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The July 31, 2002 Issue Provided by System Dynamics Inc.
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Editors Note: This Too Will Pass

There has been such extensive media coverage of the telecom melt-down that we have consciously steered away from news coverage of what we presume most of our readers already know. We don't intend to stick our heads in the sand -- it's just that we're not sure what insights we can add to the extensive coverage of items like WorldCom's bankruptcy, the Rigas family of Adelphia going to jail, the ousters of Middlehoff, Messier and Pittman, or the enormous list of bankruptcies and layoffs which have permeated the sector. Like many of you involved in broadband, we've seen friends lose jobs and felt the pinch in personal ways.

Despite all that, we personally resonated with Steve Lohr's article in the July 29th New York Times, headlined "Technology Climate Is Gloomy, But Its Future Still Seems Bright". He points out that "the numbers for the technology in use worldwide -- personal computers, cellphones, handhelds, digital cameras, DVD players, MP3 music players and households online -- all continue to grow apace." That's part of what we were saying in last month's articles "Goodbye to Analog: Our Digital Destiny" and our "broadband home movie".

Maybe we have the advantage of being part of the over-50 crowd and can recall other cycles. We've been there and know that the path to change has more than its share of rough spots. Like all of you, we're looking forward to getting to the other side!


Heard on the Net

News about People and Companies Influencing The Broadband Home


People News

Stephen Burke, currently President of Comcast Cable, has been announced as the head of AT&T Comcast subsequent to the merger, expected in 4Q2002. The six division managers reporting to Burke were also named. ( www.comcast.com )

Michael Collette has been named CEO of Ucentric. He was formerly Senior VP of Marketing and Business Development at OpenTV. ( www.ucentric.com )

Matt Desch has been named CEO of Telcordia. He was previously president of Nortel's Global Service Providers division. ( www.telcorida.com )

Peter D. Martin has been named VP of Engineering at Bermai and Eric Cheong was appointed Sales VP. Martin was previously with Cirrus Logic and Cheong was at Marvell Semiconductor. ( www.bermai.com )

Richard Prodan has been named VP and Chief Scientist at Broadcom Corp. He was previously with Terayon Communications. ( www.broadcom.com )

Charles Snell has been named VP, Manufacturing at Cedar Point Communications. Snell was previously with Cratos Networks. ( www.cedarpointcom.com )

Mike Zafirovski has been named President and COO at Motorola, following the move of Ed Breen to Tyco as CEO. Zafirovski was previously president of Motorolaís Personal Communications Sector. ( www.motorola.com )


Company News

--Acquisitions

IP Unity is acquiring silicon vendor EmpowerTel Networks. Terms of the agreement were not disclosed. ( www.ipunity.com ) ( www.empowertel.com )

Liberate Technologies is acquiring Sigma Systems Group, which provides service management solutions to MSOs. Liberate will purchase all outstanding shares of Sigma Systems for approximately $62 million in cash. ( www.liberate.com ) ( www.sigma-systems.com )

RedWire Broadband, an in-building broadband service provider, purchased the assets of IntelliSpace Southern California, Inc. ( www.redwire.net )

Wificom, a French wireless broadband software company, and Micsom, a Finnish software provider for Wi-Fi access, announced plans to merge. The merged company, to be called Wificom Technologies, awaits competition authority approval. ( www.wificom.com ) ( www.micsom.com )

--Funding

Alopa Networks, a provider of broadband subscriber solutions and OSS applications, has closed $8.5 million of a Series C financing tranche as part of a $12.5 million total investment. ( www.alopa.com )

Aurora Networks, a developer of advanced optical transport systems for broadband cable networks has received $30 million in third round financing. ( www.aurora.com )

Bermai Inc., a chipset technology developer for the 802.11 wireless platform, received an additional $5 million in Series A funding; this brings its total first round funding to just over $20 million. ( www.bermai.com )

Continuum Photonics closed its series B financing round with just over $14 million. ( www.continuumphotonics.com )

Integra Telecom raised $22 million from its shareholder and bank groups. ( www.integratelecom.com )

Internet Photonics has closed $31 million in third round funding. ( www.internetphotonics.com )

NexTone Communications, a provider of VolP software for service providers, has raised $3.5 million. ( www.nextone.com )

Pictos Technologies, a provider of digital imaging products, announced its launch, along with a $17 million round of funding. The company resulted from the merger of Zing Network and the digital imaging business of Conexant Systems. ( www.pictos.com )

SpaceBridge Semiconductor, a broadband wireless semiconductor developer, received $21 million Cdn (US$13.9 million). ( www.spacebridge.com )

Synad, a developer of wireless local-area network chip technology, raised $20.7 million in its second round of funding. ( www.synad.com )

--Other News

Ambient Corporation, a development stage company, and Consolidated Edison of New York, Inc., (Con Edison) jointly announced successful results concluding one phase of demonstrating Ambient's Power Line Communications architecture on Con Edison's overhead electric distribution system. Ambient's proprietary coupler and network components are deployed on Con Edison's Medium and Low Voltage lines, constructing an end-to-end network in a live environment. ( www.ambientcorp.com ) ( www.conedison.com )

Bristol Virginia Utilities, a municipal utility in Virginia, is deploying a new all-optical network using Alcatel's Fiber-to-the-User (FTTU) technology. The system will deliver broadband to customers alongside traditional utility and electrical services and will enable four active phone lines, high speed Internet access and video services. ( www.bvub.com ) ( www.alcatel.com )

Cogency Semiconductor has introduced its single-chip Ethernet to HomePlug bridge for powerline networking. The chip integrates the Ethernet MAC, bridging and HomePlug MAC/PHY functions (see article below). ( www.cogency.com )

Comcast Corporation announced additional vendors for its primary line Voice over Internet Protocol (VoIP) deployment. Comcast has been a leading proponent of VoIP and the industry is watching its vendor selections and awaiting its early rollout results. ( www.comcast.com/PressRoom/viewrelease.asp?pressid=177 )

Eagle Broadband has been selected to provide its set-tops to MOTEC (a member of the Belgian M-TEC group) for its video conferencing project for retirement communities. The project is funded by the European Union (EU) and focuses on retirement communities centered around clinics or hospitals. The program addresses both medical security and preventing social isolation of the elderly in retirement communities. ( www.eaglebroadband.com ) ( www.mtecgroup.com )

EarthLink reported the addition of 72,000 net broadband subscribers during 2Q02. They have been aggressively focused on broadband and have been losing dial-up subscribers; broadband services revenues represent over 17 percent of EarthLink's total revenue. This contrasts with widespread criticism of AOL which has seemed much more focused on preserving its large dial-up base than on expansion into broadband. ( www.earthlink.net ) ( www.aol.com )

The Euro-DOCSIS Certification Board granted its first Euro-DOCSIS 1.1 certification to Toshiba's PCX2500 cable modem. ARRIS's Cadant C4 CMTS received Euro-DOCSIS 1.1 Qualification. ( www.euro-docsis.com ) ( www.toshiba.com ) ( www.arrisi.com )

Pacific Century Cyberworks (PCCW) is shutting down its four-year-old interactive TV venture. ( www.pccw.com )

Phonex Broadband has introduced its NeverWire 14, HomePlug 1.0-compliant device. The product, consisting of a modem-sized box with a power plug and a RJ-45 Ethernet jack, lets users leverage existing power lines to create a home network via unused bandwidth in standard home electrical wiring. See our HomePlug article below . ( www.phonex.com )

RealNetworks announced its Helix open source platform and community for creating digital media products and applications for any format, operating system or device. The RealNetworks Public Source License (RPSL) is being submitted to the Open Source Initiative for certification and initial source code for the Helix Community will be available within 90 days. Real's own new product, called the Universal Server, allows one server to stream Real's technology, Microsoft files, Apple Computer's QuickTime, and others. ( www.realnetworks.com ) ( www.helixcommunity.org )

StarBand has launched high-speed satellite Internet service for consumer and small office customers in Puerto Rico; it is the first satellite-delivered Internet provider officially launching service on the island. Starband also launched in the three U.S. Virgin Islands.( www.starband.com )

XtremeSpectrum Inc. demonstrated its new Trinity chipset, a UWB wireless semiconductor solution targetted for applications in the consumer connectivity market, broadcasting six MPEG2 video streams to separate flat panel displays simultaneously across the room. ( www.xtremespectrum.com )

--Industry Organizations

The Ethernet in the First Mile Alliance (EFMA) said the IEEE 802.3ah EFM Task Force has reached consensus on a complete set of baseline technical proposals that will provide the foundation of the Ethernet in the First Mile (EFM) standard. The IEEE 802.3ah EFM Task Force is chartered with developing the IEEE EFM standard and is part of the IEEE 802.3 Working Group, which is responsible for the development of all Ethernet standards. Three subscriber access network topologies and physical layers will be supported: point to point copper over the existing copper plant at speeds of at least 10 Mbps up to at least 750 m; point to point optical fiber over a single fiber at a speed of 1000 Mbps up to at least 10 km; and point to multipoint fiber at a speed of 1000 Mbps up to at least 10 km. ( www.efmalliance.org )

The Positively Broadband Campaign is a coalition of companies and trade associations committed to fostering US demand for broadband services. Supporters include AT&T, Best Buy, CapNet, CompTIA, Corning, Dell Computer, Educause, Information Technology Association of America (ITAA), Kodak and Siemens. They have published a white paper and have now issued a call for government and industry in the US to make e-work via broadband a key priority. ( www.positivelybroadband.org )

--Legal/Regulatory

US: The Federal Communications Commission (FCC) has released summary statistics of its latest data on the deployment of high-speed connections to the Internet in the United States. The information includes data as of December 31, 2001. Here are some highlights.

  • High-speed lines connecting homes and businesses to the Internet increased by 33% during the second half of 2001, from 9.6 million to 12.8 million lines.
  • Of the 12.8 million high-speed lines in service at the end of 2001, 11 million served residential and small business subscribers, a 41% increase from the 7.8 million residential and small business high-speed lines reported six months earlier.
  • About 7.4 million of the high-speed lines were advanced services lines that provide services at speeds exceeding 200 kilobits per second (kbps) in both directions, an increase of 25% during the second half of 2001.
  • At the end of 2001, the presence of high-speed service subscribers was reported in all fifty states, the District of Columbia, Puerto Rico, and the Virgin Islands, and in 79% of the nationís zip codes.
  • ADSL lines in service increased by 47% during the second half of 2001, from nearly 2.7 million to over 3.9 million lines; cable modem connections increased by 36% during the final six months of 2001, from 5.2 million to 7.1 million lines.

Details are available at ( www.fcc.gov/wcb/stats )


Compelling Broadband Applications -- Listen.com's Rhapsody service

Several months ago, a reader asked us to provide more coverage of broadband applications. There is still lots to write about the evolving infrastructure, economics, regulation, etc. but we think compelling applications are key in spurring broadband adoption and growth. As the "Positively Broadband" Campaign said in their original press release (see Industry Organization News, above): "We are going to have to give consumers better reasons for purchasing broadband service..."

Since many of our readers are broadband users as well as members of the industry, we'd like to hear about YOUR favorite broadband application. Please share your thoughts by emailing us at editor@bb-home.com and we'll share some with our readers in future reports.

To get the ball rolling, we'll share one application that Dave's been using a lot this month. Music is one of Dave's hobbies and passions. He plays music (and has a collection of more than 12 instruments) and is also an avid listener. His collection includes lots of CDs and tons of old vinyl.

Bringing it all together -- to listen to what he wants, when and where he wants it -- is a problem that's still not fully solved, but the pieces are emerging. We'll talk about this more next month.


Listen.com

We recently visited with Listen.com's CEO Sean Ryan and subsequently started using their Rhapsody service. From our first week's reaction, this is one of those services that, once you've started using, you probably won't want to do without. Users pay $9.95 per month for unlimited access to more than 15,000 albums from thousands of artists.

Rhapsody user interface --> Click for larger pictureThe user interface is very clear and easy to use. You can search the library, listen to complete albums and create your own playlists. You can play music with controls similar to those on a CD player. Since the interface takes a lot of space on the screen, you can enable a tiny "Mini Player" which pops up only when you want it.

Rhapsody has 18 major genres, each with a list of subgenres. Some of them are our favorites while others, like "glam", "ska revival" and "darkside" we've never heard of before. But that's the point--it seems to have lots for every taste. It also has performer background information, suggestions for similar artists, compilations, Internet radio and a good search.

Dave has found that it has lots of music that he likes, and he's created playlists to keep music running in his office all the time.

Unlike P2P "file sharing" systems, Rhapsody is completely legitimate. Listen.com has signed agreements with the five major record companies and several independents and is working on more.

Rhapsody is a software application running over your broadband connection -- you have to be connected in order to play the music. That doesn't mean you have to listen via your PC speakers. Their Web site gives instructions on how to listen to Rhapsody through your home stereo, and Dave has it running through the stereo system in his office.

Rhapsody goes hand in glove with broadband. You can use it over dial-up but you really need an "always on" broadband connection to give you the CD-quality experience without listening interruptions.

There are some drawbacks, although Sean Ryan tells us that many of them are being worked on. Lots of our favorite artists are in genres which listen.com hasn't paid much attention to. We can't play Rhapsody through our Audiotron (see our article in BBHR 4/23/02). It doesn't solve the "where you want it" issue, since there are draconian limits on CD burning -- you can burn only 10 tracks a month and those are currently limited to the Naxos classical catalog. Rhapsody is available only to US residents, although they are working on expanding the available footprint.

Rhapsody has several different offers - the "all access service" costs $9.95 a month and has a 7-day free trial. Sandy thinks it's pretty cool too!

( www.listen.com )


Is It Time for Telco Video? -- A report on VDSL

Those watching US telcos over the last decade have seen multiple attempts to add video services to the bundle. Most of those forays ended for a variety of reasons. Earlier trials were based on technologies whose costs and capabilities did not match user willingness to pay. SBC has been quite clear in its disdain for video: it closed down video services at Pacific Bell, Ameritech and SNET after buying them. Qwest has been an exception, but with its "accounting irregularities" under examination, expanding video services is clearly not the top priority. Since we've given coverage to how cable operators are moving toward adding voice to their video and data services, we turned our attention to what is happening with the addition of video to the the bundle at telcos.

Manitoba Telecom

Our contact at Manitoba Telecom Services (MTS), Roy Sherbo, recently provided us an update on their progress toward adding digital video into their voice and data service bundle. MTS is the fourth largest telecom in Canada and has been on a push to make broadband services available in their region. They offer high speed broadband access to 96% of their urban centers and 76% of the population of Manitoba. Starting in May, they began a 200 participant trial of digital TV service, which will run for 6-8 months and lead to a decision whether to launch the service in Winnipeg next year. MTS has a loyal franchise whose customers are predisposed to taking a bundled service from them.

MTS is using Next Level Communications' (NLC) VDSL technology. It enables MTS to provide high speed Internet service plus three simultaneous video feeds through one set top box. The three digital video streams can serve three TVs in various rooms. The master set-top is located in the primary viewing area and connected over the internal coax to the other set-tops. Other features include an interactive program guide and the ability to view incoming call information on the TV screen if the customer has MTS's Call Display service. NLC Residential Gateway --> Click for larger picture

Next Level Communications

The conversation with Roy raised a number of questions about the NLC technology. We visited NLC at their headquarters in Rohnert Park, California, to get an update on the technology, deployments and economics. Geoff Burke, Director, Marketing Services and Jeff Barnell, Senior VP, Marketing & Customer Care provided a tour of their facility and a description of their deployments and technology. Sandy with NLC's Geoff Burke --> Click for larger picture

Qwest VDSL --> Click for larger pictureNLC has deployed over 100,000 video lines of which approximately 50,000 are at Qwest. Qwest's service, Qwest Choice TV & OnLine, is offered in Phoenix, Omaha and Denver. It uses existing fiber in the neighborhood, reaching within 4,000 feet of a customer's location, and allows the VDSL technology to deliver speeds of 26 Mbps downstream and 3 Mbps upstream. At the neighborhood, signals are converted and sent via ATM and MPEG2 technology through the existing telephone copper wire network.

Many of the other NLC deployments have been at smaller US ILECs such as Citizen's Communications, CenturyTel and Horry Telephone Cooperative. Our impression is that these companies have acted to add video because they have faster decision making than the RBOCs, are often well positioned in their communities (and thus expect good take rates) and may receive government financial incentives for updating technology in rural locations.

Outside North America, companies such as Telenor and China Telecom have run (respectively) VOD pilots and technical trials. Trials have also taken place at BT, Korea Telecom, TelMex, etc.

Although the first VDSL deployment costs seemed prohibitive because of high set-top costs, NLC indicates that the deployent cost per subscriber has dropped 50% over the last year. They say that the return on investment (ROI) yields a two-year break even. (We have not reviewed the models to understand what assumptions support this claim.)

NLC's current technology, which uses Metalinkís VDSL chipset, is promoted as allowing telecom operators to deploy VDSL-based services within the same copper cable binder groups alongside existing and new services. This results from Metalinkís implementation of the standards compliant band plan, transmission layer and power requirements required by the FS-VDSL specifications (see below).

In addition to providing digital TV service, VOD and IPGs, NLC has announced application partnerships with several interactive application vendors, including iMagicTV, Myrio and Orca Interactive.

NLC observes that US telcos are under attack from several perspectives:

  • RBOC access line growth has slowed dramatically and is now estimated on average to be negative
  • Increasing numbers of US homes have dropped wireline phone service and the trend is expected to continue
  • Cable has over 2 million telephony subscribers and DOCSIS 1.1 and VoIP voice services promise to significantly raise that number

These observations lead NLC to anticipate that the US RBOCs may start moving more aggressively to add video services to their bundles. The unanswered question is whether the RBOCs will focus resources on this market now with all the turmoil in the telecom industry.

It seems likely that RBOC strategists are focusing on how to best leverage their positioning as the long-term survivors who can be entrusted with telecom stability and getting increased regulatory relief. We would put our bets on RBOC expenditures going wherever they will best aid that regulatory agenda. After all, more can be obtained by changing the rules of the game than by simply playing the game well.

A footnote: Anyone living in or visiting the Santa Rosa area might enjoy seeing NLCs extensive exhibit of local artists (www.nlc.com/NewFiles/ArtGallery.html).

Full Service VDSL

In June, the Full Service-VDSL (FS-VDSL) Committee published a set of specifications for providing multiple streams of digital video programming, high-speed data and voice services over traditional phone lines - claiming "superior service quality to cable platforms." The Committee was formed two years ago and includes both service providers (most European carriers plus Bell Canada, Quest and SBC from North America) and vendors from ADC to Zhone.

This is a very positive step for the global broadband industry. While the cable industry succeeded in developing and deploying DOCSIS, a single global standard for cable modems, ADSL suffered from numerous competing specifications.

We have written previously about CableLabs' work in developing common specifications through a collaborative process with leading vendors (see BBHR April 23, 2002). The FS-VDSL Committee has adopted a similar approach and has published documents which appear very similar to CableLabs specs. As with DOCSIS, the FS-VDSL specs are being submitted to ITU-T for global standardization; ITU-T has created an FS-VDSL Focus Group under its Study Group 16.

CableLabs efforts resulted in a dramatic reduction in the selling price of cable modems - from $500 to well under $100 - and CMTSs. This reduction in cost, and standardization of systems from many vendors, played a major role in the North American cable industry getting the lion's share - still nearly two-thirds - of residential broadband customers.

We'll watch the FS-VDSL effort to see if it has a similar effect on VDSL. We'll also watch to see which organization takes responsibility for FS-VDSL conformance and interoperability testing, which CableLabs undertook reluctantly for DOCSIS after publishing the specs.

Finally, we were interested to note that SBC is hosting the first meeting of the FS-VDSL Focus Group. Maybe this is a signal that they're not opposed to video in general, but only to the ways others have done it.

( www.mts.mb.ca ) ( www.nlc.com ) ( www.qwest.com ) ( www.metalink.co.il ) ( www.fs-vdsl.net )


Taking Services Into Their Own Hands: One Builder's Approach

Toll Brothers is the eighth largest US home builder by revenue and builds homes in twenty-one states. They generally serve the upscale market, with an average delivered home price of $500,000 in fiscal 2001. Advanced Broadband, a competitive communications provider, is their wholly-owned subsidiary, offering cable TV and high speed Internet access. We visited Toll Brothers Regency at Monroe property in New Jersey to learn more about Advanced Broadband's operations.

In communities where their services are offered, basic cable, community Intranet and high speed Internet are generally part of the Home Owners Agreement and thus bundled as part of the home purchase; because their facilities are all on private property, they do not need to open their infrastructure to other providers. Basic cable TV is available to all homeowners and includes local broadcast TV stations, at least 38 basic cable TV stations, and up to three private community TV channels. Premium packages are available for an additional charge, competitively priced. Basic high-speed Internet service is also provided to all residents under the HOA and includes provision of a DOCSIS cable modem and 3 e-mail addresses; higher-tiered premium services carry an extra charge.

Mike Zammit of Advanced Broadband --> Click for larger pictureWe met with Mike Zammit, who came from Telcordia and is now responsible for the design and operation of Advanced Broadband, to get an inside look at the infrastructure behind these services. One of the challenges for Advanced Broadband is getting a service functioning when the first residents move into a new community. Roads and houses are still under construction and workers can inadvertently cause outages. The facilities for all the equipment are a construction-site trailer, which belies the sophisitication of the equipment housed inside and the back-up powering necessary to insure continuing service. Headend in trailer --> Click for larger picture

Advanced Broadband offers video and data services, but leaves telephone service to the incumbent carrier. Mike said that they are not staffed to provide appropriate response for lifeline telephone service and do not want the risks involved.

Their network is HFC based, with fiber terminating at an optical node serving an average of 100-150 homes.They have a joint trenching agreement with the utilities and use conduit for their fiber. They use WSNet to assemble their digital channel line up and also use satellite to obtain local channel feeds. They monitor the plant for outages using SNMP data from the CMTS and cable modems; because they have a modem in every home and can correlate MAC addresses with their plant topolgy, they have excellent visibility into any plant problems. Mike said that their cost per subscriber including the head-end is less than $1000.

Toll Bros. wall map --> Click for larger picture Advanced Broadband currently serves about 1200 homes in 6 communities. They expect this to rise rapidly to 8000 as homes are completed in their currently-served developments, and to 15,000 when they serve the homes currently under contract in new developments.

Although Toll Brothers formed Advanced Broadband to "bring the latest in communication technology to Toll Brothers' communities," their Web site descriptions regarding amenities in their communities did not include a single word about these services. We can only conclude that granite counter kitchen tops still draw the consumer's attention much more than broadband services.

Although we were impressed with the cost effective approach used by Advanced Broadband to provide their services, we were disappointed to note the absense of an appropriate structured-wiring offering in the homes being built in this community. CAT5 is provided only for telephone service, and all the cables are brought to a common termination outside the house; a homeowner who wants to network PCs will have to pull new wiring through the walls, or fall back on other forms of home networking. These are lower-priced retirement "cottages" in a golf community, and Toll Brothers evidently assumed that buyers would not need structured wiring even though cable modem service was included in the home price; Mike assured us that structured wiring is a major offering in other communities, and we are looking forward to visiting one in the future.

We'll check back in about a year to see how they are doing in terms of subscribers served and whether any other home builders have decided to follow their lead in taking services into their own hands.

( www.tollbrothers.com ) ( www.advancedbroadband.com ) ( www.wsnet.tv )


More Solutions for Expanding Cable Bandwidth - Part 2

In our last issue, we discussed six companies focused on expanding the digital carrying capacity of existing cable plants. Since then, we've talked to a seventh and have thought about what MSOs might do with all these opportunities.


Advent Networks

We received some literature from Advent Networks and arranged a telephone interview with Geoff Tudor, Advent's CEO/Chairman. Unlike the companies we reviewed in the previous issue, Advent's system is not for expanding cable bandwidth; rather, it is a platform that permits MSOs to offer competitive telecommunications services to SMBs with a relatively small investment.

The Ultraband system provides TDM services with per-user downstream speeds from 5 to 40 Mbps and upstream speeds from 0.5 to 8 Mbps. Services are dedicated to each user, just like T-1/E-1 services from the telephone company (and unlike cable modem services, which share bandwidth between the users in each neighborhood). Applications include dedicated high-speed Internet access over symmetrical or asymmetrical facilities; VoIP telephone services; and video conferencing. These services are targeted to the SMB market and focused on customers with 15 to 150 employees that would like more bandwidth than a T-1 at a lower price. Geoff said that Ultraband is designed to fill the "huge gap between T-1 and T-3".

Ultraband operates over the existing HFC plant without any upgrades; to deploy it, an MSO would install a Switch Router at the cable headend, and an Access Gateway at each business customer site. The Access Gateway uses standard Ethernet, unlike T-1 and T-3, which require complex and expensive CSU/DSU interfaces and routers.

At first blush, this sounds like a simple business proposition for an MSO that wants to offer SMB services. A Switch Router with a single line card costs about $60,000 and supports 64 connections with an aggregate of 320 MBps of capacity; each Access Gateway costs about $400. Telephone companies charge at least $400 monthly per T-1 line, so an MSO wouldn't have to sell many connections at a competitive price to pay off the capital investment.


What Will Operators Buy?

The seven companies we've covered operate in three basic ways: they get more usable services into existing cable channels, put more usable bits in a given amount of bandwidth, and expand the available bandwidth of the cable infrastructure.

We think there's a logical progression by which cable operators will decide which technologies to use. Since the current market climate forces a sharp focus on the near-term bottom line, we think operators will start with those technologies giving the biggest near-term payoff from the smallest overall expense. Technologies which involve substantial changes in the plant and/or at the end points are less likely to happen in the near term.

So we think that companies will first buy those technologies that require capital expenditures only for headend equipment and for user equipment as sales are made. This would include the video multiplexing systems from BigBand and Terayon, and Advent's TDM over HFC system.

Next would come technologies requiring capex for upgrading or replacing previously-installed headend and user equipment. This would include DOCSIS 2.0 cable modem systems from Terayon and other companies; Rainmaker's wavelet modulation system; and Pulse~LINK's UWB system.

Over time, operators will start to run out of available bandwidth and will consider those technologies which require modifying the outside plant. This would include systems from Xtend and Narad. (Narad has positioned its system for the same short-term opportunity as Expand, but does require modifications to outside plant.)

There are considerable differences between cable systems, and each MSO will approach this differently. Some MSOs have a longer-term view, and might want to make longer-term investments sooner than others. Some are enthusiastic about new services - such as those for SMBs - and would install technologies to facilitate doing so on a large scale. Some cable systems have so much capacity committed -- to analog TV, digital TV, VOD, high-speed data, and telephony -- that they might be ripe for technologies which extend the carrying capacity at a lower cost than an upgrade.

( www.adventnetworks.com )

Last month's issue covered technologies from BigBand Networks, Narad Networks, Pulse~LINK, Rainmaker Technologies, Terayon, and Xtend Networks; see http://www.bbhcentral.com/report/backissues/Report0206.html#link4 for more information.


Introduction to HomePlug

We have been researching and writing about powerline networking technologies for some time. Powerline products are being developed both for metropolitan area networking providing broadband access to the home, and for local area networking in the home. HomePlug is an emerging LAN technology targeted to customers who want to connect multiple PCs to a cable or DSL modem and don't want to run new wiring.

In this article, we provide background information on the industry consortium and a few of the players that we've visited or interviewed recently. In the next issue, we'll report on our testing of HomePlug equipment we've recently received from four different companies. Our early experience has been pretty positive, and we're looking forward to sharing it with you.

HomePlug PowerLine Alliance

Home networking over existing electrical wiring has always seemed like a great approach, since most devices are already plugged into electrical outlets and wouldn't need additional network connections. Many companies started developing technologies for powerline networking, but recognized that coming to market with mutually-incompatible proprietary technologies would only confuse consumers.

The HomePlug Powerline Alliance was formed more than two years ago to create a common specification so that products from different companies would be interoperable and so they could be marketed with a common logo. The Alliance released its HomePlug 1.0 specification in June 2001 and the consortium members have been working to develop consumer products.

Many HomePlug 1.0 products have just reached the market. Phonex showed its NeverWire 14 products at CES and has just started a worldwide marketing campaign. Asoka USA has started limited marketing prior to a full rollout. Two of the leaders in home networking, Linksys and Netgear, have introduced HomePlug products. A complete product list is on the HomePlug website.

( www.homeplug.org )

Asoka USA

We visited Asoka USA a few weeks ago near San Francisco. We met with Elsa Chan, Director of Business Communications. Their parent company, Asoka, Inc. of Taiwan, established Asoka USA last year specifically to penetrate the US consumer market, and HomePlug powerline networking is their initial effort.

Asoka PlugLink HomePlug-Ethernet bridge --> Click for larger pictureElsa had already loaned us two of their PlugLink Ethernet Bridge units for evaluation, and she gave us one of their USB Bridges as well while we visited with her.

Elsa told us that they were working on additional HomePlug products, including a 4-port Ethernet bridge and a Wi-Fi bridge. They're also exploring different form factors for their current products.

We started our testing with Asoka's products and were impressed with how well they worked after a few problems with our initial setup.

We're looking forward to finishing testing their equipment and reporting on it to you.

( www.asokausa.com )

Cogency Semiconductor

Cogency Piranha HomePlug chipset --> Click for larger pictureAbout a month ago, we interviewed Graham Wilson, Director of Marketing at Cogency Semiconductor, a Canadian company developing chips compatible with the HomePlug specs. The picture shows how Cogency's Piranha chipset fits on a PCI HomePlug adapter.

Cogency USB-HomePlug Wall Adapter --> Click for larger pictureCogency also sells complete "reference designs" based on its chipsets; a consumer electronics company can quickly turn a reference design into a finished product. Cogency's reference designs include a USB-HomePlug Wall Adapter - a low-cost unit with a small form factor (shown at the right) - and a slightly larger Ethernet-HomePlug Wall Adapter. Earlier this month, Cogency announced its new CS1102 Ethernet to HomePlug bridge on a chip, which should enable consumer-priced products.

Graham, who also serves as the chair of the HomePlug marketing group, told us that early consumer products were adapters - simple products to connect HomePlug to USB and Ethernet, with various form factors. HomePlug will then migrate into integrated products - built into cable modems, cable/DSL routers and gateways.

So as HomePlug products roll out, the consumer should be able to buy a cable modem with HomePlug built-in - just connect it to the cable and plug it into the wall outlet: the power plug provides the network connection. For now, each PC requires a HomePlug wall adapter for USB or Ethernet - whichever is built into the PC; later, HomePlug will be built into the PC, removing the need for wall adapters.

( www.cogency.com )

Where Does Powerline Fit?

The consumer already has a bewildering choice of home networking technologies: Ethernet, wireless (Wi-Fi) and phoneline (HomePNA). Wi-Fi is going great guns - does the consumer really need another home networking technology?

We think that HomePlug promises to be a good solution for connecting multiple PCs to a cable or DSL modem - its operating speed is a good fit to the maximum speed of most broadband modems (about 1.5 Mbps). Our initial testing indicates that HomePlug is better than today's wireless networking - it reaches more places in our house.

On the other hand, we don't think either HomePlug or Wi-Fi provides a particularly good solution for PC-to-PC networking. And neither provides enough speed for digital video distribution. Ethernet over structured wiring is a much better solution, since it operates at much higher speeds. But it does require pulling wires through walls, which scares away many customers.

We'll write more about this in the next issue.


Website Changes -- We've Added a Glossary

We recently modified our report to add a "pop-up glossary" to the report on our website. Key phrases and acronyms are highlighted; the definition appears as soon as you point to it - there's no need to click!

Many of you are industry insiders and don't need these definitions. But many readers know more about some areas than others, and might get lost with lots of new words and acronyms.

Please try out the glossary and let us know what you think about it.

  • Do you disagree with our definition in your field of expertise? Please let us know how we should have defined it.
  • Is there a word or acronym missing? Please let us know - and suggest a definition if you know it.

We don't highlight a phrase or acronym every time it's used, but only the first time it appears in that issue of the report. If a definition seems to be missing, take a look earlier in the report.

The glossary is currently included in this report and the previous two. Over the summer, we'll update the earlier issues, since many new readers browse through them to learn about the industry.


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