In the enclosure, a residential gateway, audio server, video server, PBX

The value chain includes many different roles:

  • Core technology suppliers provide piece parts ranging from enclosures, cabling and outlets to touchpads, servers and software
  • Aggregators assemble complete "structured cabling systems" from the piece parts
  • Integrators purchase the systems and install them in homes during and after construction, often as subcontractors to builders
  • Home builders select base systems bundled into the base prices of homes, and then (often through integrators) sell more advanced systems
  • Property developers may specify minimum cabling configurations for homes and may play a role in offering services such as video, data, and telephony.

Many companies play several roles in the value chain. Some core technology providers configure and sell pre-packaged sets of piece parts directly to builders. Some aggregators manufacture piece parts. Some integrators bypass the aggregators and assemble their own systems. The builder may sell a package which includes all the structured wiring plus a contract for the services.


Technology Players

Here is a summary of our discussions with many players in the value chain:

  • Bobby Riesdorph in Leviton booth --> Click for larger pictureLeviton is one of the largest manufacturers of electrical and electronics parts and offers pre-packaged structured wiring systems. We talked with Bobby Riesdorph of its Integrated Networks Group, which works directly with builders to configure wiring systems to fit the needs of each home model. Bobby told us that it was easy to convince builders to use structured wiring for telephony and video distribution, but hard to convince them to include additional wiring for data and other applications. He said that the vast majority of homes equipped with structured wiring in 2001 had only one CAT5E for telephony and one RG-6 for video, even though it would cost the builder less that $100 to add a second CAT5E for data. ( www.leviton.com/sections/prodinfo/newprod/npleadin.htm )
  • Doug Fikse of OnQ --> Click for larger pictureOnQ Technologies is said to be the leader in providing structured wiring systems. A spinout from AMP Inc., long one of the major connector manufacturers, OnQ offers a wide range of pre-packaged systems and modules spanning the whole range of applications. Doug Fikse, OnQ's President, confirmed what we had heard from Leviton - most of their sales last year were minimum systems with one CAT5E and one RG-6. Only a small number of systems included support for data, lighting, or home management. ( www.onqtech.com )
  • Mark Schmidt of Home Director --> Click for larger pictureHome Director is said to be #2 in structured wiring systems. A spinout from IBM, Home Director offers a wide range of systems. They used the show to announce an entry-level "Contractor Series" for the mass market and deals with ITT and CorAccess for advanced technologies. Mark Schmidt, VP and GM, showed us the new products to provide a complete home networking infrastructure: a home server, the migration of video and audio from analog to digital carried over CAT5E (from ITT), touchpoint controls (from CorAccess) and a comprehensive software infrastructure based on OGSi and UPnP. We especially liked the AudioPoint 7000 digital audio receiver which decodes audio from Ethernet to standard RCA jacks; the associated software permits the selection of audio source, volume and equalization from a PC or a webpad. ( www.homedirector.com )
  • CorAccess Systems provides flat-screen touch-enabled devices and embedded software platforms for networks which don't require PC-type functionality. Craig Slawson, CEO, showed us their hand-held webpads operating over an 802.11b wireless network, and their in-wall TouchPoint units ranging from 6" to 15". Both can be used as interface devices for built-in home servers or with appropriate software can control other devices. We especially liked the look and the applications on the cute Companion 6 TouchPoint (which we unfortunately forgot to photograph). CorAccess has business relationships with aggregators such as Home Director. ( www.coraccess.com )
  • Todd Sames of Premise Systems --> Click for larger picturePremise Systems provides middleware to integrate the electronics systems in the home. At the Genesis Homes model home on the show floor, Todd Sames showed us Premise Systems middleware running on a Home Director server controlling the lighting, audio and video through both wired and wireless networking. Premise Systems aims to embed its middleware in many systems, and has announced strategic relationships with GE-SMART, Microsoft, Lutron and X-10 among others. ( www.premisesystems.com )
  • Bill Thompson of Ustec --> Click for larger pictureUStec focuses mostly on the higher-end market. Bill Thompson, President of USTec, showed us their bundled quad cable (dual CAT5Es and dual RG-6s in a single jacket) and integrated systems for computer networking, entertainment, security, and automation. ( www.ustecnet.com )
  • Industry pioneer SMART showed systems for networking, automation, and audio distribution. ( www.ge-smart.com )

Builders Are Off To a Good Start, But More Is Needed

Industry associations such as CEBus and HANA (now part of CEA) have long preached the need for standardized structured wiring in new construction, but it has been slow to take off. US builders have started including structured wiring in the base price of new homes. ( www.cebus.org )

Industry surveys estimate that about 25% of homes built in 2001 included some form of structured wiring. Our discussions at IBS with many of the industry leaders confirmed that most of these homes have only minimum wiring - one CAT5E and one RG-6. While the industry has convinced many builders to use "home-run" wiring instead of the "daisy chain" they used before, it has been much harder to convince them to include additional wiring as part of the base price or to invest the effort to "up-sell" the customer to pay for additional wiring or electronics.

With about 65 million US homes already equipped with a PC and 25 million of these with more than one, it would seem pretty easy to convince the home buyer to spend an extra 1% or so of the home price to install a proper network. But the industry has done a great job confusing the customer as to what is required to "future proof" the house. While the vendors at IBS were consistent in preaching the need for dual CAT5E and dual RG-6, the end user is bombarded with messages that on the one hand suggest that wireless will solve all the problems, and on the other that he should really install fiber for true future-proofing.

What's clearly needed is a clear and coherent industry message addressed to all the constituencies.


The TechHome Rating System Is a Good Focal Point

Many vendors at IBS were handing out copies of the new TechHome Rating System (THRS) form from the Consumer Electronics Association (CEA). THRS is the product of a concerted industry effort and makes it easy for a home owner, builder or buyer to assign a score to a home's "technological capabilities". The key idea is to make the THRS score as visible as the number of bedrooms and baths. ( www.CE.org/techhomerating ) ( www.ce.org )

The THRS form scores the home's electronics systems in five groups: home entertainment, communications, PC networking, security, and comfort and convenience. It assigns a Category Rating from 0 to 5 depending on the systems built into the home. A home with structured wiring automatically gets a 5.

Although we have a few quibbles with the details, we think THRS is a great way to get a consistent message to all the stakeholders.

Now that THRS has been rolled out, we wondered how it was being promoted. After the show, we phoned David Nash of Intel, who chaired the TechHome group and continues to be deeply involved. David's talk at IBS challenged the builders "to install these systems in all new home starts - not just high-end custom homes". He told us that TechHome's "mission this year is that 100% of home starts in all price categories go in with at least a minimal solution." TechHome is focused on getting builders to use it for new homes and on realtors to score existing homes. ( www.intel.com )

We think everyone in the industry should become familiar with TechHome and start promoting it to reduce all the confusion out there. The TechHome and Connecting Americas' Homes websites are a good place to learn more. ( www.connectedhome.org/standards.html )


Developers and Builders as Service Providers

We have written before about developers and builders playing a role in providing telephone, video and data services, and we wondered whether this would be highlighted at IBS. At the show, we attended a session on this subject and talked to a service provider. While most builders continue to leave these services to the incumbent telephone and cable companies, a few have gotten involved and more are thinking about it.

Optical Solutions

We attended the session "What Every Developer Should Know About Telecommunications." Ian Thomsen, Director of Marketing for Optical Solutions Inc., talked about "The Case for Broadband Networks in New Housing Developments." OSI is a major provider of fiber to the home (FTTH) solutions based on passive optical networking (PON), and has announced technology rollouts in both new and existing communities in the US.

Ian's talk argued that buyers would increasingly demand "broadband converged services" in new developments and that developers should become services providers to "gain a lifetime annuity based on recurring monthly fees" he estimated at more than $100 a month. His key point was that depending on incumbents for broadband services provided no competitive differentiation and the likelihood that incumbents would not provide new services in a timely way, putting the developer at a competitive disadvantage. He presented several business models for converged networks, with the highest reward and risk for the developer acting as owner, operator and service provider. Partnering or subcontracting operations and service would reduce the risk.

The session was well attended and Ian's talk seemed well received. From their questions, it appeared that many of the attendees were surprised by the complex technical, legal, operational and marketing issues in a business offering converged voice, video and data services, and did not want to get involved at this time. But they seemed interested in learning more and further exploring the opportunity.

( www.opticalsolutions.com )

GateHouse Networks

At the show, we had a very interesting conversation with Mike Rahimi, VP Sales and Marketing at Lamont Digital Systems. Lamont's Campus Televideo division provides telecommunication services for colleges and universities, and currently supports 350,000 subscribers on over 150 campuses; all receive video services from Lamont and many receive high-speed data as well.

Lamont has established a GateHouse Networks division to provide telecommunications services to new communities. GateHouse is flexible in the way in partners with developers. Since it has years of experience in operating networks, it prefers to have an ongoing operational role. It is willing to bear the upfront "first mile" cost itself, but prefers to share the risk with developers and builders. Since it sees its core skills in video and data, but not voice, GateHouse likes to include telephone companies in its partnerships; it announced a partnership with Sprint at the show (see Heard on the Net above).

While its earlier systems were based on traditional cable hybrid fiber-coax (HFC) infrastructure, GateHouse now prefers to use all fiber.

Mike told us that GateHouse now has agreements with 11 communities totalling 30,000 homes; about 600 of these homes have been built and are in service. He invited us to visit one of its communities; we'll do so soon and report on it in a future issue.

( www.campustelevideo.com ) ( www.gatehousenetworks.com )


Home appliances and how they fit

Intelligent appliances are one of the areas invariably associated with bringing technology into the home. We're talking here about white goods like refrigerators, washers and dryers, not the Internet appliances like Audrey and the i-Opener that have not found traction in the market. The refrigerator is often the first example given.

In past articles we've indicated a healthy skepticism about the practical aspects of these appliances. Our concerns include:

  • the gap between the price a user will need to pay to get these capabilities vs. the value perceived by the user
  • the very different useful lives of something like a refrigerator (perhaps 12 years) compared with that of integrated sophisticated computing and networking technology (perhaps 18 months),
  • the slow development and acceptance of networking standards which allow these intelligent appliances to interconnect with the environment in which they sit and with the outside world
  • behavioral and cultural factors, including real behavioral understanding of users, attitudes toward acceptance of technology and cultural differences between groups and countries.

LG Refrigerator --> Click for larger pictureSo perhaps it was not with an entirely unbiased view that we visited several purveyors of such appliances. Our first visit was with LG Electronics. They featured a "Living Network System" centered around their "Internet refrigerator" which acts as the residential gateway. Their press release describes the unit: 26-cubic-foot refrigerator, high quality 15.1 inch TFT-LCD, its own LAN port, a digital camera mounted on top of the LCD, touch screens. This refrigerator does more than chill food and dispense ice-cubes. "Consumers can use the Internet refrigerator as a TV, radio, Web appliance, videophone, bulletin board, calendar and digital camera." But do you want to? If you can't wait to get yours, they'll be available in the US in the 4th quarter of 2002 and will cost $9,999. ( www.lgappliances.com )

Randy Voss with Whirlpool's Tablet --> Click for larger pictureOur concerns having been re-enforced by the LG visit, we next visited with Whirlpool. We were delighted to learn that Whirlpool's views are more closely linked to ours. Their emphasis for Internet-enabled appliances are applications which "can offer the greatest consumer benefits". You don't need to buy a new refrigerator to get their tablet: rather than making it an integral part of the refrigerator, their portable Web Tablet can be purchased separately and mounted to the refrigerator to serve as a central control station. Although the pricing has not yet been finalized, we were assured that the total tab will be very significantly less than LGs.

Whirlpool's design and technical elements are centered on assuming the house will be broadband-connected and thus always-on, using an OSGi (Open Services Gateway Initiative) gateway connecting to a Wi-Fi (wireless 802.11b) hub, which can in turn wirelessly communicate with the Web pad(s). Information on the Web Tablet can be accessed through any Internet connected PC outside the home.

In our conversation with Randy Voss, Retail Brand Manager for Whirlpool's Integrated Home Solutions, we got thoughtful answers to many of the issues we raised. Whirlpool is leveraging established networking standards and protocols like Wi-Fi, OSGi and UPnP. They have done extensive behavioral studies and are still refining their assumptions and knowledge on how the i-enabled aspects of these appliances will be used. Although the consumer will be the ultimate judge when these appliances are released, we walked away with the cautious conclusion that their efforts really support their corporate vision of creating "home appliances, which make life easier and more enjoyable" for people. ( www.whirlpoolcorp.com )


Georgia: Peaches, Peanuts and Broadband?

A visit to GCATT's Broadband Institute

The southern US state of Georgia is associated with lots of things. Peaches and peanuts are two: the peanut is Georgia's official state crop. But if organizations like the Georgia Research Alliance and Georgia Centers For Advanced Telecommunications Technology (GCATT) are successful, you might also start associating "digital" and "broadband" with Georgia.

We were introduced to these efforts by an email reference to the National Academy of Science's Report, "Broadband: Bringing Home the Bits". The report was written by a committee chaired by Nikil Jayant, Executive Director of GCATT. Small world, since Sandy and Nikil had worked together on a special issue of the AT&T Technical Journal back in their days at AT&T. At GCATT, we met with Nikil and Bill Prigge, the organization's Business & Operations Manager.

The Georgia Research Alliance (GRA) is a public/private partnership promoting the state's technology-based economic development. GCATT, a program of GRA, supports development of the latest technologies and applications in communications, computing and content processing. It has three areas of focus: technology, policy and commercialization. The Georgia Tech Broadband Institute, one of GCATT's centers, focuses on broadband communications research and applications and was the primary driver for our visit.

GCATT Aware Home --> Click for larger pictureThe Broadband Institute works on "last mile" (access) technologies and on services and infrastructure within the home. The Residential Laboratory, which we visited, is one of their research facilities. Its purpose is to understand how broadband connectivity and ubiquitous computing can enhance future lifestyles.

Helping Seniors --> Click for larger pictureOne of their current programs, "Aging in Place" is researching what aids might be provided in-home to assist older people (and their families) in maintaining independence and safety.

Much of their funding and work plan come from industrial sponsors such as BellSouth, Broadcom, HP and Intel. Sponsorships come in several levels, including a special one for small companies and start-ups. They involve "pre-competitive" research of the kinds not usually affordable by "small" companies. Examples of some recent projects include: "Interference Mitigation Techniques for Bluetooth Systems", "Architectures and Protocols for Scalable Content Distribution Networks" and "Efficient Security Protocols for Handheld Devices".

Why might you care? The Broadband Institute's research agenda is directed by its members. Their fees give them access to the research results of talented doctoral candidates and their advisors, and help set their direction. The annual cycle of determining projects which will start in August is just about to get under way. For more information, contact Bill Prigge, bill.prigge@gcatt.gatech.edu .

( www.gra.org ) ( www.gcatt.gatech.edu ) ( www4.nationalacademies.org/cpsma/cstb.nsf/web/pub_broadband?OpenDocument ) ( www.broadband.gatech.edu )


Your Voice -- Readers' Comments

A few of YOUR thoughtful tidbits culled from this months' email.

Universal Plug and Play (UPnP)

Andrew Liu, Co-Chair UPnP Marketing Committee at Intel, writes:

"It's great to see UPnP starting to get some coverage in your newsletter. As you may be aware, UPnP is going to become very important this year in making home networking more accessible to consumers.

One point that I would like to make about residential gateways is that they all have a fundamental problem that gives big headaches to broadband/home networking applications. They all use NAT, and that causes applications such as VoIP, video-conferencing, hosting multi-player games, and remote assistance to break. Many of these applications are broadband drivers, but what good are they when the residential gateway breaks their usage model. UPnP internet gateways solve this problem. I would like the opportunity to into more detail here and perhaps let you try first hand the benefits of UPnP in solving these problems.

Here's a good reference article: http://www.microsoft.com/windowsxp/expertzone/columns/bowman/december24.asp "

( www.upnp.org ) ( www.intel.com )

We also heard from Bob Quinn of sockets.com:

"It will be interesting to see what happens in this space! Getting a common API over standard protocols that can use any of the many in-home network medium is key. The fact that it uses XML to provide "self-description" facilitates discovery and zeroconf, which in turn enable the transparency that will make for viable consumer products.

I was involved with the creation of the WinSock API, and this is just as promising for SOHO and factory nets as WinSock was for early Internet applications (personally, I believe WinSock was responsible for the early success of NetScape, for example). Killer home apps here we come!!!"

( www.sockets.com )

Wireless networking

We heard from William Watté, General Manager at M-TEC WIRELESS in Belgium:

"I'd like to point out that there is still another standard which was overlooked in your overview. The standard is HiperLAN/2. Opposite to what some people in the yellow press are trying to spread, this standard is far from death! And it is also not "the standard for Europe". HiperLAN/2 can be used all over the world, which is not the case for 802.11a.

However, the discussion of "which standard is going to win" is the wrong discussion. The real discussion should be "which standard should we use for which application". If you are looking for a network where Ethernet has to be replaced by something wireless, an 802.11 standard is clearly the best choice. However, if you are looking at other applications requiring Quality of Service (like video distribution and gaming), the only right choice is HiperLAN/2. More information on the QoS feature in HL/2 can be found on our website ( www.mtecwireless.com/htdocs/products/HL2doormanrev.pdf ).

Since the home environment is full of QoS broadband (with TV on the first place), HiperLAN/2 is probably the first choice for this environment. However, a dual system where also 11a is supported (for the laptops brought home from work) will probably also emerge quite soon.

As you know, our architecture is protocol independent due to its software configurability. Therefore, we don't really need to push any of the standards. We are just providing you this information so you can keep your readers up-to-date. And we would like to keep them from a disillusion which they might experience when transmitting video signals over a non-QoS 11a system. We all don't want this to happen because this could deteriorate the public opinion towards broadband wireless LANs."

( www.mtecwireless.com )


Conference and Report Tidbits

PLC for Broadband Access?

The Columbia Institute for Tele-Information (CITI) ran a seminar on Power Line Communications (PLC) on February 7th, while we were at the builder's show. Called "Power Line Communications: More Than a Scientific Curiosity, But Is It (Finally) the Long-Awaited "Third Wire" to Every Home?", many of the presentations from the conference are posted on their site. ( www.citi.columbia.edu/powerline.htm ).

Broadband in Europe

The Mckinsey Quarterly published an article indicating that Broadband Internet access is growing more slowly than hoped in Europe. They assert that part of the problem is from flawed business models, but some of the onus rests on the shoulders of policy makers and regulators, as a result of regulations that have dampened competition and kept prices unrealistically low. See "A Regulatory Remedy for European Broadband" in their February issue at ( www.mckinseyquarterly.com/newsletters/2002_02.htm )

GartnerG2 recently released a study "Broadband: The Revolution is on Hold In Europe Just Now," analyzes the development of broadband across Europe. It seems to reach different conclusions than above, at least in their press release which suggests that providers must reduce prices to less than 30 Euros per month. See their year-end 2001 penetration estimates for France, Germany, the UK and US at ( www.gartnerg2.com/press/pr2002-02-04.asp )

For additional information also see the DSL Analysis pages of the Point Topic website at ( www.point-topic.com/analysis )

We'd love to hear what our European readers think.


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.

We'll be wearing our press hats for: Electronic House Expo. March 6-8, Orlando, Florida ( www.ehexpo.com )

We'll be speakers at: 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 at ( www.BroadbandGurus.com ).


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