In This Issue
HomePlug Powerline Networking
Compelling Broadband Applications -
Website Changes -
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Colleen Abdoulah has been named President and COO of WideOpenWest (WOW). Colleen was formerly an EVP with AT&T Broadband. ( www.wideopenwest.com )
Greg Ballard has been appointed Interim CEO of SONICblue, replacing Ken Potashner. Ballard was previously their EVP for Marketing and Product Management. ( www.sonicblue.com )
Steve Boogar has been named CEO of Digital Deck, Inc.. He was formerly COO of NEC Computers Inc. ( www.digitaldeck.com )
Merrill Brown has been appointed Senior VP at RealNetworks, tasked with running RealNetworks' RealOne subscription video and audio service. He was formerly with MSNBC.com. ( www.realnetworks.com )
William G. Carson has been promoted to Senior VP of Operations at Escient Convergence Corp. ( www.escient.com )
Mark Dzuban has been appointed EVP, Cable Telephony Deployment at Cedar Point Communications. Dzuban was founder of Hatteras House Consulting and previously Senior VP, telephony engineering & operations for AT&T Broadband. ( www.cedarpointcom.com )
Dave Fellows will become the CTO of the merged AT&T Comcast cable business after completion of the pending merger. He is currently CTO of AT&T Broadband. Brad Dusto, the current Comcast CTO, will become president of the merged compnay's Mountain Division. ( www.comcast.com )
Chad Gibbons was appointed Sales Director, Americas, focusing on Client Solutions at Thirdspace. Prior to joining Thirdspace, he established the North American operation of Tuxia. ( www.thirdspace.tv )
Maureen Govern has been appointed CTO of Convergys and Larry Schwartz has been named EVP of North American Operations for their Information Management Group. ( www.convergsys.com )
Steve Heap has been appointed Chief Network Officer of ePHONE Telecom, Inc. He was previously with Aleron. ( www.ephonetelecom.com )
Randal Hinson has joined Eagle Broadband as its VP of sales and marketing. His previous position was with World Wide Packets. ( www.eaglebroadband.com )
Jonathan F. Miller was named Chairman and CEO of AOL. He was formerly President and CEO of USA Interactive's USA Information and Services. ( www.aoltimewarner.com )
David Novak has been promoted to VP of marketing at Pace Micro Technology - Americas. He will be responsible for identifying new business development opportunities in satellite, terrestrial, voice over IP and video telephony. ( www.pacemicro.com )
Mark A. Ross has been named CTO at Cypress Semiconductor. He was previously with Cisco Systems and Sun Microsystems. ( www.cypress.com )
Oleh Sniezko has joined Aurora Networks as CTO. He was previously with AT&T Broadband.( www.aurora.com )
Tim Travaille, previously the EVP of finance and business development for Wink Communications, has been appointed interim chief operating officer of OpenTV. ( www.opentv.com )
Company News --Acquisitions
Callahan Associates International, together with the shareholders of Telenet and the Mixed Intercommunales (MICs), announced the closing of the acquisition of the ‘Mixed Intercommunales’ cable networks in Flanders, Belgium. The acquisition values the MICs cable networks at approximately Euro 944 million. ( www.callahanassoc.com ) ( www.telenet.be )
Universal Broadband Communications has purchased Cybertel Communications subsidiary AWI Global Technologies. Financial terms of the deal weren't released. ( www.ubcom.com )
Axerra Networks has closed a $10 million second round of private financing. The company's technology enables integration of legacy services with emerging IP services over unified networks. ( www.axerra.com )
Broadbus Technologies, Inc. a provider of VoD server systems for the cable TV industry, announced the closing of its Series A-1 round of financing, raising more than $12 Million. Comcast Interactive Capital was one of the participating investors. ( www.Broadbus.com )
Country Road Communications LLC, a telecom formed in January 2000 to acquire rural local exchange carriers, or RLECs, received $32 million investment and a commitment of an additional $50 million to continue such acquisitions. An article in thedeal.com indicates that Country Road's strategy is to purchase family-owned businesses in rural and semi-rural locations, run operations more efficiently, invest in new technology as appropriate, and sell to a strategic buyer.
Dune Networks, a fab-less provider of semiconductors for communications platforms, raised $24 million in Series A funding. ( www.dunenetworks.com )
The FeedRoom, Inc., a broadband network operator for streaming video web sites, has raised $5.4 million from both new and existing investors. ( www.feedroom.com )
Garuda Networks a broadband solution provider, closed $4.7 million in second round financing ( www.garudanetworks.com )
Maxima, a developer of high-capacity optical wireless transmission systems, raised an additional $4.2 million in its Series A round, bringing the total raised to $7.2 million. ( www.maximacorporation.com )
Midstream Technologies, a video server company, raised $26 million in a third round of funding. ( www.midstream.com )
NuVox Communications Inc., a broadband telecommunications provider, has raised $78.5 million of additional capital to finance its operations. ( www.nuvox.com )
Trinity Convergence, a provider of integrated voice over IP enabling software, received $4.5 million in its Series B round of funding. ( www.trinityconvergence.com )
Wave7 Optics, Inc., a developer of optical access equipment for fiber-to-the-home networks, has raised a third round of funding totaling $15.5 million, ( www.wave7optics.com )
AOL Time Warner Inc. is buying AT&T's 27.6 percent stake in Time Warner Entertainment in a deal valued at roughly $9 billion. The deal will give AOL complete control of its content businesses and includes a three-year, non-exclusive agreement to deliver AOL High-Speed Broadband service to 10 million AT&T Comcast homes. Once completed, AOL Time Warner has said it would conduct an initial public offering of Time Warner Cable. ( www.aoltimewarner.com ) ( www.att.com )
AtomFilms and Global Media Holdings have a new joint venture, AtomTelevision, which will launch a digital network in early '03 using Atom's library of short films and animation titles. As part of AtomTelevision's debut, the company announced the launch of its VOD initiative, Atom On Demand. The latter will provide five one hour-long programs to Comcast Cable as part of the MSO's planned fall VOD launch in Philadelphia. ( www.atomshockwave.com ) ( www.atomtelevision.com ) ( www.comcast.com )
CableLabs is consolidating its three currently separate testing prgoams in 2003. The DOCSIS cable modem test program will also include devices seeking PacketCable and CableHome compliance. The new test plan is accompanied by lower charges for certification testing of most devices. ( www.cablelabs.com )
China Netcom Corporation is using InnoMedia's standalone 4-voice port broadband VoIP CPE device to deliver voice services over its converged broadband IP network. Commercial VoIP service was first launched in June 2002 in Ningbo and will be extended to 9 major cities including Beijing, Shanghai, and Guangzhou in phase 1, with more cities subsequently. ( www.cnc.net.cn ) ( www.innomedia.com )
Comcast, Broadcom, and Ucentric Systems announced plans for a joint trial in Philadelphia that uses cable television in-home coaxial infrastructure and HomePNA technology to create a home networking solution capable of delivering robust multi-media traffic and services. ( www.comcast.com ) ( www.broadcom.com ) ( www.ucentric.com )
Conexant and Intersil announced an agreement under which Intersil will provide Conexant with its PRISM Wi-Fi (802.11b) wireless local area network technology for integration into Conexant's next-generation DSL modems, cable modems and home networking chip sets. ( www.conexant.com ) ( www.intersil.com )
Covad Communications signed a five-year agreement providing AOL the ability to purchase wholesale DSL consumer services throughout Covad's U.S. network. Covad issued warrants for AOL to purchase 3.5 million shares of Covad common stock, having an estimated aggregate value of $3.5 million. ( www.covad.com ) ( www.aol.com )
Dremedia, a UK broadcasting technology group, signed an agreement through which CNN will use Dremedia's voice recognition software to enhance CNN's broadband internet content. The software picks out key words from a database and finds related Web articles and VOD background stories to which it can hyperlink, without losing the broadcast. CNN will launch the new product with cable and broadband operators across Europe, the Middle East and Africa from September 2002 onwards. ( www.dremedia.com ) ( www.cnn.com )
iVAST, a provider of MPEG-4 software, announced a partnership with Oracle Japan and Sun Microsystems K.K. to deliver MPEG-4 based interactive multimedia solutions to Japan's broadband, cable, satellite, wireless, enterprise and digital broadcast networks. ( www.ivast.com )
Mediabolic signed a deal with D&M Holdings, parent companies of DENON Electronics and Marantz. Mediabolic's entertainment middleware links devices such as TVs and stereos to PCs so that consumers can share digital music and video content. The D&M companies plan to include the software in future high-end stereo products; the technology will enable them to integrate digital rights management controls for copyright holders, as well as parental controls for families. The agreement includes a minority investment in Mediabolic by D&M Holdings. ( www.mediabolic.com ) ( www.dm-holdings.com )
M-TEC BROADBAND has announced the spin-off of M-TEC SERVICE, which offers European cable operators full service maintenance of various manufacturers' products. ( www.mtecbroadband.com ) ( www.mteccableservice.com )
Microsoft announced that Xbox Live online broadband gaming network will officially go live on November 15, although there is an opportunity to use the Beta pre-release version earlier. Gamers can purchase a $49 online kit that will include a headset microphone, a 1-year subscription to Xbox Live, and software for accessing a broadband Internet connection. ( www.microsoft.com ) ( www.xbox.xom )
Microsoft demonstrated the beta version of Windows Media Player 9 Series, a next-generation digital media platform, formerly code-named Corona. ( www.microsoft.com )
Motive Communications has released its automated service and support offering to handle the needs of home networking customers. The solution is targeted at broadband providers, ISPs, retailers, and warranty service companies to enable them to offer managed services to consumers for installing, troubleshooting and managing home networks. ( www.motive.com )
Nielsen Media Research will begin measuring personal video recorder activity in about 20 "sample households" through a software partnership with Tivo Inc. The software will extract information from Tivo on tuning, recording and playback. ( www.nielsenmedia.com ) ( www.tivo.com )
Nintendo will begin selling an broadband adapter for GameCube in October in Japan, with later availability in the US. ( www.nintendo.com )
OpenTV announced it has agreements with eight local Chinese partners to port its interactive software to digital TV set-top boxes designed for the Chinese market. These partnerships include Coship Electronics Company Limited, which has a significant percentage of the satellite and cable receiver market in China. ( www.opentv.com )
Orange the British mobile phone operator, launched a picture messaging service enabling customers to send photos using a Sony/Ericsson camera phone. The company will charge users .62 Euros for each picture message sent. T-Mobile, which also offers picture messaging in the UK, charges a flat rate of about 32 Euros/month for its service. Orange and T-Mobile picture services currently work only on their own networks. J-Phone, a subsidiary of Vodafone Group, originally launched its picture mail service in Japan in November 2000, where it was surprisingly successful. The new services are developing as a result of new camera-equipped cell phones coming to market; Sharp's newest phone, which went on sale in August in Japan, contains 5MB of memory. ( www.orange.com ) ( www.t-mobile.co.uk )
PanAmSat Corporation introduced two new digital content delivery services: Video on Demand (VOD) and Digital Store & Forward (DSF). Intertainer is working with PanAmSat to distribute VOD content to its cable affiliate partners via satellite. DSF enables production companies to use satellite links rather than shipping analog tapes to deliver content around the globe. ( www.panamsat.com ) ( www.intertainer.com )
Ricochet Networks Inc. has re-launched high speed wireless service in Denver. RNI worked out a public/private partnership with the city, giving it modems and service in exchange for the joint development and deployment of municipal and public safety applications. The service is reported to now run at 176 kbps and higher, and costs $44.95 a month. Before its bankruptcy, Metricom had built its network in 21 US cities, offering wireless connections at 128 kbps. ( www.ricochet.com )
Sony has announced a personal video recorder (PVR) with broadband connectivity, which will be launched in Japan in November. The unit is part of a series called "CoCoon", which stands for COnnected COmmunity On Network. The unit will have a 160 gigabyte hard drive and runs on Linux. ( www.sony.com )
Starbucks is providing 1,200 of its US cafes and select cafes in London and Berlin with a Wi-Fi-based local area network. The network service is provided through T-Mobile International, a Deutsche Telekom wireless subsidiary. For PC configuration, HP has released the free Wireless Connection Manager which automatically senses and connects to available wireless networks; it can be downloaded from the Starbucks Web site. ( www.starbucks.com/hotspot )
Verizon is testing BeamReach Networks' broadband fixed wireless technology for delivering broadband services in Fairfax County, VA. The trial is intended to determine if it can supplement and expand delivery of Verizon's DSL service. ( www.verizon.com ) ( www.beamreachnetworks.com )
The Fiber-to-the-home (FTTH) Council indicates that U.S. FTTH installations increased substantially in the past year. Their new list details 50 communities in 16 states that use FTTH. ( www.ftthcouncil.org )
The Home Phoneline Networking Alliance (HomePNA), announced approval of a joint technology proposal by Broadcom Corporation and CopperGate Communication, Inc. for the HomePNA 3.0 next-generation specification, claiming a throughput rate up to 128 Mbps and Quality of Service (QoS). HomePNA 3.0 technology will coexist with other services such as POTS, ISDN, and ADSL, and is backwards compatible and interoperable with currently deployed HomePNA 2.0 network components. The Voice-over-HomePNA protocol, which extends HomePNA 2.0 by enabling eight simultaneous high-quality voice streams within the home, will also be supported by version 3.0. ( www.homepna.org )
US: The Federal Communications Commission (FCC) voted to require TV manufacturers to include digital tuners in almost every television sold. The commission's order requires manufacturers to include digital tuners, either as part of the set itself or as external units, in all sets 35 inches or larger, phasing them in over a year beginning July 1, 2004. A year later, that rule would extend to all televisions with screens from 25 to 35 inches. By July 1, 2007, all televisions with screens 13 inches and larger would be covered. Once the switch to digital television is complete, the commission is slated to reclaim the broadcast spectrum used for analog TV and sell it. Under the law, that can happen only after 85 percent of households have digital televisions. Most TV manufacturers oppose the new commission rule. ( www.fcc.gov )
--Broadband Growth: Some Tidbits on Broadband Growth in Various Countries
The UK: In August 2000, after a visit to the UK we wrote about how much of the broadband focus there was on the TV and how small the broadband PC penetration was at that time. Recent news articles suggest that has changed dramatically in the intervening time. Here are a few of the news items:
Japan: Broadband subscribers in Japan divide by access method as follows:
Almost 5 million people subscribed to a broadband Internet connection service, up 300 per cent from June 2001. (source: the Ministry of Public Management, Home Affairs, Posts and Telecommunications as of June 2002, via Nikkei)
Canada: The Canadian government is spending $105 million Canadian to promote development of broadband infrastructure in the country's underserved communities. The funds will be available to not-for-profit organizations that want to bring broadband access to rural and northern communities currently without broadband access. The funds are part of the Broadband for Rural and Northern Development Pilot Program. The Canadian national target is to bring high-speed Internet access to all Canadian communities by 2005. ( www.broadband.gc.ca )
Chile: As of 2Q02, cable modem operator VTR GlobalCom has 55,000 subscribers; Telefonica CTC Chile has 40,000 ADSL subscribers; local exchange operator Manquehue Net has about 16,000 ADSL subscribers in Santiago and Entel has about 25,000 customers for its ADSL and WLL broadband Internet services. ( www.unitedglobal.com/laFmain.html ) ( www.telefonicadechile.cl )
Worldwide: According to research from In-Stat/MDR, the worldwide number of Internet users with broadband connections has passed 30 million. DSL is generally in the lead except for the US, where cable modem services have a 2:1 led over DSL. ( www.instat.com )
In our previous issue, we introduced powerline networking and HomePlug. Despite our concern about market confusion in introducing yet another home networking technology, we believe that since most devices are already plugged into electrical outlets, this technology makes a lot of sense for the mass market and the stationary devices in the home. One of our questions was how well these products actually work and so we tested a sampling of HomePlug products in our own home to gain anecdotal experience. We also interviewed representatives from the HomePlug alliance to understand how they intend to promote HomePlug products, given the mind share and shelf space already occupied by Wi-Fi.
We've subjected HomePlug products from three companies to a series of in-home tests - in fact, we wrote part of this article on a desktop machine connected to our server and the Internet through HomePlug. We also interviewed many of the key players developing and marketing this technology.
We came away from our testing and discussions with the strong belief that HomePlug could play a major role in consumer networking. Our tests confirmed our initial conclusion that HomePlug would be "a good solution for connecting multiple PCs to a cable or DSL modem"; indeed, we think HomePlug is a good fit for additional applications, including telephony and audio distribution. It falls short for video distribution, but that's still several years away as a mass-market requirement.
We ran into several problems during our testing and interacted with many of the vendors about them. From the responses we got we are assuming that most should be resolved in the next generation of chips that are already being integrated into products for later this year. The most serious problem - assuring seamless interoperability between "HomePlug"-branded products - is being studied by the HomePlug organization and we hope it will be resolved soon.
Although we were impressed with HomePlug even when testing first-generation products, we are not convinced that the market can absorb yet another approach to "no new wires" networking. Now that HomePlug products are becoming available, the participants face a major challenge to get attention in a very crowded market.
HomePlug PowerLine Alliance 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.
We interviewed Tom Reed, the President of the Alliance, several times by telephone and in person. We also interviewed Larry Yonge of Intellon, chair of the HomePlug technical group; Christian Joly, Intellon's Senior VP of Marketing and Business Development; and Brad Warnock, Director of Marketing at Phonex Broadband. Our previous issue summarized our interview with Graham Wilson of Cogency, chair of the HomePlug marketing group.
We discussed the interoperability issue with technical and marketing people. They want the "HomePlug" label on a product to connote "interoperability" and said that they plan to take action to assure that devices from different vendors will work together seamlessly.
We were told that the initial positioning for HomePlug will be for sharing the broadband connection and for audio distribution, and that later generations will support higher speeds and will handle home video distribution. We were also told that HomePlug products would be price competitive with other approaches to home networking, and would be available through many distribution channels including online, retail, and through service providers. Retail will be initially focused on several key markets.
We asked the marketing people how they intend to sell HomePlug products against Wi-Fi wireless, which has achieved substantial market acceptance as a workable solution for connecting one or more remote PCs to a broadband modem. We were told that the positioning might well be "HomePlug works where wireless doesn't".
Summary Of Our Test Results
We tested HomePlug products from three companies - Asoka USA, Phonex Broadband, and ST&T xNetworks - and also examined a product from Valence Semiconductor. Other HomePlug products are currently on the market from Linksys, Netgear and others. Since all current products are based on the same chip from Intellon, the results from our tests should be representative of other current products. Our preliminary evaluation of a pre-release product based on a Cogency chip suggested that products based on this chip will provide comparable results.
We tested in only one home, so our conclusions should be considered as indicative but not definitive; we wouldn't be surprised if tests in another home were different. We understand that the HomePlug organization will publish the results of its extensive home testing, and we're looking forward to comparing the results.
We tested two-node networks with HomePlug Ethernet bridge adapters from the same company; two- and three-node networks mixing different company's adapters; and a network with a USB adapter and an Ethernet bridge. These networks all used one HomePlug Ethernet bridge as the "master" adapter - connected to the Ethernet switch sitting between our broadband modem and our desktop PCs - and one or more "mobile" adapters connected to remote portable and desktop PCs. The master adapter was plugged into a "good" outlet after several false starts (see below) and we carried a portable PC with a mobile adapter around our house to test at a variety of outlets.
We performed quantitative measurement of network speed by creating a diagnostic to precisely time the transfer of a large file between PCs. This gives transfer rates substantially lower than "raw" network speed but we believe provides a realistic comparison between different networking technologies.
More information about the tested products, the details of our testing approach and results are available on our website at http://www.bbhcentral.com/bbhl/homeplug.html.
Here's a summary of what we found:
Performance and Speed
What Makes Outlets "Good" or "Bad"?
We spent a lot of effort trying to understand why some outlets worked much better than others. We read the product manuals, discussed this with many vendors, and tried to decipher our test results for clues. We wanted to read the HomePlug specifications, but they are considered proprietary and were not available to us. In the absence of understanding just how the technology works, it's pretty hard to deduce why some outlets were particularly bad.
Since the tested HomePlug devices are all based on the same Intellon chip, it's not surprising that they were largely compatible. Later this year, devices based on Cogency's chips will appear on the market, and products will come to market with Intellon's new chip; this offers plenty of opportunities for additional compatability issues. Consumers will be very disappointed if the HomePlug logo fails to fulfill its promise of product interoperability.
HomePlug Products Tested We thank the HomePlug PowerLine Alliance for coordinating our contacts with vendors, the manufacturers for providing adapters and telephone support during our testing, and the chip vendors for their help in reviewing our test plan and explaining why some outlets worked better than others.
We tested both Ethernet and USB adapters from Asoka USA - the PlugLink Ethernet Bridge PL9610-ETH shown on the left and PlugLink USB Adapter PL9710-USB on the right. See our previous article for background on Asoka.
Just before going to press, we received a pre-release product made by ST&T - a USB Wall Adaptor U22. Unlike the other units, this is designed to plug directly into the wall; it is the first production unit based on the Cogency chip. We will report on our tests of this unit in the next issue.
We received a PCI Evaluation Kit VK6001-EVB1 from Valence Semiconductor, but ran out of time before we were able to evaluate it. Unlike the other units, this is configured as a PCI card to be installed in a desktop PC; a power cord connects it to an outlet.
More details of these products and our tests are posted on our web site at http://www.bbhcentral.com/bbhl/homeplug.html .
When MSOs introduced cable modem service, they began with an unlimited service at a flat rate. As operators have gained experience with the service and consumers learn about broadband, there is an increasing move for MSOs to provide different levels of service at different price points. The move comes from a variety of factors including:
The need for better MSO controls has been exacerabated by:
Charter was one of the leaders in tiered pricing. Although initially their offers varied in their different cable systems, they have standardized to three levels of service. Prices and speeds vary slightly, but the Charter Pipeline service usually includes an entry-level offer for 256 kilobits per second upstream and 128 kbps downstream for $30; a 768-kbps downstream, 128-kbps upstream service for $40; and a top-level 1.5 megabits-per-second downstream, 128 kbps upstream service which costs from $50 to $60. Each level is promoted by the kinds of applications most generally appealing to a category of users. At the low end it's Web surfing and email; at the high end they market to gamers, those doing big file transfers and intensive users.
AT&T Broadband has joined the tiering movement by rolling out its UltraLink service in a number of markets. For $80/month users get to download at up to 3 megabits per second. Their standard service, which provides downloads at up to 1.5 mbps, costs about $46/month. AT&T has not yet introduced a low-end offering but is said to be planning a trial of such an offering before year-end.
Although DSL providers have historically had more than one offer, they seem to be moving in the direction of additional tiering as well. SBC announced plans to offer new speeds and prices for DSL, in what they call 'personalized' speeds, beginning this fall. A pricing structure has not been announced, although they have characterized prices as "competitive." The six announced plans range from a basic plan targeted for moving dial-up users into broadband, up to an "expert plus" package targeted for hosting Web/e-mail servers, uploading large documents and high grade videoconferencing. Details are in the SBC press release (http://www.sbc.com/press_room).
Covad Communications also recently introduced a lower-end offering. They now provide "fast, faster and fastest" grades of service for residential users.
After a US Federal judge blocked its $9 million sale to Bertelsmann, Napster filed to liquidate its assets. But in a very real way, the idea of downloading and sharing music (and now video) files lives on in a much more threatening way. Napster was much easier to put out of business than what has replaced it: because Napster used a central server to locate the content to be swapped, there was a server that could be shut down and an owner to be put out of business.
"P2P" -- peer-to-peer networking -- has now arisen in its place. P2P is a type of de-centralized computing that allows computer users with the same networking program to connect with each other and directly access files from one another's hard drives. Unlike Napster, there is no central site and some of the most prevalent client software is open source, so stamping it out is virtually impossible. It's like the lump under the rug--you stomp it down in one spot and it pops up in another. Although P2P has multiple uses, including collaboration, communications and distributed computing, we'll focus here on the file sharing application which was popularized by Napster. Its primary application was people sharing music and much of the material being shared was copyrighted material.
What does this have to do with broadband? Everything! File sharing clients specifically target broadband content sources, so they are involved in the majority of transactions. This happens for several reasons. Broadband-connected PCs represent the file sources with the most bandwidth and therefore provide the fastest downloading, Since many broadband users leave their machines on and connected around the clock, their content is always available.
With their "always-on" connections, these broadband-connected machines can unknowingly become "supernodes". What that means is that their machines take on some of the functions that had been handled by Napster's central server: pushing search requests and acting as indexing servers, with hundreds of peers simultaneously connecting to the super-peer.
With residential broadband becoming more widely deployed all around the world, the type of files being exchanged has expanded from MP3 music files to include programs, games, movies and video files. Many of the movies have been "ripped" from DVDs and are of high quality; since the files are typically about 750MB, a broadband connection is all but required at each end for up- and down-loading.
What is different from Napster is that the company providing the P2P software has absolutely no control over the supernodes. Thus the copyright owners' effort to end file sharing becomes much more difficult.
So who are the many players in this drama and what are their needs?
What's the state of play in this multi-sided game? Current P2P networks are very much in operation and continuing to grow. The Slyck web site has statistics for the various clients and number of users online (currently well over 3 million). Even more impressive, because of the file sizes represented, is the number of movies available for downloading: the Fasttrackmovies.com site provides Grokster, Kazaa and iMesh users with the "correct" movie file sizes so they can find the real movie they are seeking instead of a "spoofed" file (see below).
The RIAA's lawyers are busy suing the P2P networks and going after the file traders. In what appears to be a test case, the RIAA recently asked Verizon Communications for personal information about a subscriber whom they allege engaged in peer-to-peer file-sharing using KaZaA software. The case falls under the Digital Millennium Copyright Act of 1998 (DMCA), which expanded U.S. copyright law to protect against infringement in a digital medium. In addition, the RIAA has been busy engaging firms to fill file trading services with junk files or "spoofing"; the intent is to make it much more difficult and time consuming for users to download a real version of what they are looking for.
Meanwhile the impact on the broadband service providers is unmistakeable. comScore has been collecting data on Internet usage for some time, and we're delighted that they provided some recent data for this report. Their aggregate data on US home broadband users (May, 2002) show that
The attached graph shows this dramatically - P2P overwhelms all other protocols among US broadband users.
Broadband service providers are taking a multi-faceted approach to this problem. One part of their approach is to assume that there is a real consumer need and a willingness to pay something to fill the need -- particularly as the RIAA tries to make using P2P networks more difficult, time consuming and perhaps even risky. Broadband providers such as DIRECTV Broadband, Charter Communications and Time Warner Cable's Road Runner service have signed agreements with Listen.com to provide their customers legal access to music via Listen's Rhapsody digital music subscription service. The benefit for Rhapsody is clearly to get broader distribution of their service. The benefit for the broadband provider can be twofold: (1) getting some part of the subscription fee from Rhapsody (although we don't know the contractual details of their agreements) and (2) using significantly less bandwidth -- and no upstream bandwidth -- for Rhapsody users, because of Rhapsody's distribution technology. (Pressplay and MusicNet, digital music services owned and controlled by the recording industry, have not as yet announced any agreements with broadband service providers.)
A second part of the BSP approach involves "tiering" of broadband services. As covered in this month's article on tiering (see "Why The Move Toward Tiered Offers?" above), there is an increasing recognition by broadband providers that they will need to offer a variety of plans, which provide different bandwidth and perhaps volume options. We expect to see a proliferation of tiered offers over the coming year. These will put the price paid by the user in closer balance with the bandwidth resources they consume.
A third part of the BSP approach may be the use of technology to "mitigate the damages" from P2P traffic, like bandwidth consumption and increasing NAP fees from what Sandvine calls “protocol chatter” with other clients off-network. Expand Networks gave a recent paper on the potential application of its caching technology to reduce both downstream and upstream traffic in broadband networks. Blue Falcon Networks provides digital contect delivery systems that exploit P2P technology for the legitimate distribution of copyrighted material.
The big and as yet unanswered question is "How will the situation play out over the next few years?" We know certain things:
To borrow from William O. Douglas (in a different context), we think that the solution that accomodates the various players and preserves their rights will be reached by "discarding old ideas that have outlived their usefulness and adapting others to current facts."
( www.bertelsmann.com ) ( www.kazaa.com ) ( www.riaa.org ) ( www.mpaa.org ) ( www.listen.com ) ( www.expandnetworks.com ) ( www.bluefalcon.com ) ( www.slyck.com ) ( www.fasttrackmovies.com ) ( www.verizon.com ) ( www.comscore.com ) ( www.directvinternet.com ) ( www.charter.com ) ( www.rr.com ) ( www.pressplay.com ) ( www.musicnet.com ) ( www.sandvine.com )
Bruce Miller wrote us to say: "How about just trying to keep Windows XP updated as reason enough! Have you seen the size of the patch files offered under Windows Update service? ....just trying to keep your machine current basically requires high speed access in my opinion or you won't do it."
Joe Helfrich wrote to tell us about Bell Canada's new "Gamesmania" service. "Gamesmania is delivering highend, full version PC titles to their broadband subscribers who pay $14.95(Canadian) for unlimited access to the library of games (around 100 games in total and growing)." As part of his "full disclosure" Joe did tell us that he is the VP of Sales for Exent Technologies, which supplies Bell Canada with the streaming technology used in Gamesmania, and was kind enough to give us access to the games so we could try some of them out for ourselves. We tried out a few of them but didn't have a great basis for comparison, since we're not avid gamers ourselves. We then delegated the task to our game-savvy son who was visiting from Boston and used to be a game software designer. His assessment was pretty positive, although he wanted more "A list" (very current) games included.
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