BBH Report Home Page
July 9, 2002 Provided by System Dynamics Inc.

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Heard on the Net

News about People and Companies Influencing The Broadband Home


People News

Colin Dixon has been named VP of applications and content at Liberate. He was formerly general manager of cable services for Microsoft's Web TV division. ( www.liberate.com )

Tim Evard has joined WSNet Inc. as Senior VP of Sales and Marketing. ( www.wsnet.tv )

Nicholas Hippolyte has beem appointed VP, Market Development for Asia-Pacific at Sigma Systems. ( www.sigma-systems.com )

Bryan Jones has been named VP of e.Digital's new Broadband Entertainment Business Unit. Jones was formerly with MP3.com and was also a radio host. ( www.edig.com )

Mike Jones has assumed the position of Director of Business Development/Service Providers for RADVISION. ( www.radvision.com )

Preston Lau has been named VP Sales for the Asia Pacific Region for Thirdspace. He was previously with Kasenna Inc. ( www.thirdspace.tv )

Steve Miron has been appointed President, Advance/Newhouse. Miron, son of A/N CEO Bob Miron, was formerly VP and general manager of Time Warner Cable’s central New York cluster. The company also announced the appointments of Nomi Bergman as EVP of strategy and development and Bill Futera as VP and CFO. ( www.advance.net )

Dan Moloney has assumed the position of EVP Motorola, and president of BCS. He was previously senior VP and GM of the IP Systems Group for BCS. ( www.gi.com )

Stephen L. Robertson has been appointed President - Convergys International. ( www.convergys.com )

Stephen A. Royal has been appointed CFO at Net to Net Technologies, Inc. ( www.nettonet.com )

Piers Wilson has been appointed CEO of Two Way TV (US). He was previously the parent company's CFO. ( www.twowaytvus.com )


Company News

--Acquisitions

ATI Technologies Inc. is purchasing NxtWave Communications Inc. for $20 million cash. ( www.ati.com ) ( www.nxtwavecomm.com )

C-COR.net Corp. is purchasing Philips Broadband Networks division for approximately 80 million Euros and assumption of certain liabilities. ( www.c-cor.net ) ( www.philips.com )

Conexant has purchased GlobespanVirata's MPEG video and audio codec business for $21 million cash and 1.25 million shares of Conexant common stock. ( www.ati.com ) ( www.globespanvirata.com )

Fastnet Corp. has purchased selected assets of bankrupt AppliedTheory Corp.and has also purchased Netaxs/Earthstation. ( www.fast.net )

Gemstar-TV Guide International, Inc. is acquiring substantially all of the assets of bankrupt DIVA Systems Corporation. ( www.gemstartvguide.com ) ( www.divatv.com )

Internet Ventures, Inc. has been acquired by Turer Corporation which will change its name to IVI Communications. Nyhl Henson was named as new CEO and Chairman. IVI plans to continue acquiring and operating ISPs in small markets. ( www.ivn.net )

Liberty Media subsidiary Liberty Broadband Interactive Television, Inc. (LBIT) is acquiring all outstanding stock of Wink Communications, Inc. in a deal valued at $100 million. This follows Liberty's recent purchases of OpenTV and ACTV. ( www.libertymedia.com ) ( www.wink.com )

Liquid Audio has entered into a definitive merger agreement with Alliance Entertainment Corp. The companies hope the merger will enable them to become a leading provider of commerce solutions for entertainment media, providing both physical and digital distribution. ( www.liquidaudio.com ) ( www.aent.com )

NDS Group acquired VISIONIK A/S, an interactive TV application software company based in Denmark. ( www.ndsuk.com ) ( www.visionik.com )

Zhone Technologies, Inc. has acquired Vpacket Communications. The transaction is Zhone's seventh acquisition, and expands its selection of last-mile interfaces and protocols. ( www.zhone.com ) ( www.Vpacket.com )

--Funding

China Venture Capital Association (CVCA) has been announced in Beijing, creating an association of firms which manage in excess of $25bn of private equity and venture capital targeted for investment in China and Asia, according to IPO.com. Founding partners include such leading investment managers as Carlyle, Goldman Sachs and Warburg Pincus. CVCA is the first national venture capital body in Greater China, following the model of local associations in Hong Kong and Shanghai.

Broadview Networks has completed an additional $40 million plus round of equity financing. ( www.broadviewnet.com )

Indigo Software, a developer of Internet communications software based on SIP technology, has raised $4.5 million in a round of financing headed by their primary lead investor Sofinnova Ventures and including Belgian venture capital firm GIMV. ( www.indigosw.com ) ( www.sofinnova.com ) ( www.gimv.com )

Radiant has placed a $2.1 million equity investment in Phonetime as part of an agreement between the two companies that also includes the establishment of a marketing and strategic technology alliance. ( www.radiantholdings.com ) ( www.phonetime.com )

SAVVIS Communications Corp. has secured a $20 million investment from Constellation Ventures. ( www.savvis.net ) ( www.constellationventures.com )

Teknovus, a developer of broadband access semiconductor products, closed a $5 million first round of venture financing. ( www.teknovus.com )

--Other News

Acterna announced availability of its cable operational support systems (OSS) platform, Vision360, at Cable-Tec Expo. The system is reported to be under test by both Cablevision Systems Corp. and Time Warner Cable . ( www.acterna.com )

AOL Time Warner's cable division and Advance/Newhouse Communications have restructured their cable partnership. The new arrangement will switch about 2.1 million cable subscribers to Newhouse, reducing TWC's cable base by about 16 percent. As part of the deal, Time Warner Cable takes over Newhouse's stake in Road Runner. Meanwhile, resolution of the dispostion of AT&T's stake in Time Warner Entertainment is expected to become clearer this month; AOL TW CEO Richard Parsons has said that regaining full ownership of Time Warner Entertainment is a top priority. ( www.aoltimewarner.com ) ( www.advance.net ) ( www.rr.com ) ( www.att.com )

AT&T Broadband raised its prices -- but only for those customers who had already purchased cable modems. It increased its monthly service pricing by $7 but also reduced the $10 pricing differential between modem owners and leasers to $3 to reflect the sharp reduction in modem purchase prices, resulting in the same price for modem leasers. Modem owners are unlikely to be pleased with the change. ( www.attbi.com )

Comcast announced that it has begun to install equipment for the initial deployment of residential Voice over Internet Protocol (VoIP) phone service; Comcast plans to offer residential primary-line VoIP phone service in a Philadelphia suburb during the second quarter of 2003. ARRIS will provide the initial DOCSIS 1.1 CMTS. It looks like the time for end-to-end VoIP is finally getting closer for MSOs as Net2Phone also announced a 100-home VoIP trial with Liberty Cablevision's system in Puerto Rico. ( www.comcast.com ) ( www.arrisi.com ) ( www.net2phone.com ) ( www.libertycablevision.com )

FastWeb, the Italian provider of integrated telephony, Internet access and TV services, has deployed a complete networked PVR solution. It was launched this Spring and is available to approximately 80,000 subscribers. The deployment uses technology from Minerva Networks. ( www.ebiscom.it ) ( www.minervanetworks.com )

Gemstar encountered a serious setback when an ITC administrative law judge ruled that 3 of its patents for on-screen interactive program guides (IPG) hadn't been infringed upon. The decision allows EchoStar, Pioneer and Scientific-Atlanta, all of whom had designed their own IPGs, to continue importing satellite receivers and cable set-top boxes. ( www.gemstartvguide.com ) ( www.dishnetwork.com ) ( www.pioneerelectronics.com ) ( www.sciatl.com )

Hong Kong Broadband Network Ltd. (HKBN), a subsidiary of the CityTelecom Group, has established a broadband network that is offering coverage to more than 2,500 buildings with around one million residential homes passed; they anticipate their subscriber base will increase from 100,000 to over 200,000 by the end of the year. Their Metro Ethernet network is based on Cisco equipment and offers broadband Internet access and local telephony. A digital television service is planned. Similar to FastWeb in Italy, they offer dedicated 10Mbps connection to each subscriber. ( corporate.hkbn.net ) ( www.cisco.com )

IDT and Jungo announced a partnership to provide a Linux-based development platform for wireless LAN and SOHO routers. ( www.idt.com ) ( www.jungo.com )

Liberate Technologies and Samsung Electronics Co., Ltd. announced an integrated digital set-top supporting MPEG over IP based delivery of interactive video programs, content and services for DSL-based Telco networks. Samsung plans to offer the set-top to network operator customers worldwide later this year. ( www.liberate.com ) ( www.samsungelectronics.com )

Microsoft Corp., in a Securities and Exchange Commission filing, disclosed an offer to sell its 23.7 percent stake in Telewest Communications plc to Liberty Media's International unit for approximately $330 million. If this stake were added to Liberty's current 25% ownership of Telewest, John Malone would add control of another European MSO to his investments. ( www.microsoft.com ) ( www.telewest.co.uk ) ( www.libertymedia.com )

Motorola announced a fixed wireless access system for high speed Internet for residential and small business customers. Their Canopy system uses the unlicensed 5GHz spectrum and small, wireless components designed for small cell configurations. Its target market is community networks, wireless and community service providers and small- to moderate-sized private networks. The system can be deployed as a stand-alone, or used to extend the reach of wired IP distribution systems such as cable and DSL. ( www.motorola.com/canopy )

Next Level Communications announced commercial availability of its platform for delivering bundled services to densely populated areas. Called a Broadband Services Access Multiplexer (BSAM), it enables increased capacity in a small form factor and replaces the need for multiple Digital Subscriber Line Access Multiplexers (DSLAMs). This summer, Bell Canada will be the first telco to commercially deploy the new "998 band plan" BSAM product to provide digital TV and high-speed data services to the multi-dwelling unit (MDU) marketplace using very-high-speed digital subscriber line (VDSL) technology. ( www.nlc.com )

Philips Electronics demonstrated the FireWire protocol (IEEE 1394) running over an 802.11a wireless LAN interface. This combination, which allows the isochronous transfer needed for video and audio, could provide a wireless home networking solution for distribution of digital content. ( www.philips.com )

SONICblue has been granted a reversal of the customer tracking ruling of April 26, 2002, which required the company to implement software to monitor its customers’ viewing habits. In separate news, SONICblue unveiled its new ReplayTV 4500 series PVR. The units add modem support for standard phone line connections, redesigned software and a service-based pricing model. The latter is a major departure from their original business model on which the units had a higher initial price but no on-going service charges. ( www.sonicblue.com )

Toshiba Semiconductor Co. and Toshiba America Electronic Components Inc. are licensing TiVo Inc.'s digital video recording technology. The intellectual property-based technology license includes TiVo's proprietary Media ASIC design, and a hardware porting kit that provides a standardized layer of implementing TiVo DVR services on a variety of platforms and operating systems. The first chips with the TiVo technology inside will be available in 2004. ( www.toshiba.com ) ( www.tivo.com )

Two Way TV announced that it has completed a licensing deal with NTL, which will integrate Two Way TV’s Ark technologies into NTL's digital network. The system enables digital TV viewers to play along with game shows and interact with live programming. Two Way TV has a similar technology agreement with Telewest. ( www.twowaytv.com ) ( www.ntl.com ) ( www.telewest.co.uk )

Tylite, Inc. announced development of a subscriber demarcation box and fiber optic system design for providing Internet and broadcast video services over an Ethernet fiber network. The product is designed to be used in the deployment of networks by municipalities, Public Utility Districts (PUDs) and residential developers. The box provides an uplink connection to a fiber network, with a standard TV coax interface and a standard CAT-5e data downlink to the user. The end user links provide full-duplex 100 Mbps bandwith for data and video functionality. The design eliminates the need for an expensive set-top box within the residence since it carries broadcast video directly from the service provider, over the fiber network, to the subscriber's television. ( www.tylite.com )

Xtend Networks Ltd. announced completion of a field trial of their system for enabling cable bandwidth expansion at Golden Channels, a major Israeli MSO. See article below on solutions which expand "last mile" cable capacity at a fraction of the cost of a plant upgrade. ( www.xtendnetworks.com ) ( www.aztv.co.il )

--Industry Organizations

The High Definition Multimedia Interface (HDMI) founders announced availability of the draft specification v 0.9 defining HDMI, the next-generation digital interface for consumer electronics, intended to address the current HDTV stalemate in which Hollywood wants to protect its content against piracy and other stakeholders want to insure fair use of content and avoid undue burdens on others. The HDMI group was formed in April by Hitachi, Matsushita Electric (Panasonic), Philips, Silicon Image, Sony Corporation, Thomson Multimedia and Toshiba Corporation. The HDMI spec combines high-definition video and multi-channel audio in a single digital interface with a bandwidth of up to 5 Gigabits/second to carry full-bandwidth digital video and audio from set-top boxes to TV sets. Before any new standard is embraced, remaining issues such as how the technology would be implemented, what home users will be permitted to do, and the level of Hollywood control over those uses will need to be worked out. ( www.hdmi.org )

The Bandies, which concurrent with the Western cable show has been honoring the best in broadband content, has decided to postpone this year's event. They hope to be back in 2003. Michael Collette wrote us to say "While we can clearly see growing interest from the content community to enter the competition, sponsors are just plain confused/broke right now so we'll let the 2002 dust settle and be back, we hope, in 2003." ( www.thebandies.com )

--Legal/Regulatory

U.S. - There has been a great deal of rhetoric coming from Washington, DC on the subject of digital content protection and "cyberspace piracy". Rep. W.J. "Billy" Tauzin has set July 15 as his deadline for a digital TV solution. He has indicated that if private negotiations fail, he is prepared to step in and mandate government intervention. Meanwhile, Senate Commerce Committee Chmn. Hollings introduced S-2048 requiring DRM standards if the private sector doesn't reach agreement. One gap involves a broadcast flag standard to protect over-the-air broadcast content from being uploaded to the Internet. Resolution of these issues requires a delicate balancing process that preserves both consumer access and copyright protection.


More Solutions for Expanding Cable Bandwidth

In our report on the 2001 Western Cable Show last December, we wrote about several new technologies designed to expand the digital carrying capacity of existing cable plants without massive new rebuilds. The past six months have seen further developments; there are now half a dozen different technologies designed to squeeze more revenue-generating services over the existing plant.

Because it was designed for television viewing, the HFC cable plant is quite asymmetric - much more bandwidth is available downstream than upstream.

Cable operators are deploying many services which use both downstream and upstream cable bandwidth. Some of these new services (such as VOD) are very asymmetric, while others (such as telephony) are symmetric. High-speed data services were designed assuming that most of the usage would be web browsing or file downloading - both highly asymmetric downstream.

The load on the cable network is growing quite rapidly as more and more homes subscribe to cable modem services, use the services more of the time, and download larger and larger files. To make matters worse, many users have installed peer-to-peer (P2P) networking applications; if they choose to share files (often in violation of copyright laws) their homes become highly asymmetric upstream.

Most cable systems have been rebuilt during the past decade: cable operators have replaced most or all of the physical infrastructure of optical fiber, coaxial cable and electronics which carry the services. As operators anticipate the need for more capacity to accomodate growth, they would much rather add technology to the existing infrastructure than start rebuilding yet again.

Many companies are working to address this need. In "Cable's Magic Trick: How Bandwidth Keeps Growing" last December, we discussed BigBand Networks, Narad Networks, and Rainmaker Technologies. We'll update these three, and add three more: Terayon, Pulse~LINK, and Xtend Networks.

The technological approaches fall into three broad groups:

  • Getting more usable channels into existing video multiplexes - by using statistical multiplexing and/or by suppressing unwatched channels (Terayon, BigBand)
  • Getting more usable bits in a given amount of bandwidth - by using advanced coding and modulation techniques (Terayon, Rainmaker)
  • Expanding the available bandwidth of the cable infrastructure - by extending the upper end of the existing frequency range and/or by spreading extra data across the range (Narad, Xtend, Pulse~LINK)

Several of these approaches could be used together for a multiplicative effect.


Terayon

A long-time player in the delivery of digital data over cable networks, Terayon offers two solutions to help MSOs conserve their bandwidth. Their CherryPicker product, deployed in many cable systems, allows the real-time adjustment of digital video bit rates to accommodate a given amount of bandwidth. At the recent NCTA show, they showed their newest version combining four HDTV streams into a single cable channel, and also combining fewer HD streams with multiple standard-definition streams.

Terayon invented and has long been promoting "advanced S-CDMA," an alternative physical layer technology for cable modems. S-CDMA permits more efficient use of upstream bandwidth, nearly doubling the upstream data rates possible with earlier versions of DOCSIS. The most recent cable modem standard, DOCSIS 2.0, includes S-CDMA, and Terayon is positioning itself to be first in the market with DOCSIS 2.0 certified CMTS and cable modems.

Terayon has established a subsidiary, Imedia Semiconductor, to provide DOCSIS 2.0 chips and software to other cable modem vendors.

( www.terayon.com ) ( www.imedia.com )


BigBand Networks

BigBand Networks is focused on getting the most out of the cable bandwidth assigned to digital broadcast multiplexes. Since our last article, the company has announced that their BMR technology has been deployed in cable systems serving more than 500,000 digital cable subscribers. They have also announced the use of their system to carry three simultaneous HDTV feeds in a standard 6 MHz TV channel, which previously could support only two feeds.

We recently interviewed Seth Kenvin, VP of Corporate Development at BigBand, to get an update. Seth told us that their installations are "rapidly approaching a million subs". We asked about more aggressive bit rate reduction and he said that operators might be able to squeeze more than three HD feeds in a channel if they (and their subs) were willing to accept some degradation in quality.

We were especially interested in what BigBand calls "switched broadcast services," based on the observation that the increase in TV channels leaves a lot of them unwatched at some times and places. A typical cable node serves 500 homes, of which perhaps 350 might subscribe to cable. Suppose the cable system is carrying 500 channels, many of them digital. Pareto's Law suggests that many channels are not being watched by anybody in a particular node. BigBand's system can delete all of the unwatched channels from the broadcast stream, automatically switching a channel on only when a subscriber selects it from the EPG. This frees unused bandwidth for other services such as VOD and high-speed data. Systems that exploit this capability could add a wide array of special-interest channels without having to increase the system's channel capacity, since channels will be switched only to those nodes where viewers have selected them.

Seth told us that the switched broadcast services have been demonstrated but not yet deployed. He said that operators expressed a lot of interest at recent shows and expects a deployment soon.

( www.bigbandnet.com )


Rainmaker Technologies

Any approach to transmitting digital information -- whether video, voice, or data -- depends on a modulation scheme. In North American cable systems, the downstream modulation is either 64 QAM or 256 QAM, which operate in 6 MHz channels with a payload of about 27 and 39 Mbps respectively and a spectral efficiency of about 4.5 and 6.5 bits per Hertz.

Rainmaker proposes to make two changes to current standards: use wavelet modulation rather than QAM, and to operate in wider channels than the traditional 6 MHz allocation. They claim that this approach will provide 170 Mbps downstream in 18 MHz (combining three 6 MHz channels) and 150 Mbps upstream; this provides an efficiency gain of 1.5 to 2 downstream and 3 to 4 upstream. This near-doubling of payload could be applied to any digital service currently carried over cable: data, video or voice.

Since our December article, Rainmaker has become a Panasonic Digital Concepts Company with an investment from Panasonic Ventures. Their current focus is on adding wavelet modulation to the global standards for digital video transmission. This is still an early-stage effort, and is awaiting completion of Series B financing to move the technology from the lab to a field trial.

( www.rainmakertechnologies.com ) ( www.panasonicventures.com )


Narad Networks

Narad Networks' Broadband Access Network offers two options for switched IP services: bidirectional 100 Mbps (Fast Ethernet) and 1 Gbps (Gigabit Ethernet) service. They say both will operate on existing cable plants without any effect on existing cable services.

While it doesn't require a rebuild, implementing Narad's system for an entire cable system requires a substantial investment in additional technology throughout the system, adding equipment at each fiber node and replacing the amplifiers and other boxes between coaxial cable segments.

Rather than advocating the complete upgrade of a cable system, Narad has been promoting its technology for cable operators who want to offer services to small and medium businesses. To address the needs of a specific customer, the Narad equipment can be installed only on the specific fiber node and coaxial trunk serving that customer. This provides a fast return on the capital investment.

Narad and IBM recently announced an alliance to work together to help MSOs address the SMB market. This combines Narad's service delivery platform with IBM's software and services. To learn more about the alliance, we talked with Peter Gaucher, Director, Segment Strategy, IBM Pervasive Computing Division, and Ahmet Ozalp, VP Strategic Marketing at Narad.

Peter and Ahmet told us that many SMBs are struggling with IT complexity, and are looking for solutions to compete more effectively. Their solution is for the MSO to deploy Narad's technology selectively and use IBM's products to provide core and premium services to the target market - the "sweet spot" is businesses with 10 to 300 or so employees.

The MSO would provide core services such as Internet access, VPN, and T1 equivalents for voice and video communications. IBM has a growing portfolio of outsourced services through its "Manage IT for me" program, and would provide such premium services as web sites, email, application hosting and management, CRM as well as traditional back-office applications like payroll. These premium services could be co-branded with the MSO or sold under the IBM brand.

The Narad/IBM offering includes TDMoIP technology from RAD Data Communications to permit the MSO to offer T-1 and E-1 services in competition with the local telephone company. Unlike T-1 lines with fixed capacity, the TDMoIP approach provides bandwidth on demand and can pay back in 12 months.

( www.naradnetworks.com ) ( www.ibm.com ) ( www.radusa.com )


Xtend Networks

We received some literature from Xtend Networks and arranged a telephone interview with Hillel Weinstein, their CEO, at his office in Tel Aviv.

Xtend's product line superficially resembles Narad's - it uses the bandwidth above 860 MHz to expand the capacity of a cable system without replacing any of the fiber or coax. The difference is that Narad's technology dedicates the extended bandwidth to a specific service - switched Ethernet - while Xtend's simply increases the available cable bandwidth which can then be used for any service or combination of services. Narad's technology is mainly digital, while Xtend's is analog.

Xtend's technology extends the cable bandwidth from the conventional 860 MHz all the way to nearly 3 GHz. The additional bandwidth can be used either symmetrically (about 1 GHz in each direction) or split asymmetrically. The added bandwidth could be used for additional digital multiplexes (for additional broadcast channels and/or VOD), for additional DOCSIS channels, and/or for switched Ethernet.

From our conversation with Hillel, the best way we found to think about the Xtend approach is as a "virtual dual cable" system. During the 1980s, the most advanced cable systems were built with two parallel cables, each operating up to 450 MHz (the bandwidth limit of technology at the time); half the TV channels were carried on each cable. Special set-top boxes were used to switch between the two cables as the subscriber selected a channel. Since a "cable ready" TV did not have the switching function built-in, the cable operator would provide an "A/B" switch so the subscriber could manually select the appropriate cable; many customers preferred to use the special set-top box on each TV.

The Xtend system can be used in a similar way. Xtend's XTB module, installed at the customer premises, acts as a "block converter" to shift the extended frequencies into the conventional TV band. The effect is identical to having a second cable, except that the Xtend cable has much higher upstream bandwidth. As with the "dual cable" approach, the subscriber can use a manual "A/B" switch. Hillel told us that Xtend plans to work with cable manufacturers to build the block convertor and switching functions into set-top boxes, so the "dual cable" is invisible to customers. Hillel projects that adding Xtend's technology to an existing system has a capital cost of about $200 per subscriber today, and will come down to about $100 per subscriber once XTB functionality is built into set-top boxes.

The net effect of Xtend's approach, once proven in the field, will be to give the cable operator more than twice the capacity at a much lower cost than a complete rebuild. But the operator does have to add equipment throughout the cable plant to gain the full benefit.

( www.xtendnetworks.com )


Pulse~LINK

While Narad and Xtend add bandwidth at the upper end of the cable frequency range, Pulse~LINK adds in within the standard frequency band. They do this with ultra wideband technology, a novel technique approved in February by the FCC. While many companies have talked about applying UWB to wireless networking, Pulse~LINK is the first to announce plans to use it to carry data over existing HFC cable systems.

Pulse~LINK has just gone public with their plans, and we interviewed John Santhoff (founder and CTO) and Bruce Watkins (President and COO) to better understand their approach. John told us that their current prototype uses a very narrow pulse (1.5 nanoseconds) across the entire downstream frequency band to tranmit data at 400 Mbps. The pulse is transmitted at very low power and does not interfere with any of the programming already carried in over those frequencies. They say they've already tweaked the data rate above 1 Gbps and expect to get yet higher with a production product.

Since the UWB data is carried in the existing frequency band, no changes are required to the cable infrastructure. An MSO would need to install suitable equipment at the headend. In customer homes, a "UWB to Ethernet dongle" might be the first product before suitable chips were built into digital set-top boxes and cable modems.

Pulse~LINK is assembling the patent portfolio for UWB over cable, and expects to licence its technology to cable equipment manufacturers. Many companies will await field trials to see whether the technology works as promised.

( www.pulse-link.com )


Summing It Up

The companies making the most ambitious claims are all at early stages of their development. They need funding to prove that their approaches work as well in the field as on paper and in the lab. This is not the most propitious time for funding, and some of them may not survive even if their technologies are sound.

Nevertheless, we feel that cable operators are in a good position to fulfill the promise of broadband. All MSOs have made heavy long-term investments in rebuilding their cable plants; most are fortunate that they are well along and their investments are winding down just as the market has turned sour on spending for long-term rewards.

As many of the new applications -- especially high-speed data, video on demand, and telephony -- prove themselves in the market, cable operators will need more bandwidth than they have. They would like to pull back analog channels but will have to move slowly unless digital TV sets start selling much more quickly.

All of these new technologies suggest that MSOs will be able to wring a lot more bandwidth -- probably many gigabits per second -- out of the existing plant. Taken together, they promise to postpone the need for additional massive capital investments for many years.


Builder Technology Conference: An Upbeat Industry

The building of new homes is one of the bright notes in the US economy. Headlines in June said "Home Building Up 11.6% in May". Reuters reported that U.S. housing starts surged last month at the fastest rate in nearly seven years.

We were delighted that the publishers at Hanley-Wood gave us the opportunity to address people from this booming industry at the Builder Technology Conference in Washington DC. The goal of our talk "Tomorrow's Home Technology: Separating Fact From Fantasy" was to help this group understand how some of the new technologies will impact their business and how to avoid getting burned by undeliverable promises.

Our messages to people associated with home building were:

  • Broadband both TO and WITHIN the home are increasingly important to your buyers.
  • Broadband access is the foundation for much of what’s changing in home technologies. Although its starting point is the high penetration of computers (and multiple computers) in US homes, broadband is about much more than computers and sharing the broadband connection.
  • The worlds of the PC, home entertainment and telephones are starting to overlap and merge. Each of these areas is being impacted by the change of technology from analog to digital. The implication is that they should NOT be treated as independent, unrelated and unconnected systems.
  • More and more consumers are spending their time and money on buying and using “this digital technology-enabled stuff” -- although they think about it in very different words: "taking pictures and sharing them" or "listening to my MP3's anywhere in the house". The consumer electronics industry has its efforts and money behind promoting networked digital devices and it's working. Once they get these devices, people need the networking to connect them. (For more on the transition to digital, see "Goodbye to Analog: Our Digital Destiny" below. )
  • Structured wiring is the enabling plumbing within the home. You do your buyers a disservice if you don't help them understand its value.
  • Builders have proven that a well-structured sales effort will convince most home buyers to pay for the structured wiring.
  • Availability of broadband services will increasingly impact the “sale-ability” of homes you build. You control what goes IN your homes, but can’t control whether telcos or cable ops offer broadband TO them. Big developers and builders can take control of their own destiny and provide broadband services if the incumbents won't.

Our "Home Movie"

Since our presentation was late in the day, we had some fun illustrating our points, using our own home to demonstrate what we were talking about.

  • We find real value in the many applications of broadband within our home. We are delighted that we put in structured wiring including 3 Cat 5 cables to each room to provide the "plumbing" for these applications.
  • One of the clear applications is networking our PCs and sharing our broadband Internet connection, but there is much more.
  • Our home has lots of today's usual consumer electronic toys, like a digital camera and digital camcorder. We edit and share pictures and home videos with friends and family thru our Web site. It's as simple as connecting either of these devices to the PC, editing and emailing or posting to the Web.
  • Our daughter in California does the same with her digital camera and camcorder, which lets us keep up with our grandson as he grows.
  • Our ReplayTV 4000 PVR is also connnected to our local network, so we can take digital pictures, connect in the camera and have a slide show of our pictures on our entertainment center big screen.
  • Another great consumer electronics device (the Audiotron digital networked music player) allows us to play all the MP3 digital music we have on our PCs in our bedroom, where we can select by artist, title, genre,etc.
  • This isn't limited to "techies" like us. It's also being done by "real people" like our assistant Mary Ann. She has a broadband connection, 2 (and soon to be 3) PCs, a digital camcorder, is about to put in a home network, and is getting ready to share her videos with her parents in Indiana. She, her husband and her kids all view this as part of their everyday lives.

Centex Homes

We had a great lead-in to our talk since we were preceded by Kurt Scherf from Parks Associates and Randy Luther, VP of Construction at Centex Homes. Since we've written several articles on "broadband plumbers", Randy made us smile when he told the group to "think about installing category 5 wire just like you think about installing plumbing". His messages were very congruent with ours:

  • Future proof your homes by installing structured wire networks
  • A quality integrator is extremely important. Centex is searching for larger integrator partners.
  • Centex discourages its divisions from entering long-term commitments with service providers.
  • Their goal for 2004 is a basic structured wire network in in every home they build.

( www.hanley-wood.com/inperson/btc/schedule.asp ) ( www.parksassociates.com ) ( www.centex.com )

Please visit ( www.broadbandhomecentral.com/presentations_archive.html#btc2002 ) to view or download our presentation and "home movie".


Goodbye to Analog: Our Digital Destiny

An old saying tells us that the only certain things in life are death and taxes. But when we focus in on the things that are becoming inevitable in the broadband home, there are two different driving forces: connectivity and digital.

Connectivity is an important aspect of the broadband home -- it's all about the benefits to everyday people as big pipes connect their homes to the rest of the world and allow the devices within the home to communicate with each other and the outside. But the other aspect is WHAT is being connected -- that's where digital comes in. As content and devices move from analog to digital, it becomes easier and more cost effective (at least in theory) for the devices to communicate with one another and to use the same networking and communication technologies to share their information.

We've been living with the transition to digital consumer electronics for some time now. Let's examine where we are in the replacement of analog by digital. In the realm of music, we've seen the demise of vinyl (analog) records and the acceptance of (digital) CDs. We've seen the emergence of various digital compression schemes like MP3 and WMA and their ability to be "ripped" from CDs, downloaded over the Web, and written by consumers on MP3 players and recordable CDs (CD-R). This has led to a number of issues regarding intellectual property and copyrights which are still being unravelled.

In movies, the transition from (analog) VCRs to (digital) DVDs is well underway. DVD players were introduced in Japan in '96 and their US sales first surpassed those of VCRs in September 2001. By April 2002, US DVD player sales outstripped those of VCRs almost 2 to 1.

Sales of digital still cameras are predicted to exceed those of conventional, film-based (reloadable, non-disposable) cameras in the year 2002 in North America. While film cameras still vastly outnumber digital cameras, digital camera penetration in online households is growing particularly fast. US Internet-connected households reached 33 percent in 2001, and is projected to reach 60 percent by year-end 2002 (InfoTrends Research Group, Inc surveys).

In the same way, digital camcorders are rapidly displacing older analog camcorders in consumer homes.

The digital transformation of radio is also under way. Internet radio has come to net-connected PCs and is starting to influence the design of home radios. Next generation digital radio broadcasts are happening. In the US, Sirius Satellite Radio and XM Satellite Radio have introduced digital radio, delivering up to 100 channels of music, talk and news. WorldSpace is already broadcasting in Africa and Asia.

The transition to digital in the TV world has been more problematic and is likely to proceed more slowly due to the enormous installed base of analog delivery systems (broadcast and cable) and receivers - both TV sets and VCRs.

There is a slow but steady trend of migrating the TV delivery systems from analog to digital. Those consumers getting their TV from satellite are already receiving a digital signal. Terrestrial broadcast and cable are overwhelmingly analog and are moving to digital much more slowly. Since the situation varies between countries we'll concentrate this section on what's happening in the US.

While traditional broadcast networks originate much of the TV content, very few U.S. homes receive their TV programs directly from local broadcast stations. Well over 80 percent of US homes receive television programming via satellite or cable -- for them, broadcast stations are just another set of channels in the bewildering universe of choices. Most cable operators offer digital services and have increased their overall penetration of digital subscribers to about 20% (although some operators have significantly higher penetrations). But most of the program content delivered to the digital set-top boxes is still analog; digital channels represent only a small fraction of the total.

As a key element of its drive for (digital) high-definition TV, the US gave broadcasters new digital channels in exchange for a promise to return the old analog channels in the future so the spectrum could be reused. Year end 2006 is the scheduled date when 1500 broadcast TV stations are scheduled to cease analog broadcast and continue only in digital. However, "safeguard" provisons in the transition plan make that date a mirage - the coupling of digital with high definition has resulted in very pricy TV sets and very low penetration to date.

Digital TV set purchases have been hampered by high prices, little content, and lack of compatibility between today's digital TV receivers and current generation cable set-tops. Cable operators don't want to prematurely devote too much channel capacity to bandwidth hungry high-definition video content, when the viewing audience is still very small.

FCC Chairman Powell recently exhorted all the players - broadcasters, cable operators, equipment manufacturers - to work together to accelerate the move to high definition. This may help to break the logjam and put the migration on a faster track. However, there are few incentives to do so and also few punishments for postponing the transition. The FCC has announced consideration of rules imposing sanctions on broadcast stations that miss deadlines for DTV transition. These would include losing their digital license if they appear to be acting in bad faith. However, we would expect the usual protests from lawyers, lobbyists and others to drag out any such proceedings.

Netting it out, the transition to digital for TV is inevitable, but the timing and path by which the scenario plays out in the US is still unclear.

Our presentation at BTC2002 included a graphical representation of the transition from analog to digital. Please visit ( www.broadbandhomecentral.com/presentations.html#btc2002 ) to view or download our presentation.

In our article on CES in BBHR 1/21/2002 we wrote about how many of the devices being shown were built with communications capability. Earlier we wrote about how home networking is increasingly enabling the interconnection of these devices.


Broadband Traveler - Taking the Broadband Home on the Road

MultiNetwork Manager 6.2

Portable computers are an important part of the broadband home. Several years ago we found ourselves sitting at our daughter's house in California and fighting over our one portable; before we left, we bought another portable and now carry both with us whenever we travel. We've found it hard to cope with all the different network environments we run into in airports, hotels and trade shows - and our children's houses!

Some time ago we downloaded and installed version 4 of MultiNetwork Manager, a low-cost program designed to switch between multiple networking environments, on one of our portables. That substantially reduced the amount of reconfiguring we need to do at each location. But it only handled some of our needs; we often needed to manually reconfigure some additional settings.

We received an email several months ago from Magnus Ekeberg, CEO of GlobeSoft AB, the Swedish company that developed MultiNetwork Manager. It announced that mnm version 6.2 was now available with many additional features. After some correspondence with Magnus, we downloaded and installed the new version and have taken it on the road several times.

With mnm, you set up multiple networking configurations, each with different settings for protocols, adapters, file sharing, and domain login. The new version handles all of the settings we previously needed to change manually. Once you've set up several configurations, you can select between them when you start a machine, and can switch between configurations on the fly.

On one of our portables, we have now set up configurations as

  • the control PC for our cable modem
  • a DHCP client PC when docked in our Windows NT domain
  • a substitute server while running both portables together through Ethernet on a airplane
  • a DHCP client over Wi-Fi to our other portable running Internet Connection Sharing connected to a broadband port in a hotel room
  • a static client to connect over the Wi-Fi network at a trade show
  • a DHCP client over Wi-Fi through a gateway and DSL modem at our daughter's house

mnm 6.2 has worked flawlessly except for one minor setup glitch. It's a lot easier than trying to manually reconfigure the machines each time we get somewhere. It works well and doesn't break the bank at $36 for a single copy. We recommend it to anyone who frequently needs to switch configurations.

( www.globesoft.com )


Your Voice -- Readers' Comments

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

Home Security Over Broadband

Dale Thompson wrote to ask "about where you felt home security fit in with the broadband home. You talk a lot about digital radio, VOD, VoIP, Audio, Games, Photos, control, video conference etc. but nary a word about home security. It would seem to me that this would be one of those quiet applications that while not of the Napster killer kind would drive consumers to install the broadband infrastructure."

We think home security is an important application but one that's pretty mature in and of itself.

We wrote a short piece on Home Automation Inc. in our report on EH Expo in the April 2, 2002 issue. HAI makes an integrated controller for home security and home automation; their equipment is often installed with a structured wiring package.

We've been watching Security Broadband. It was formed by cable industry players, nearly all from Prime Cable. They're rolling out services with Comcast and Cox. William Glasgow, Pres and CEO, spoke at our Fall 2001 BBH conference.

Peter Michel, the CEO of Brink's Home Security, one of the largest players in home security, spoke at our Fall 2000 conference. Shawn Lucht who heads Brink's broadband effort, also spoke in a panel discussion. They both made it clear that they were quite ambitious to participate in the broadband business.

These folks could play an important role in building the broadband infrastructure. In particular, companies like Brink's have a lot of experience in pulling wires in existing homes, and already have lots of trucks on the road and a 24x7 response center.

( www.homeauto.com ) ( www.atsecurity.com ) ( www.brinks.com )