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The April 2, 2002 Issue Provided by System Dynamics Inc.
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In This Issue

Heard on the Net

Window Blinds, Central Vacuums and Home Networking?

Visiting a "Broadband Plumber"
e house

Broadband's Becoming Mainstream

Hot off the press
IEEE Communications Magazine

Website Changes

Your Voice -
Readers' Comments

Broadband Gurus

Heard on the Net

News about People and Companies Influencing The Broadband Home

People News

Lennart Broers has been named sales director for Sigma Systems newly opened Benelux office. He was previously with Daleen Technologies. ( )

David Brown has become VP, Business Development at Tiaris, Inc. He was previously at DSB Consulting. ( )

Daniel Cohen has been appointed Director of Gallery IP Telephony's Europe, Middle East and Africa Business Development (EMEA). Previously he was with GTS. ( )

Michael C. Crowley has been appointed VP and CIO at Avaya Inc. Crowley had been CIO for Campbell Soup Co. ( )

James Hamilton was promoted to president of Efficient Networks Inc. Siemens acquired Efficient in April 2001. ( )

Allen Preece has been appointed CFO of Sigma Systems. Allen was previously CFO for Norigen Communications. ( )

Michael Pritz has been named president and CEO at Jedai Broadband Networks Inc. He was previously at Clarent Corp. Jedai has also added James Walsh, formerly from Motorola, as VP of Business Development and Richard Graber, formerly of ViaGate, as VP of Engineering and Operations. ( )

Michael J. Pohl was been named CEO of nCUBE Corp. He has been the company's president since 1999. nCUBE also promoted Kyle Christensen to VP of finance and named Clinton Tripodi, previously at Pacific Broadband Communications, as VP of workplace resources. ( )

Stan Sands has been named VP of corporate sales NDS Group plc. He was previously with Micromuse. ( )

Donna Thomas has been named senior VP of sales and marketing at Incanta. She had been at Discovery Networks. Stuart Lipson was added as senior VP of business development. ( )

(Please email to report a change in your position.)

Company News


180 Telecommunications of Aurora, Ontario is buying Viasource Communications in a transaction valued at about $60 million. The deal still needs to be approved by the bankruptcy court. ( )

Advanced Fibre Communications acquired AccessLan Communications. AFC, which was an investor in AccessLan, will buy outstanding shares for approximately $43 million in cash and will assume approximately $4 million in liabilities. ( ) ( )

Digeo, the ITV company founded by Paul Allen, is acquiring Moxi Digital. Financial details were not disclosed. Digeo CEO Jim Billmaier will become CEO of the new company. Moxi CEO Rita Brogley will become EVP of business development and marketing. ( ) ( )

GoldPocket Interactive, an ITV company, has acquired Mixed Signals ITV Professional Services Group. ( )

Netopia has acquired privately-held DoBox, Inc., a provider of broadband gateway parental control, content filtering, and family firewall software. Terms of the transaction were not disclosed. ( )


Editors' Note: Now that the first quarter of 2002 has closed, VentureWire figures show that venture capital investment has decreased for the seventh consecutive quarter. Silicon Valley continued to be the region that attracted the most venture capital, with New York and Boston nearly tied for second place. ( )

Bermai, a developer of integrated semiconductor systems for indoor wireless LAN and outdoor fixed access applications, announced itself and $15 million in first round of funding. Mobius Venture Capital, Blueprint Ventures, and Advanced Technology Ventures (ATV) co-led the round. ( )

City Signal Communications (CSC), a provider of metropolitan dark fiber networks in selected U.S. markets, closed a $17 million third-round equity investment. ( )

Equipe Communications raised $40 million in its third round of funding. ( )

Gatespace has received additional funding from its current owners, and is acquiring the e-services venture from Ericsson Business Innovation. During 2001, Gatespace extended its offering to add management and service provisioning products, as well as complete solutions for broadband operators and telematics system developers. ( ) ( )

Magis Networks, Inc. announced that SANYO Semiconductor Corporation is the latest strategic investor to join Magis' current round of funding. ( )

N2 Broadband has obtained $10 million in additional financing. ( )

Pelago Networks has secured $32 million in new financing, bringing Pelago's total funding to just under $50 million. ( )

Polaris Networks, which develops optical transport switching systems, has raised $52 million in its Series B round of financing. ( )

Radiance Technologies has closed a $13.4 million Series B financing round. They also unveiled their first product and made public a strategic partnership with TiVo. ( )

Thirdspace has raised $16 million in a second round of funding from Alcatel and Concurrent Computer Corporation. Concurrent and Thirdspace have also formed an alliance to jointly develop and market an integrated system to enable broadband telecommunications carriers to provide broadcast television, iTV and VOD services to subscribers on DSL transport networks. ( ) ( )

Trinity Convergence Inc. announced a $3.1 million round of funding. ( )

Verance, a provider of tools and broadcast verification services to track, manage, and enhance the use of media content, said it received $13 million in its third round of funding. ( )

Wave7 Optics Inc. has gotten $3 M from Mellon Ventures in their second round of financing, bringing their Series B total to $23 million. The company is developing a high-bandwidth, optical access system for last-mile connectivity. ( )

Wayport, a provider of Wi-Fi wireless and wired high-speed Internet service to business travelers, has secured $15 million in venture funding. ( )

--Other News

2Wire has introduced the 2Wire OfficePortal for the SOHO market. It has a slot for Wi-Fi (802.11b) networking, an optional ADSL modem and HPNA interface, a 4-port 10/100 Ethernet switch, a firewall, NAT and a browser based interface for managing the office network. ( )

@Security Broadband Corp. has announced that both Comcast Cable and Cox Communications will launch their SafeVillage security systems. The systems allow customers to remotely view their homes and interact with people there via video and audio using their cable modems. ( )

ANT Limited, IBM, InterActual Technologies, OpenGlobe and Wind River have demonstrated DVD technology for playing enhanced movie content. The collaboration will enable studios and manufacturers to create advanced consumer platforms and content, providing new opportunities to bring enhanced DVD into the living room. ( ) ( ) ( ) ( )( )

ARRIS and Comcast Cable announced that ARRIS will provide its Cadant C4 CMTS for Comcast's ongoing Voice over PacketCable trial in its Detroit, Michigan system and will evaluate broader deployment of it when the trial concludes in April. The trial, which began in 4Q01, provides primary-line residential voice services over IP and interfaces these markets through existing circuit switches to the PSTN through a voice gateway. ( ) ( )

ARRIS also announced availability of Touchstone Telephony Port, an outdoor network interface unit with embedded multimedia terminal adapter (MTA), integrated DOCSIS 1.1 cable modem that supports up to four VoIP lines, a 10/100 BaseT Ethernet port, HomePNA 2.0, battery backup and remote power status monitoring. Arris was also selected by newcomer Altrio, a California broadband communications provider. to supply their complete end-to-end voice and high-speed data solution.( ) ( )

AT&T Corp. announced trials of new streaming capabilities for its Internet-based content delivery network that will help media and entertainment companies deliver pay-per-view and subscription-based Web services to Internet users. ( )

BT is cutting prices of its wholesale home user broadband package. Starting April 1, the price will be cut from 25 (US$35.35) plus VAT for self-installed broadband to 14.75 ($20.85) a month. The package is currently offered by about 200 ISPs in the UK. BT's retail ISP, BT openworld, announced it would cut its monthly charge on April 1 to 29.99 (US$42.50) from 39.99 (US$56.70). Competitor Freeserve will do the same. ( ) ( )

CableLabs has completed the first of a set of specifications to create a common approach to handling descriptive data, called metadata, associated with on-demand video events. Goals for this common approach are reduced operating and encoding costs and increased ease of integration with program guides and other existing infrastructure. CableLabs formed a royalty-free Intellectual Property Rights (IPR) pool signed by contributors to the spec. ( )

Cablelabs recently certified 12 more DOCSIS 1.1 cable modems and qualified two cable modem termination systems (CMTS) in its third 1.1 wave; there are now 21 DOCSIS 1.1 certified cable modems and 4 qualified CMTSs. In addition, CableLabs has certified 203 DOCSIS 1.0 cable modems and 26 CMTSs. ( )

Comcast is moving toward opening to multiple ISPs by agreeing with NetZero and Juno owner United Online to offer high-speed Internet services on Comcast cable systems in Nashville and Indianapolis. As Comcast and AT&T Broadband seek US federal approval to combine, they have committed to offer consumers a choice of high-speed ISPs via cable lines, according to recent FCC filings. ( ) ( )

e-BOX has been formed jointly by Pioneer, Sharp, National Semiconductor, Sigma Designs, CMC Magnetics, iVAST and Modern VideoFilm to collaborate on developing an MPEG-4 based technology solution for advanced broadband services. Comcast has agreed to define the architectural requirements for the MPEG-4 technology for VOD and ITV from e-BOX and will also test the initial production systems in the field early next year. ( )( ) ( ) ( ) ( ) ( ) ( ) ( ) ( )

Imedia Semiconductor Corp., a Terayon subsidiary, has launched its second-generation line of cable modem processors, based on DOCSIS 2.0. Their IM6030 is the first chip in this product line and is in Terayon's DOCSIS 1.1 certified TJ 715 cable modem. ( ) ( )

Intertainer launched Demand E.S.P., a services platform providing cable operators, broadband providers and content owners with modules for managing, programming, distributing and tracking on-demand content. Aliant Telecom of Canada is Intertainer's first Demand E.S.P. client. ( ) ( )

Orca Interactive Ltd. has signed a distribution agreement with Mitsui & Co., Ltd. to pre-purchase Orca's software licenses for the RiGHTv(TM) software enabling broadband interactive television and video on-demand over FTTH, CATV and xDSL lines. It will distribute the products in Japan. ( ) ( )

Sonera of Finland and Telia of Sweden announced plans to merge. The headquarters for the combined company will be Stockholm. The deal creates the leading telecommunications group in the Nordic and Baltic regions and opens the door for further partners to join them. ( ) ( )

Satellite broadband continues to be launched in places where operators need to fill voids.

  • BT launched 2 business-oriented packages: a single user version at 59.99 per month and a four-user version at 109.99 per month. The service is 512kbps downstream and 256kbps upstream. ( )
  • In India, Bharti Broadband Networks Ltd, has launched satellite-based broadband Internet access service in conjunction with Gilat Satellite Networks. ( )
  • StarBand, founded by Gilat, has also launched its Small Office service. It incorporates network-sharing software enabling up to five office users, virtual private network (VPN) capability, static IP addressses, business web pages and e-mail accounts. The monthly service prices are $129.99 and $169.99 for the three-seat and five-seat services respectively. ( )

Telefonica, Spain's biggest telco, has received government permission to switch from rolling out cable TV in Spain to creating a nationwide ADSL network, according to reports from Cahners. ( )

Telefonica CTC Chile is running an interactive TV trial using a platform from Minerva Networks. Participants have access to live TV, video on demand (VOD) and Internet access. Information gathered in the trial will be used to refine plans for a full-scale deployment later this year. ( ) ( )

Telewest, Britain's second-largest cable TV operator, is set to be taken over by its banks and bondholders, reports The Observer. Its share price fell signficantly over the last 18 months. John Malone's Liberty Media, a 25 per cent owner of Telewest, is expected to play a major role in the restructuring. Telewest's larger rival, NTL, is also ailing and is talking to its lenders about completing a debt-for-equity swap by the end of 2002. ( ) ( )

Telstra, Australia's largest phone and Internet company, launched three new TV-style broadband channels featuring entertainment, popular science and sports programming, exclusively to its broadband subscribers. The content developer is Beyond Online Ltd. ( ) ( )

TiVo Inc. is raising its monthly subscriber price on April 2nd from $9.95 to $12.95. ( )

--Interactive TV entering the major leagues?

Back in December we wrote about the Bandies, a mini-Hollywood-style event during the Western Cable Show which recognizes excellence in interactive content. Bill Niemeyer reported in his newsletter that ITV is moving up to the major leagues. The Board of Governors of the Academy of Television Arts and Sciences will be awarding an Emmy for interactive television as part of this year's awards. The final entry deadline is April 26. ( )

--Public Policy/Regulatory News/Legal

Australia: Australia's dominant telco Telstra is in line for fines of up to 1 million Australian dollars ($530,500) per day, after the Australian Competition and Consumer Commission (ACCC) formally invoked a "competition notice" over the issue of access to digital subscriber line (DSL) broadband services. ( )

Netherlands: A Dutch appeals court ruling in the case between Internet software company KaZaA and Dutch music rights organization Buma Stemra overturned a November decision in favor of the music industry. They ruled that KaZaA was not liable for any individuals' abuse of its software. The defense was built partly around a 1984 U.S. Supreme Court ruling which said manufacturers of video recorders are not liable if consumers use their products to abuse copyrights. ( )

US: The Federal Communications Commission re-organization went into effect on March 25th. ( )

The US House passed the Tauzin Dingell bill but it faces lots of opposition in the Senate. Reactions ranged from "This policy change is sorely needed" (Tom Tauke, RBOC Verizon) and "long-overdue deregulatory measure" (Lauren J. Belvin, RBOC Qwest) to "vote was a victory for special interests over the public interest" (Mark Cooper, Consumer Federation of America) and "marks a sad day in the short history of competition in telecommunications service" (the Association of Communications Enterprises).

The FCC declared that cable modem service is interstate "information service" and said Internet delivered over cable isn't subject to common carrier regulation that requires unbundling. As an "information service", it is also not subject to local cable franchise fees. The Commission also issued a Notice of Proposed Rulemaking (NPRM) to seek comment on what rules do and should apply to the service.

EHexpo: Window Blinds, Central Vacuums and Home Networking?

What's Hot at Electronic House Expo

To learn more about what's hot for home system integrators, we spent three days at Electronic House Expo (EHX) in Orlando. This show is mainly targeted to the group we've previously called "broadband plumbers". In industry jargon, they refer to their realm as "low voltage companies".

Central Vacuum system --> Click for larger pictureSolar Shading Systems booth --> Click for larger pictureBig changes are happening in this industry. Many of its members come from backgrounds in home security, while some have specialized on installing home theatre. Today, they are faced with customer demands that span the range from low tech items like central vacuums and electronically controlled blinds to home networks, with multiple PCs, routers, software and all the complexity those entail. Add in systems such as structured wiring, distributed audio and video, telecommunications, energy management and lighting control and you begin to see the diverse range of products and services these folks need to stay abreast of.

To keep pace with all these changes, their trade organization, the Home Automation & Networking Association (HANA) merged in January with the Consumer Electronics Association (CEA) to work on publicizing the Tech Home Rating System (see bbhr last month) and creating training curricula and certification to provide knowledgeable, well-prepared personnel. ( )

To promote knowledge of this broad field, the groups are backing a new Computing Technology Industry Association (CompTIA) certification for Residential Services Integrators (RSI's). This baseline certification will provide an overview of home electronics services and systems and allow specialists to understand how their area integrates with the bigger picture. This is key since the industry has found that the number one criterion for selecting a home technology supplier/installer is "completeness of offerings". ( )

Tim Herbert, Director of Research for CEA, shared extensive details from his consumer survey work regarding home networks, broadband access and drivers for the "intelligent/networked home". A few items of interest:

  • over 92% of cable and DSL users are satisified with their ISP as compared to only 68% of dial-up users who report satisfaction
  • "no single application will drive consumers to home automation/networking in large numbers" so give up looking for THE killer app
  • the vast majority of homes with PC networks (86%) have done their own installation
  • for support during the installation process, 57% of survey households had called the ISP and 43% called the manufacturer of the networking product (people made multiple support calls)
  • three major challenges for broader penetration of "the intelligent/networked home" are complexity, skepticism and reliability.

PC Networking and Support

(l to r) Sammy Saloum, Avi Rosenthal, Gordon Van Zuiden, Julie Jacobson --> Click for larger picturePC networking and support is the area that is the newest for this industry. Julie Jacobsen, Editor, Home Networking News, moderated a panel to help home technology providers who are not yet performing this function figure out whether they should develop in-house capabilites or subcontract it out. ( )

The three panelists represented a diverse spectrum, including one targeting and catering to high net worth households, one going directly for the mass market, and one still evaluating what to do.

All agreed that broadband sharing is the number one driver for home networking and that integrators must be prepared to handle this part of their customers' needs.

cyberManor - "We are your trusted IT source"

Gordon Van Zuiden, CEO of cyberManor has chosen to focus on high-income individuals who want a "doctor for their IT" and are willing to pay for this attention. His jobs are generally custom and go after the same kinds of individuals whom CEDIA has addressed (the high end custom home theatre group). Because Gordon's company specializes in the data aspects of the e-home, 100% of his jobs include residential gateways.

cyberManor also handles "LAN in a van" jobs which are less involved. His rates are $125/hour for an on-site engineer and $75/hour for wiring and termination activities. His product mark-ups are from 30-75% to provide sufficient margin from these jobs to warrant the time spent. This is key since one of the biggest pitfalls of participating in this business are all the customer demands that can take time and erode profitability. The other big pitfalls are staff turnover and the training needed to keep up with the inexorable advance of technology. ( )

CompUSA - Tackling the mass market

CompUSA's slogan is "where America buys technology". Sammy Saloum, Director, Business Development and Strategic Alliances for their Technical Services division, opened our eyes to the huge participation this company already has in field service and installation.

In his talk and a subsequent meeting with him, we learned that:

  • Services is CompUSA's most rapidly growing division.
  • They have over 2000 certified field technicians and 20 field service teams nationwide, covering 92% of the US population.
  • They do 50% of their work for other companies, thru their Global Service Solutions group.
  • They average 17,000-20,000 network-related installs per month.

So why has this retailer moved so aggressively into services? We heard four reasons, which together make a pretty compelling story.

  • One of the key reasons is to prevent returns. CEA's research found that 13% of those who buy products associated with home networking end up returning them, generally because they are unable to make them work. Most of these are not product problems but the inability of the user to manage the installation process. PC installation also prevents PC returns.
  • Customers who have a positive experience with their CompUSA installation are likely to go back to the store for additional purchases, so service promotes more customer loyalty and product sales.
  • The margins on services are higher than the margins on products.
  • During a service event, technicians sometimes notice things that provide an on-site sales opportunity. Sammy told us "the tech is like a doctor. When he says you need more memory, it's like the doctor saying you need surgery."

In contrast to cyberManor's hourly pricing for service, CompUSA has tiered pricing for different kinds of service events so that the customer knows what the service price will be.

CompUSA does a lot of OEM service for other companies, including cable MSOs. Though the truck may say AT&T or Time Warner, CompUSA personnel might actually be the ones making the visit or handling the phone calls. ( )

Homeworks Automation

Avi Rosenthal's company Homeworks Automation (HWA) currently handles in-home installation for several broadband providers. If the customer runs into a problem after the installation, the first service call generally comes to Avi's company since they were the human face of the broadband provider to the customer. Many of these calls can be resolved on the telephone. If not, they refer the call to the appropriate channel, depending on the symptoms.

If the customer wants and needs on-site support, they send a technician and bill for the service. They have not aggressively addressed the service and maintenance business however, until they resolve how to do it without succumbing to the issues such as turnover, training, etc. referred to above. They are evaluating whether to ramp up to handle more service themselves or to sub-contract it out. Our sense was that HWA is far from alone in working on whether and how to address the services opportunity. ( )

More Technology Players

Since EH Expo is geared for home system integrators, it's a place where technology providers come to show off their latest wares and convince integrators to use their systems. Many of the vendors also had displays at the International Builders' Show (see last month's BBHR ). We had the opportunity to meet with additional players in the home electronics value chain this time.

  • CorAccess Companion 6 --> Click for larger pictureIn our IBS article, we mentioned the cute display offered by CorAccess, and wished we'd taken a picture of it. We saw the Companion 6 TouchPoint again at EHX and were glad to see it featured in other booths on the show floor as a wall-mounted controller for lighting, home theatre, HVAC and more. ( )
  • GreyFox "can" with telephone, data and video modules --> Click for larger pictureBefore the show, we speculated that structured cabling systems vendors might use a "lock-in" strategy to force users to expand with components from the same vendor. We were particularly interested in talking with Greyfox Systems since they were one of the home networking pioneers and developed the modules used by many vendors. Greyfox has entered the market as a competitor with their own branded cabling system and many of their former OEM customers are now building their own modules. However, many systems continue to use the same module design. The picture shows a Greyfox enclosure with telephone, video and data modules.
  • Closeup of GreyFox module --> Click for larger pictureKevin Santelli of Greyfox showed us one of their video modules and assured us that the Greyfox modules will fit in structured cabling enclosures from many other companies including GE SMART and UStec. ( )
  • Jay McLellan with OmniPro II home controller --> Click for larger pictureHome Automation, Inc. was founded in 1985 and is another industry old-timer and pioneer in integrated home automation systems. We met with Jay McLellan, president of HAI who showed us their OmniPro II - their sixth-generation controller - which integrates security, HVAC (heating and air conditioning) and lighting control. It includes interfaces to touchscreen displays and PDAs. The new model has an Ethernet port so a web browser can reach its control and monitoring features from a PC or PDA in the home or from the Internet. ( )
  • Gary Allen with Digital Closet enclosure --> Click for larger pictureMany of the systems we saw are designed mainly for the "new build" or major remodeling situation. Digital Closet showed us their system which is for retrofitting existing homes (their Web site says "How do you transport a 30-year old home into the 21st century?"). Digital Closet is a brand name for TII Network Technologies, a long-time player in surge-protection equipment. Gary Allen, their VP of sales, showed us the Digital Closet enclosure including whole-home surge protection, a residential gateway, and a HPNA-based phoneline networking system. ( )
  • Alejandra Rutledge showing Compaq iPAQ home networking products --> Click for larger pictureCompaq has a small and entrepreneurial group, the Access Business Group, which has responsibility for consumer products. Alejandra Rutledge, Product Marketing Manager for Interconnected Products, showed us their line of consumer networking products. We especially liked the iPAQ-branded 5-port Ethernet switch and Wi-Fi to USB adapter. ( )

Networked Audio and Video

"Networked audio" started in two very different places. One was prompted by folks who love digital music but became tired of sitting in front of a PC to access and listen to their growing audio collection. The other came from custom integrators who created systems with speakers in multiple rooms and the ability to control what music played where. Our visits with Turtle Beach and GE SMART showed us evolutions of these two thrusts. As technology and user interface design continue to progress, we expect the capabilities of such systems to meld closer together.

The PC music phenomenon is particularly widespread in younger age groups. A recent Parks Associates study found that in U.S. households with Internet access, 81% of respondents in the 18-24 age group "have downloaded MP3 files onto home computers, storing on average approximately 350 clips, songs, and files." Although that figure decreases to 40% in the 45-54 age group, the trend is clear.

Our discussions with Texas Instruments provided another piece of the puzzle--one plausible way by which the plethora of audio, video and PC products will be interconnected.

Turtle Beach AudioTron - A Networked Jukebox for the Listening Room

Seth Dotterer with AudioTron --> Click for larger pictureAlthough it has been on the market for more than a year, and some readers had pointed us to it, we hadn't seen AudioTron's device in person until EHX. Seth Dotterer, Director of Marketing at Voyetra Turtle Beach, described how the unit works in a networked home.

The Audiotron is a network appliance designed to access music stored on PC hard drives and play selections in a listening room. Packaged as a stereo component to fit in the family entertainment center, it connects to the home network with HPNA (phoneline) or Ethernet, and has both analog and digital outputs for the home theater system. It finds all the music stored on computer hard drives (it handles MP3, WMA and WAV digital music file formats) and builds a consolidated index of up to 35,000 titles. It can be controlled from its front panel, from a remote control, or from a PC interface. The current model doesn't support UPnP but we expect that'll be added soon as UPnP catches on (see below). AudioTron is priced for the consumer market at less than $300. ( ) ( )

In our January 21 issue, we discussed the Escient Convergence FireBall, which won the "Best of CES" award for home audio. While the AudioTron is for people who are already used to "ripping" files on a PC, the FireBall is an "all in one" system that interfaces with CD jukeboxes, rips CDs, stores music files on its own hard drive, and burns CDs on its built-in drive. The FireBall has a nice user interface - it uses the TV screen and an Internet database to provide background information on each CD. But at $2000, we think it's best suited for those who already have CD jukeboxes, aren't comfortable with the PC, and have deep pockets. ( )

GE SMART Introduces UPnP Loudspeakers

GE SMART has a multi-part story. It took some discussion time for us to understand the various pieces they have been showing and why Microsoft has joined GE and SMART in this venture. GE SMART now has four product lines - structured wiring, lighting controls, integrated home controls, and networked A/V - which can be mixed and matched for a new or existing home.

Mike Braithwaite showing GE SMART's networked loudspeakers --> Click for larger pictureWe found the networked loudspeakers particularly interesting as a sign of things to come. We asked Mike Braithwaite, Managing Director of the Audio-Video Product Group, why they were showing what looked like ordinary wall-mounted loudspeakers. He explained that the speakers are actually networked loudspeakers with wired or wireless connections. They have a slot for a network module and are offered without a module, with a built-in wired Ethernet module, and with a built-in wireless Wi-Fi module. The network module includes (naturally) all of the Microsoft audio CODECs.

Most interestingly, the speakers operate as UPnP-compliant devices in a home network. GE SMART is also making a UPnP "real-time encoding module" to connect to an audio source - it has standard RCA jacks on one side and an Ethernet connection on the other. So you'll be able to use a UPnP controller to say "connect the audio output from my home entertainment center to the loudspeakers in the dining room" - the controller could be a PC or other UPnP control point which might in the future be a wall-mounted display or a webpad.

This is the first consumer A/V device we've seen with UPnP built-in. Its a great example of a not-so-distant future where all the consumer electronics devices can be controlled from anywhere in the house over the broadband network.

GE SMART's current series of networked loudspeakers is targeted to integrators - companies that build them in as part of a whole-home distributed audio system. Mike told us that they will soon announce stand-alone speakers for the end user. ( )

Networked High-Definition Video - IEEE 1394b and VHN

Before we left for Orlando, one of our friends told us we should check out what Mitsubishi was doing. Lee Ratliff of Texas Instruments was in their booth to show networked high definition (HD) video over IEEE 1394b.

As we look at how the various devices in the home are connected today, we see IEEE 1394 (also called "FireWire" or "iLink") as the digital video standard used for digital camcorders; most of today's PCs have built-in ports for 1394 to enable your PC and camcorder to communicate. But 1394 is designed only for short distances up to 4.5 meters and uses special connectors and cables. Meanwhile, your other PC communications usually happen over Ethernet with category 5E cabling.

TI's demonstration was all about 1394b, a new standard, which can operate up to 100 meters, and can use standard Category 5 cabling or fiber. The demonstration provides one plausible mechanism by which the physical interconnection of audio, video and data might all come together.

Mitsubishi D-VHS HDTV VCR and CAT5 cable with IEEE 1394b --> Click for larger pictureIn the demonstration, a Mitsubishi HS-HD2000U D-VHS HDTV VCR (shown on top of a TV) records and plays HD video in the D-VHS standard, and interfaces with IEEE 1394. Behind the VCR was a prototype TI box which converts 1394 to 1394b and connects it to the CAT5 cable shown running overhead.

Lee Ratliff of TI pointing to 1394 cable --> Click for larger pictureThe other end of the CAT5 cable is connected to another TI box, which converts 1394b back to 1394 and connects to the back of a large-screen high-definition Mitsubishi TV set.

Lee told us that 1394b can operate at up to 3.2 Gbps over fiber and at 100 Mbps over CAT5. Over CAT5, 60 Mbps is available for isochronous data such as video; since each D-VHS HD streams requires 28.2 Mbps, a single CAT5 can carry two simultaneous HD streams or a single HD stream and several standard-definition streams (up to 7 Mbps each). At the same time, 20 Mbps is available for other applications. We asked about operating over CAT 5e and were told that 1394b would probably be able to operate much faster than over CAT 5, but there isn't as yet a spec for 1394b over 5e.

TI claims to be the leader in supplying chips for 1394, and is developing the chips for 1394b. Samples will be available by the end of 2002, and production quantities by mid-2003. TI expects to see consumer products based on 1394b on the market before the end of 2003. While the Mitsubishi/TI demo was focused on HD video, we suspect that the 1394 interfaces on today's equipment will be replaced with 1394b when the chips are available, so that the port on a PC could be used for a full network connection, not just for camcorders. ( ) ( )

But 1394 is only the physical transport part of the story. In the January 21 issue, we wrote about Versatile Home Network (VHN), a new standard being developed by the EIA and the CEA. VHN defines a complete standard for a "home intranet" and is built upon 1394b and UPnP. At CES we talked with Gary Paxinos of MetroLink, Chairman of the CEA R7.4 VHN committee, and we later talked on the telephone with Bill Rose, the Chairman of CEA's R7 Home Networking Committee. We're watching VHN closely: if the PC and consumer electronics industries both adopt VHN, we'll see the interconnection of PCs, camcorders, HD cable boxes, HD VCRs, and digital TVs and more over a common network. ( )

Visiting a "Broadband Plumber" - e house

We've written before about the need for "broadband plumbers" to provide and support broadband networks in the home. So we were delighted to meet Gary Lawrence of e house, a Florida company that's now providing these services for new homes in seven cities in Florida and South Carolina.

Like many companies moving into home networking, e house has its roots in security systems and audio/video installation. It is now providing structured wiring and is starting to offer home networking setup and support.

e house arranges with home builders to act as the preferred or exclusive "low voltage" integrator. The builder typically provides a LV allowance for a home - what's included in the allowance depends on the price point of the home. As a minimum, it might include home security and telephone and TV distribution to five rooms. After signing a contract for a new home, the home buyer visits the local e house showroom for a consultation, and e house has the opportunity to demonstrate the advantages of additional wiring for audio, video and data plus additional equipment for a home theater, whole-house audio, etc.

The first meeting with e house simply introduces the home buyer to the possibilities. In a second session they interactively design what the homebuyer wants and then work up a quote. The additional wiring and equipment become part of the home purchase and are typically included in the mortgage. e house pulls all of the cabling while the house is being built, and then terminates the cables and installs the equipment just before the buyer moves in.

The builder gets a percentage of the sale, and so is incented to maintain the relationship with e house. For homes in the $400,000 to $1.5 million range, an average e house sale might be around $4000. For lower cost, production homes, they have a lower average sale but generally offer fewer options and can do higher volume.

e house Orlando --> Click for larger pictureGary arranged for us to visit the e house Orlando office in Lake Mary, Florida. The office includes a customer showroom where e house "design consultants" can demonstrate the latest in home theatre, whole-home audio, integrated home controls and home networking.

DJ and Total Connectivity poster --> Click for larger pictureDavid "DJ" Jones, Operations Leader at e house Orlando, was kind enough to meet with us on a sunny Saturday afternoon to walk us through the whole process, from ordering, to wiring, equipment installation and customer training, and post-sale support.

An 'e-ready' house --> Click for larger pictureWe really liked the idea of an "e-ready" house. This diagram in the showroom shows very nicely how all of the elements - telephone, lighting, loudspeakers, home theater, PC networking - fit together in the house.

After our visit, we talked with Maria Alfonso, the Director of e-services. She said that e house has established an "e-serviceCLUB" to provide post-installation support. This arrangement includes unlimited support though a toll-free number, and on-site visits as required to fix problems. Maria told us "we launched it because of customer demand - customers drove us to sit down and develop some kind of membership service to take away the headaches and have a place to call." For $385, the e-serviceCLUB warrantees all the wiring in the home for a 3 year period. ( )

Broadband's Becoming Mainstream

After our visit to EHX and some follow-ups around Orlando, we headed off for some relaxation on the barrier islands just off Sarasota.

We found ourselves in several conversations that make us think broadband is moving toward the mainstream. Or maybe it's just the people we talked to in the 50+ age-group who just can't live without it.

-Scene 1: We're having breakfast at the Hyatt Hotel in Sarasota and get into a conversation with the couple at the next table. They're from the UK (near London), use a cable modem from Telewest, and were worrying about the perilous financial situation for cable providers in the UK and what impact it would have on their service. They couln't imagine being without it.

-Scene 2: We looked at a condo for sale on Longboat Key. We spoke with the owner, an elderly gentleman who was disabled by a stroke many years ago. We saw he had a computer and asked if broadband service was available. He told us he is an avid broadband user, and said having a computer and online service "saved my life". Because of his difficulty in getting around, broadband is his main connection with the world.

-Scene 3: While driving with a realtor, Geri Kates from, who was showing us the condos currently on the market, we ask about her experiences using online services. She explains how she has Road Runner cable modem service and has upgraded to their higher-priced business service so she can have more consistent performance.

When we told her our priority to have broadband service in a condo for a southern getaway, she said "I've lost sales in older neighborhoods because so many people have someone who works at home and they loved the house but couldn't buy it because they HAD to have broadband".

-Scene 4: The Farmers' Market in Sarasota on a Saturday morning. We are eyeing some very real-looking silk flower arrangements in oriental containers. As we talk with the couple selling them, we learn they are from our home state of New Jersey, used to have an import/export business and have retired to Florida. They sell their flower arrangements on the Web and are broadband users. They tell us they're glad they're still using their AOL Web address for business, because of the transition problems experienced by Comcast as they moved from @Home to Comcast's own email service. (ps--we bought an arrangement!)

Dave relaxing with tall drink --> Click for larger pictureSunset off Lido Key near Sarasota --> Click for larger pictureLest you think that all we saw and talked about was broadband, we did pause to linger by the beach for some libations, eat in some funky restaurants...

...and enjoy some great sunsets.

Hot off the press: IEEE Communications Magazine

We were invited to submit an article in the April 2002 issue of IEEE Communications Magazine for a section devoted to "Home Networking". Our article raises some of the questions to be considered in designing home networks for the future. We discuss the evolving situation in the home, user needs for networking, and the growing set of problems faced by users. The article includes a survey of major home networking approaches and how well they fit user needs. Please visit to view or download the article.

Website Changes

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Your Voice -- Readers' Comments

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


Intel's David Nash offered some corrections to our Feb 25th article: 1) CEA's THRS working group was chaired by Pete Lesser of X-10, while David was "an active contributor and vocal champion." 2) We misquoted David as saying "mission this year is that 100% of home starts ... go in with at least a minimal solution." He says that's their "Vision but NOT a 2002 deliverable."

Broadband in Sweden

When it was introduced two years ago, broadband service over symmetrical Ethernet cost about $20 a month, and we thought Stockholm was the place to live if you wanted very affordable broadband. We'd heard about rate increases for broadband in Sweden, and wrote our friend Stefan Tordenmalm in Stockholm for confirmation. He replied "B2 has increased the rate to SEK 320 per month." Telia "DSL was recently increased to 375 SEK for 0.5 Mbit/s and CATV now costs 295 SEK for 0.5 Mbit/s and 350 for 1 Mbit/s. Tele2, the main alternative carrier charge 250 SEK for their CATV service (0.5 Mbit/s)."

Stefan's view on the impact is "Most certainly this will have implications on the broadband penetration. Charging USD 35 in the US is different from charging the equivalent in Sweden. Comparing disposable incomes, USD 35 is much more affordable for Americans. Many of my friends, young people who make pretty good money and are used to having instant access to a speedy connection at their office, simply aren't prepared to pay that much. They use the internet at the office and don't connect very much at home, so a modem suffices for them."

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 ( ).

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