BBH Report Home Page
May 23, 2002 Provided by System Dynamics Inc.

IN THIS ISSUE:

Heard on the Net

Computerized Complexity
Frustrations of Everyday Life

Cable's Conundrum
Set-tops and Moore's Law

An Interview with Bermai
802.11a Wireless

Broadband
Are We Reaching "The Tipping Point"?

Your Voice -
Readers' Comments

Tell A Friend


Heard on the Net

News about People and Companies Influencing The Broadband Home


People News

Greg Ballard has been named EVP of marketing and product management in the restructuring of SONICblue's management team. He was previously CEO of 3dfx. Also, Nikhil Balram will be VP of product marketing for ReplayTV and connected home products. Balram was previously with Sage Incorporated. ( www.SONICblue.com )

Peter C. Boylan III was named President and Chief Executive Officer of Liberty Media's new unit, Liberty Broadband Interactive Television, Inc. (LBIT), which will focus on developing and investing in the interactive television sector. LBIT will own and manage Liberty's investment in OpenTV. Boylan was previously President and COO of TV Guide, Inc. Four Gemstar executives resigned to join Boylan at LBIT. They are Mark Allen, Toby DeWeese, William Thomas and Craig Wagge. ( www.libertymedia.com )

Jeff DeLazaro has been named Vice President, Sales, Western Region for Cedar Point Communications. Jeff was previously with ZOLO Technologies. ( www.cedarpointcom.com )

Joy Howell, founder of Cambridge Strategic Partners, a Washington-based public policy communications and telecommunications consulting firm, has agreed to merge her operation with The Weiser Group and will manage their new Washington office. ( www.weisergroup.com )

Jeffery Huppertz has joined OpenTV as VP of North American cable. Huppertz was previously at ClearBand LLC. ( www.opentv.com )

Steve Larsen has joined St. Paul Venture Capital as a venture partner for the Software and Services team. He is currently serving as the acting VP of business development for Visage Mobile, an early-stage company in St. Paul's portfolio. Larsen was a founding executive at Net Perceptions. ( www.stpaulvc.com )

Jeff Shell has joined Gemstar-TV Guide International, Inc. as co-President and Chief Operating Officer. Jeff was formerly President and CEO of Fox Cable Networks Group. ( www.gemstartvguide.com )

Phil Summons joined BroadJump as their director of sales for EMEA. He will be based in their new European office in Uxbridge, Middlesex, England. Phil was previously with Openwave Systems Inc. ( www.broadjump.com )


Company News

--Acquisitions

Andrew acquired England's Quasar Microwave Technology. The addition will complete Andrew's radio-frequency path offering in terrestrial antenna subsystems. ( www.andrew.com )

Bertelsmann agreed to acquire the assets of Napster Inc. for $8 million. Konrad Hilbers, and the founder, Shawn Fanning, who had left Napster, both announced their return. ( www.bertelsmann.com ) ( www.napster.com )

enScaler Inc., a provider of platforms and applications for streaming and rich media, has acquired Lariat Software Inc. ( www.enscaler.com ) ( www.lariat.com )

Finisar is purchasing the passive optical component product line from New Focus for $12.8 million. ( www.finisar.com ) ( www.newfocus.com )

Paradyne Networks acqued the assets of Jetstream for $3 million. Jetstream has more than 50 percent of the VoDSL equipment sales. ( www.paradyne.com )

PowerNetGlobal Communications purchased Aleron for $3.6 million. The subsidiary will be called Aleron Broadband Services. ( www.powernetglobal.com )

Juniper Networks, Inc. agreed to acquire Unisphere Networks, Inc., a Siemens company, in a deal worth approximately $740 million. Siemens and Juniper Networks have also agreed to enter a global partnership in the field of IP infrastructure and related systems. ( www.juniper.net ) ( www.unispherenetworks.com )

Liberty Media Corporation and MIH Limited announced the signing of a stock purchase agreement by which Liberty Media will acquire MIH's controlling ownership interest in OpenTV Corp. After accounting for Liberty Media's existing shareholdings in OpenTV, its total economic interest is approximately 46% and its total voting interest is approximately 89%. Liberty Media also signed a letter of agreeement for possible acquisition of all outstanding shares of common stock of interactive TV company ACTV Inc.. ( www.libertymedia.com ) ( www.mih.com ) ( www.opentv.com ) ( www.actv.com )

USA Broadband Inc. and Las Americas Broadband Inc. have agreed to combine their operations to strengthen their service offering in California and Mexico. Las Americas shareholders will exchange their common stock for USA Broadband common stock on a 8:1 ratio. When the merger is complete, Las Americas stockholders are expected to own roughly 29 percent of the combined company.

--Funding

Is There Money To Be Had?

Is the broadband funding glass half empty or half-full? It depends on whom you ask. We recently had email from Kelly Porter of Zap Ventures, which invests in early stage broadband companies. Kelly wrote that despite the prevailing wisdom that “venture capital is in hibernation and telecom is a graveyard” ZAP believes otherwise and is “actively looking for great companies and entrepreneurs to in invest in.” If you know or are involved with very early stage companies in broadband – particularly in voice-over-IP, Wi-Fi / 802.11, and internet access/the last mile - you can find out more at ( www.zapvc.com/Entrepreneurs.htm ) .

For a different angle on what's happening with funding, the Wall Street Journal recently wrote that investments in closely held communications and media concerns have continued to drop. "In the first quarter about $939 million was invested in such companies, the lowest amount in at least three years. Exits, through selling out to larger companies or via initial public offerings, have been scarce. As a result, venture capitalists specializing in communications have hunkered down, tightly clutching cash needed to survive the recession while also slashing the start-up mouths they have to feed. " Of course the situation isn't helped by all the negative PR from the woes of big public companies, such as Adelphia and Worldcom.

That said, here are some companies that did get new funding recently:

Axcelerant Inc. obtained $9 million in funding. The company manages broadband VPNs that connect remote office and home office users to the enterprise network, using high speed broadband. ( www.axcelerant.com )

BigBand Networks completed a $27 million financing round. Digital cable operators use BigBand's Broadband Multimedia Service Router (BMR) to manage bandwidth and other network media resources. ( www.bigbandnet.com )

P-Cube announced that it has completed its series C funding round, gaining $35 million from new and existing investors. The company's IP service control platforms enable service assurance, delivery and control. ( www.p-cube.com )

Rappore Technologies has obtained $3 million Series C funding for its software which enables communication using disparate "wirefree" technologies, across different operating systems. ( www.rappore.com )

Redback Networks is teaming with Nokia, which has taken a 10% stake in the company. Their sales forces and channels will cooperate in targeting leading carriers and service providers. The companies also agreed to cooperate on customer service and technology development. ( www.redback.com ) ( www.nokia.com )

RedWire Broadband closed $1.8 million of additional financing. The company is an in-building broadband service provider and will use the funds for the completion of their Southern California network. ( www.redwire.net )

SerCoNet, a provider of home networking solutions for the residential and SoHo markets, has closed an additional round of $7 million in financing. To date, the company has raised a total of $13 million. ( www.serconet.co.il )

Xytrans received $8 million in series B financing, increasing its venture funding to $12.5 million. ( www.xytrans.com )

--Other News

Adelphia, the sixth-largest US cable operator, has been in turmoil since acknowledging questionable transactions between the family and the company. Although founder John Rigas and his son Timothy have resigned from their corporate roles, the family is resisting giving up its five of nine seats on the Board. The company has asked banks for more time to line up credit to make debt payments and avoid bankruptcy. ( www.adelphia.com )

BroadbandPlus is the new name for the convention formerly known as The Western Show. This year's show will include the 10th anniversary of CableNET and will be held December 3-6 in Anaheim, CA. ( www.broadbandplus.org )

Broadband Services, Inc. announced the availability of MapVantage, an intelligent mapping, network asset management and data storage solution for the communications industry. Their solution provides an open standards access hub for physical network data. ( www.broadbandsvc.com )

Broadcom announced their new single-chip combined cable TV set-top box/cable modem solution. Their BCM7110 system-on-a-chip provides a dedicated digital cable TV channel as well as DOCSIS 1.1 cable modem enabling interactive TV functions and broadband Internet access through the same device. It also incorporates PVR functionality, a high performance MIPS processor, an advanced graphics engine and home networking. ( www.broadcom.com )

BroadJump continued their successful position in 1Q 2002, including having been responsible for activating 69 percent of all new high-speed Internet connections. ( www.broadjump.com )

CableLabs has extended the OpenCable Application Platform (OCAP) software, or middleware, specification with the release of OCAP 2.0. OCAP is a middleware specification that enables application portability across a wide range of home devices and cable networks. OCAP 1.0, issued in January, defines a Java based Execution Engine (EE), and OCAP 2.0 extends that platform with the addition of web-based technologies like XHTML, XML, and ECMAScript. ( www.opencable.com )

Consolidated Telcom selected Vyyo to provide broadband Internet services to customers in three rural US areas of North Dakota. The deployment is comprised of three MMDS super cells covering a total area of 10,750 sq. miles. ( www.ctctel.com ) ( www.vyyo.com )

The DSL Forum announced their newly approved Technical Report (TR)- 048 "ADSL Interoperability Test Plan," a key milestone toward achieving widespread retail ADSL availability. The spec defines technical criteria for interoperability and will be the basis for a DSL Forum Independent Testing Laboratory (ITL) program. The testing suites will aid DSL vendors in verifying that their products are interoperable. The ITU plans to make TR-048 part of the requirements in the updated ITU ADSL2 Recommendations. ( www.dslforum.org )

Electronic Arts announced a deal to provide its games for the Sony Corporation's new online gaming effort. Sony, Microsoft and the Nintendo Company are all unveiling their strategies to capture those who want to participate in multi-player multi-location games via the Internet at Electronics Entertainment Expo (known as E3). Microsoft announced that it will begin consumer tests of Xbox Live this summer with a one-year subscription and a headset, for $49. Xbox owners with high-speed Internet connections will be able to compete and talk with (or cheer and jeer at) one another online. The technology includes the ability for gamers to change their voices on the fly to conceal the identities of the players. Meanwhile the competition has heated up on the price front with Sony cutting the U.S. price of the PS2 to $199 followed shortly by an equal price cut by Microsoft on the Xbox. Then Nintendo cut the price of the GameCube to $149. ( www.ea.com ) ( www.sony.com ) ( www.xbox.com ) ( www.nintendo.com ) ( www.e3expo.com )

Europe Online Investments S.A. and Plenexis GmbH have formed a strategic alliance to offer consumers high-speed Internet and digital, broadband multimedia services via satellite. Plenexis, a former subsidiary of Deutsche Telekom, and Europe Online, which owns a broad satellite network, will offer a 768 kbit/s service. A standard, digital Astra receiver equipment plus a DVB-compliant PCI card are required to receive the new service. ( www.europeonline.com )

Hughes Network Systems Europe launched DIRECWAY, Hughes Network Systems' two-way satellite broadband service, in conjunction with the grand opening of its new European operations center in Griesheim, Germany. ( www.hnseu.com )

InnoMedia announced the launch of MTA 3308 IP Phone, the latest addition to their Multimedia Terminal Adapter line. The product, which looks and feels like a regular telephone, supports the SIP protocol, and is targeted at broadband service providers who are looking to deliver new revenue-generating telephony services to their customers. ( www.innomedia.com )

LSI Logic Corp. and iVAST have signed an agreement to use iVAST's MPEG-4 Platform and LSI Logic's network media processor technology to enable MPEG-4 encoding, publishing and decoding solutions. Targeted devices include video peripherals, video-on-demand enabled set-top boxes, and Internet-ready DVD players, digital televisions and digital video recorders. ( www.lsilogic.com ) ( www.ivast.com )

Microsoft Corp's interactive television division demonstrated their new interactive program guide that targets Motorola Broadband DCT-1000/2000 series digital set-tops at NCTA. Instead of going after future speculative revenues, Microsoft is now paying attention to the here-and-now opportunites of software for thin-client boxes. ( www.microsoft.com )

Motorola Broadband Communications Sector and Digeo Inc., unveiled the Motorola Broadband Media Center (BMC) -- a family of advanced, digital, whole-home media centers. Charter Communications, the fourth-largest U.S. cable operator, will begin deploying the new Motorola BMCs. The Motorola BMC gateways are all-in-one broadband home entertainment platforms and set-tops that support multi-room capabilities. ( www.gi.com ) ( www.digeo.com ) ( www.charter.com )

Netergy Microelectronics VoIP processors were chosen by Telco Systems' and World Wide Packets' CPE platforms for Washington State's Grant County High-Speed Zipp Network. Netergy is a subsidiary of 8x8, and is a Voice-over-Internet-Protocol (VoIP), Voice-over-Digital-Subscriber-Line (VoDSL), semiconductor and software company. ( www.netergymicro.com ) ( www.gcpud.org )

Netflix, operator of the online DVD rental service, sold 5.5 million shares of stock in its IPO at an initial offering price of $15 a share, to gross $82.5 million. Although the service operates by physical DVD delivery today, it is easy to see how it could operate in the future by non-real-time electronic delivery to a customer's digital video recorder. ( www.netflix.com )

OPENTV announced that they have exceeded 25 million set-top middleware deployments. 1Q2002 was their sixth consecutive quarterly report with more than two million deployments. ( www.opentv.com )

RealNetworks and Sony announced an alliance to collaborate on products for consumer electronics devices. Sony is buying 1% of RealNetworks, with financial terms undisclosed. Sony said it will adopt RealNetworks' media technologies in a variety of connected consumer electronics devices. ( www.realnetworks.com ) ( www.sony.com )

Scientific-Atlanta has added PVR capability to their Explorer 8000, using Keen Personal Media's TV4me digital video recorder (DVR) storage management subsystem software and Metabyte Networks' MbTV 2.1 PVR software. S-A has also licensed Metabyte's personalization software engine to enable other personal TV services like targeted advertisements, t-commerce, and personalized VOD. ( www.sciatl.com ) ( www.keenpm.com ) ( www.mbtv.com )

SES Americom announced plans to enter the direct-to-home business by launching two "bent-pipe" satellites over North America. They plan a service launch as early as 2004 using Ku-/ Ka-band satellite capacity. Two satellites (and ultimately two in-orbit spares) would provide the service as a platform for content providers to broadcast DBS-type programming packages and two-way interactive content to subscribers nationwide, including Alaska and Hawaii. ( www.ses-americom.com )

SkyStream Networks has launched the Mediaplex 20 Video Services Router, targeted to telcos and carriers wanting to offer an IP video services solution to enable delivery of television, pay-per-view, and movies on demand to their (voice/data) customers. ( www.skystream.com )

SONICblue announced that it will apply a service-based pricing model to new ReplayTV products, beginning with its ReplayTV 4500 series, to have lower costs at the retail level. Additional details on their service-based pricing model will be made available when the new ReplayTV 4500 series is officially unveiled this summer. ( www.sonicblue.com )

Telefonica, the Spanish telecommunications group, plans to launch integrated ADSL packages with telephony, Internet and television services in 2003. The operator will be in direct competition with cable and satellite groups. Telefonica is expecting to close this year with a million broadband clients. The company has invested 9m euros in Alicante in its Imagenio multimedia pilot project which provides internet access, interactive digital TV and video and audio on the same telephone line, using ADSL technology. The pilot project, running in 200 homes, will be extended to a thousand subscribers in the city before the summer. ( www.telefonica.es )

Texas Instruments introduced the first in a family of plain old telephone service (POTS) solutions for voice over broadband, enabling manufacturers and service providers to deploy enhanced voice capabilities on existing broadband platforms. TI´s new family of programmable voice codecs directly interfaces with a dual ringing Subscriber Line Interface Circuit (SLIC) from Intersil, forming a complete voice solution that can be used in network interface devices, SME gateways, or CPE devices such as home routers and gateways, DSL and cable modems, and multimedia terminal adapters. ( www.ti.com/rd/potsvoice ) ( www.intersil.com )

WSNet announced DigitalFlex, a programming delivery and back-office support system that will enable small system cable operators to expand their lineup despite having limited bandwidth and operational capabilities. It allows operators to purchase programming directly through their existing agreements and customize channel lineups accordingly. ( www.wsnet.tv )


Computerized Complexity: Frustrations of Everyday Life

(Sandy) When the radio in my '86 Toyota Supra quit working, I tried to focus on the positives about buying a new one. The so-called "double-DIN" slot in my car limited my choices, but the new unit has a CD player as well as a better FM tuner and casette deck - it's also XM satellite radio ready.

As I was leaving the shop post-installation, the manager suggested he show me how to use the unit. That seemed strange--after all, what did I need to learn about a car radio that wasn't obvious? After a 5 minute lesson, I had seen the basics -- but was a little uncertain about why I needed a remote for my tuner and why he insisted that I read the manual.

Arriving home and turning off the car, the radio alarmingly started beeping at me. A look at the manual explained it was just an alert, reminding me to remove the front panel. The theory is that if you park in an unsavory area, you can remove it, thus averting theft. However, it's not clear why I have to listen to it beeping when I park in my own garage. Since the installer had suggested I might want to look at the removable front panel while I read the manual, I dutifully took it out and brought it inside with me.

Things went downhill from there. When Dave borrowed my car, he couldn't figure out how to turn on the radio - there's nothing as obvious as an "on/off" switch. Next I wanted to re-set the clock. I'll spare you the details, except to say that even by following the manual, I couldn't make it work. This time Dave came to the rescue. By carefully reading the manual, he discovered that what I was doing wrong was pressing the function button. What I should have been doing was HOLDING IN the function button (which invokes a different function)!!

I've now graduated to the point where I've mastered the pre-sets for radio stations and, if I concentrate, can vary the sound to simulate a club, studio or for jazz (if I should want to). Of course I haven't started yet on learning all the different things the function button can do when used with the CD player. Nor have I tried yet to disable the warning tone when I park--the manual tells me that also requires use of the function button!

THIS IS CRAZY! Why should we have to read manuals to do things we've known how to do for years? If your company is designing technology based products and services, think about helping the user accomplish their goal easily and intuitively. On radios that means things like an on/off switch, not buttons that are labeled "esc" (escape), "f" (for function) and "d" for DSP. And certainly not similar but not identical functions on different buttons on different places on the radio and on the remote.

Reading Alan Cooper's book, "The Inmates are Running the Asylum--Why High Tech Products Drive Us Crazy and How to Restore the Sanity" is one way to get some perspective on how we have gotten to this state--and perhaps a guide to escaping it. Cooper's "riddles for the information age" ask questions like "what do you get when you cross a computer with ...?", where the devices are as varied as airplanes, cameras, alarm clocks, cars and banks (and presumably radios too). The answer in each case is the same: "a computer." No wonder my radio has an "escape" function!

A recent review of the new BMW 745i (NY Times, May 12) convinced me I was lucky I only had to replace my radio and not the whole car. It's hard for me to covet a car that requires the dealer to spend three hours explaining it. The car also comes with a set of instructions for the owner to hand a valet, so that a bewildered parking attendant can figure out how to move the car!

The sentence that stuck with me after reading the BMW review is "a fundamental issue is how the 7 forces the driver to think and act in new ways." Let's keep the user in mind as we try to bring the benefits of broadband technology to the home!

( www.cooper.com )


Cable's Conundrum: Set-tops and Moore's Law

Cable operators have a tough problem to unravel. On the one hand, they want to offer increasingly rich interactive services to their customers. Translate that to mean lots of software, graphics and processing to enable service delivery. Unlike satellite operators, their business model has always involved the MSO supplying (purchasing and leasing to the customer) the set-top. If an Echostar customer wants personal video recording (PVR) capability, no problem. The customer buys a set-top with a hard drive and appropriate software. If they want it, they pay (although the costs may be subsidized by the service charges on a committment contract). But if a cable operator wants to supply PVR functions, today's business model says the MSO has to make the capital investment in the box.

So imagine the MSO buys a box with PVR capability and other jazzy stuff. Instead of the box costing say $250, its price goes up to $450 or $500. Meanwhile, Moore's Law is inexorably at work, so by the time they've ordered, received and deployed some of the boxes, memory, processor, hard drive and other costs have dropped and the box is quickly outmoded, like last year's computer. In the face of such a conundrum, many operators decide to continue buying the lower-end boxes, which actually have a longer economic life.

Why not have the consumer buy the cable set-top? That's what some legislation and Open Cable were all about, right? Well, maybe. But first the MSO has to develop the channels and business model. And then the customer will go to the retail store, and is open to choosing not only what cable box they want but maybe instead choosing DBS. All of a sudden, sales incentives, side-by-side comparisons and lots of other factors have to be considered by the MSO.

The cable industry has seen this play out over the past few years as Motorola's DCT 5000 was the box that perennially was "almost ready"-- but constantly battled the issues of balancing costs, function, software etc. In the mean time, MSOs who had spent the money to deploy older cable set tops have been reluctant to replace them, if they can squeeze more useful life out of them. Rather than shelling out big bucks for new set-tops, software developers are cleverly shoe-horning more into existing boxes like Motorola's DCT-2000. For example, Motorola and Wink have integrated Wink's interactive TV service and Gemstar interactive program guides into the 2000, which are being deployed by Charter.

Add to the mix the fact that the average US home has 2.5 TVs (and may want the kids' and adults' TVs to both have access to advanced functions) and now we add in the problem and costs of whole home video, or investment in multiple set-tops.

Against this back-drop, vendors are providing some interesting solutions.


ICTV's HeadendWare

ICTV has been working for some time in the belief that, rather than chasing Moore's law in the set-top, MSOs should put most of the functionality at the head-end, with only a small footprint in the set-top. Although their solution originally involved their own hardware, their newest announcement of HeadendWare is a totally software-based platform that allows delivery of interactive applications and services from the headend. It uses a client-server architecture to enable "thin" digital set-tops to deliver the kinds of complex applications previously targeted for "thick clients".

Because their approach uses standard Intel-type processors at the head-end, the hardware costs constantly decline, directly benefitting from Moore's law. For example, today they specify 1.3 GHz Pentium 4 motherboards, but will be moving soon to 2.3 GHz following the processor cost curves. Their modules are interconnected with Gigabit Ethernet, so that the MSO can organize modules based on their particular plant architecture. ICTV has designed their own software based multiplexers, which are the only things that need to be in the headend and nodes. They indicate that a single rack can serve 500,000 ICTV subscribers, important in the tight spaces often available in cable locations.

ICTV has been honing their approach for some time now, and has substantially reduced their capital costs. In a phone interview, ICTV CEO Wes Hoffman told us that their first-time capital cost now comes out to $4 per digital subscriber, including head-end hardware, up-converters, software licenses and the first year of support.

ICTV is now concentrating on evangelizing application developers. Because it is based on Windows, HeadendWare provides developers a familiar way to develop and deliver applications to all the thin clients out there. There is nothing proprietary and different that application developers need to know or do -- Wes told us the (slightly tongue-in-cheek) three elements of their content design tool kit: 1. Don't use "hot red." 2. Design for TV. 3. Good luck! Interested application developers can get information from Anna Tarnay, anna@ictv.com .

HeadendWare is installed at Charter in Kalamazoo, Michigan; ICTV is working with Charter and Digeo on commercial deployment. They say they are also working with other well-known but unannounced MSOs on trial deployments. Since all elements of their approach are ready and available today, we'll be watching how the market votes with their dollars.

[Editor's note: We are on ICTV's Advisory Board and have consulted for them.]

( www.ictv.com )


Ucentric's Whole-Home Entertainment Solution

Ucentric's key story is also about using software to generate new revenue streams for MSOs. Other key concepts make lots of sense to us: client-server architecture and a notion of low cost (thin) clients for all but the primary TV.

We interviewed Paula Giancola, Ucentric's VP of Marketing, to find out what was getting cable operator's attention at the recent NCTA Show. The big competitive issue facing cable operators today is clearly satellite services. At year-end 2001 Echostar and DirecTV together accounted for about 17.5 million subscribers and their numbers keep growing. Satellite providers' ability to provide new features like PVR more quickly than cable has been a real competitive threat. As we saw in the ICTV story above, providing thick clients with PVR capability is economically challenging - and especially so for multiple TVs.

Ucentric's software platform provides multi-TV PVR functionality from a single box. It is designed to be integrated with boxes from existing providers; for example, it has been integrated into Pace’s "digital home gateway" (set-top). It stores content and distributes digital entertainment and communications services to the primary TV and stereo, and to computers connected over a wired or wireless network. Additional TVs receive the services through small low-cost boxes ("media clients"). Services include multi-TV personal video recorder functionality (PVR), multi-TV Video on Demand (VOD), multi-speaker digital music, and shared Internet access, throughout the home over a wired or wireless network.

Ucentric's server software includes a Linux-based operating system with Quality of Service (QoS) enhancements, an applications services engine, a customizable user interface and a suite of media-rich applications. Ucentric has been through six trials, including four with MSO partners, and has incorporated feedback from both the service providers and the 150 user homes where it was trialed. They are now in their third generation of software.

Mindful of our car radio story and Cooper's question of what you get when you cross a computer with a TV (see above), we asked Paula what they had learned about the user interface from customer reactions. She said they have refined their user interface, making it less "mouse like" and more readily used with the TV remote, more readable on the TV screen and more in line with customer expectations about how to interact with the TV. They have teamed with AGENCY.COM Ltd. which is helping to develop the user interface design for its multi-TV personal video recorder (PVR) application. Ucentric is incorporating AGENCY.COM’s design templates and style guidelines into the TV-based user interface for the entire suite of whole-home entertainment applications. We haven't had the opportunity to play with it yet, although Ucentric did demonstrate it to some potential clients in their private suite at NCTA. Hopefully they are meeting their design goal of creating a "sensible and simple means to manage and control their digital entertainment".

The jury is still out on whether cable operators will adopt Ucentric's platform or any that departs from the tradional "one box to a TV" model. Now that they've partnered with a major manufacturer, and will have software for deployment later this year, we'll watch to see Ucentric announce MSO rollouts.

( www.ucentric.com ) ( www.pace.co.uk ) ( www.agency.com )

(For our previous article on Ucentric see BBHR 11/14/2001.)


An Interview with Bermai - 802.11a Wireless

Wi-Fi (IEEE 802.11b) has won the current battle for wireless home networking. It's fine for connecting multiple PCs to a broadband modem, but doesn't provide sufficient bandwidth for digital video, especially for high-definition TV - which requires about 30 Mbps. In previous issues of BBHR, we have written about the looming competition between 802.11a and 802.11g (and HiperLAN2 in Europe). These are competing standards which push the speed of wireless networking to 54 Mbps and higher. 802.11g operates in the same 2.4 Ghz spectrum as 802.11b, while 802.11a and HiperLAN2 operate in the 5 GHz spectrum.

To learn more about the prospects for 802.11a, we spoke with Bruce Sanguinetti, the CEO and President of Bermai. A startup company, Bermai has operated in "stealth mode" for some time, and has just announced its first products, centered on an "ultra-integrated" system-on-a-chip for 802.11a. The chip can be used to create access points and NICs for indoor wireless LANs, and for outdoor broadband wireless access.

Bruce started by providing some background information on Bermai. Bruce has had lots of experience leading companies in the wireless field, and observed that they tend to be strong in either analog or digital, but rarely in both. Bermai was founded by two professors from the University of Minnesota, one specializing in analog and the other in digital technology. They run the development lab near St. Paul, Minnesota, while Bruce is based in Palo Alto, California.

In addition to its chip, Bermai has created reference designs for PC Card and PCI NICs and for access points. Both designs are available as 11a only or as dual-mode 11a/11b. To show us how highly integrated the chip is, Bruce showed us the picture of the 11a Reference Board on their website, and pointed out that "besides power conditioning, it needs only six components to support the chip - four of them capacitors."

He said that Bermai saw three distinct market segments for 802.11a and Bermai:

  • The "wireless LAN" segment, principally for the enterprise
  • The "home entertainment" segment, with wireless technology built into consumer electronics devices
  • The "broadband wireless access" segment, with wireless technology used to provide broadband access to homes and enterprises

Bruce observed that "home networkers are not rushing out to buy 11a right now. It won't happen until there's a paradigm shift in the home" as home entertainment - mainly video - becomes an important component. So he thinks that 802.11a wireless LANs will appeal mainly to enterprises for now, while there's a significant difference between 11b and 11a pricing. By next near, the pricing gap will narrow.

Bruce thinks that many consumer electronics companies will build wireless technology into their products. He believes that many will provide both wired and wireless networking, just as many of today's notebook PCs include both Ethernet and Wi-Fi.

So he thinks that the near-term opportunity for 11a lies in the enterprise market. Even though "the enterprise IP people are doing it begrudgingly" he thinks that "the first wave of 11a into enterprises is going to explode" since it provides more bandwidth and better security than 11b.

Many advocates of other technologies have told us that 802.11a will have a much shorter range than .11b, and we asked Bruce what coverage he expected. He said he was sure that 11a would provide higher performance than 11b at any range, principally due to the OFDM modulation scheme. He said he was looking forward to side-by-side comparisons to resolve the question.

Finally, we asked about the pricing of 11a versus 11b. He said that Bermai's goal was to get a very low "bill of materials" (BOM) cost: "The 11b chips are heading to a $10 cost - we will have a comparably low cost."

( www.bermai.com )

For background material on wireless home networking, please visit ( www.bbhcentral.com/home.html#wireless_networking ) on our website.


Broadband: Are We Reaching "The Tipping Point"?

Have you read "The Tipping Point" by Malcolm Gladwell? It's one of those books that presents an idea so intuitively appealing, and in line with your own experience, that it makes you wonder why you didn't think of it yourself. As Gladwell says on his gladwell.com Web site "The word "Tipping Point" comes from the world of epidemiology. It's the name given to that moment in an epidemic when a virus reaches critical mass." He goes on to explain that "once you start to understand this pattern you start to see it everywhere. I'm convinced that ideas and behaviors and new products move through a population very much like a disease does."

When writing about new technology adoption, the mass media always seems to have a binary approach: everything is either disappointingly slow or growing like crazy. There's little understanding of the dynamics of how something moves from being new to being taken as normal. When home PCs were first introduced, the press wrote articles saying how specialized they were because "only 5% of US consumer homes have a PC"; then they were writing "only 20% of consumers have a home PC", then "only 40%". Now two-thirds of US homes have PCs and the newspapers and TVs are full of PC ads targeted to the consumer. Things progressed in a similar manner with online services and Internet access. Now we're hearing the same story again about the "slow" adoption of broadband.

Broadband services (cable and DSL) started becoming available in North America during 1996 and 1997. By the end of 1997, it was in about 110,000 homes - a penetration of about 0.1%. At the end of 2001, it was in more than 10% - a hundred-time growth in four years. Let's look at some of what's been happening this year.

  • A news release from Nielsen/NetRatings reported that broadband usage had outpaced narrowband usage for the first time. Their measurements showed that 51% of the online hours in January 2002 were by broadband users, whereas last year the number was 38%. They wrote about the growth as "the unstoppable march towards broadband".
  • An article about Taiwan in the Financial Times pointed out that the size of Taiwan's broadband Internet population quadrupled in 2001 to 1.13 million, because of heavy promotion of low-priced ADSL services by domestic operators. The number of subscribers is expected to more than double again during 2002.
  • Telecommunications Reports International (TRI) reported that a significant shift in the online access market began in 2001, with dial-up access providers seeing their first-ever year-over-year decline in number of users. However, providers of broadband Internet access, including cable modem and digital subscriber line (DSL) connections, closed the year with significant gains. Although the US online access market grew barely one percent (from about 68.6 million users at the start of 2001 to 69.3 million by the close of the year) the DSL and cable modem access methods combined recorded a 62-percent growth rate for the year according to TR's Online Census. This was despite the shut-down of @Home and the increases in rates by many DSL and cable broadband providers.
  • A new report from Nielsen/NetRatings showed that the largest broadband markets (such as NY, LA, Boston, Philadelphia, Wasington and Atlanta) experienced at least 48% year over year audience gains comparing this April with a year ago. The top two broadband cities, New York and Los Angeles, had more thtan 70% year over year subscriber growth. Of the 20 cities with the most broadband users, Orlando, Fla., saw the greatest growth of 183 percent year over year.

These and many other reports tell us that broadband is reaching the tipping point. Expect the popular press to recognize it sometime soon.

( www.gladwell.com ) ( www.nielsen-netratings.com ) ( www.tr.com )


Your Voice -- Readers' Comments

Market Potential for "Broadband Plumbers"

One of our readers wrote to ask our view of the market potential for broadband plumbers. He wondered whether we thought that "the folks that currently provide home theater solutions are best positioned to expand into this 'data services' space" and whether "data only" companies would survive.

We think that the market potential for "broadband plumbers" is very high. Over the next few years, the "home network" will be extended from the PC domain to include all the audio and video equipment, and will be as taken for granted as electric and telephone wiring, water and gas. As we've written in the past few issues, several products already on the market are connecting the PC and CE domains and that will only increase with time as traditional audio and video distribution goes digital.

An increasing percentage of new homes are getting structured wiring - at around $2500 a pop - some much higher. This year and next, there's going to be a big push on consumer (and realtor and builder) education to make structured wiring a "must have" in all but the lowest-end homes.

For existing homes, the wild card is to what extent emerging "no new wires" solutions will work well for voice and video. If they do, then most existing homes won't need to retrofit new wiring. The jury is out.

The home theater guys - CEDIA members, mostly - are nibbling at this, but many don't have much digital experience - especially the networking expertise required to do it right. Many if not most of them are focused on the high end - they'd rather do 50-100 jobs a year, each at $20K, than move down-market to address the huge audience that today only wants to share the PC in Mary's bedroom with the cable modem connected to the PC in Daddy's office. So lots of other folks will address the mass market, including the cable ops and maybe the telcos.

There are very few "data only" companies. Most "broadband plumbers" we've written about do data, telephony, and video, with add-ons for home security, home automation, home theatre, whole-home audio etc., etc. They make more money on the add-ons than on the structured wiring. And the nice thing for new homes is that it's all included in the mortgage - even that $20,000 plasma display you can't live without - and therefore tax-deductible (at least in the US).

The "x/Pad"

Knut Flottorp wrote us from Norway, in response to our previous references to Webpads. He said that "I am about to form a consortium to specify the device, where the generic term is "x/Pad". This will be split into single-network devices (WLAN/WiFi) and dual networks (WLAN + GSM/GPRS).

"The x/Pad itself is defined as the ultimate slate for user interface. This is what the (Internet) user has at hand of enhanced devices to make use of a new generation applications - some focused on home use, although the marketing is also focused to office and engineering applications, public offices such as police, ambulance and disaster recovery, finance sector squarely as enabler of e-commerce by providing a secure platform for payments."


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