BBH Report Home Page
April 16, 2003 Provided by System Dynamics Inc.

IN THIS ISSUE:

Heard on the Net

Power Line Communications
Third Wire To the Home?

Wireless
The Road to "Broadband Anywhere"

VoIP Coming of Age -
Thoughts on the VON Conference

An All-Digital, All-IP Future? -
Read the Fortune Cookie

Sony
The Passage to Competitive Set-top Boxes

SercoNet's NetHome -
Making Customers More Sticky

Coming Next Month

Your Voice -
Readers' Comments

Website Changes


Heard on the Net

News about People and Companies Influencing The Broadband Home


People News

Craig Barrat, previously VP for technology at Atheros Communications, has become President and CEO. ( www.atheros.com )

Duane R. Dickhut has been named to lead Broadcom's ServerWorks subsidiary. He previously headed their Broadband Processor Business Unit and was with SONICblue prior to joining Broadcom in January. ( www.broadcom.com )

Marwan Fawaz was appointed CTO of Adelphia Communications. He was previously with the Vulcan Inc. Investment Management Group. ( www.adelphia.net )

Greg Gudorf was named Senior VP of Sony's Digital Platform Division of America (DPA). Gudorf had been VP of business planning. ( www.sony.com/passage )

Thomas R. Jokerst has joined Broadbus Technologies, Inc. as CTO. He was previously at Charter Communications. ( www.broadbus.com )

Amol Joshi has been named VP of marketing at BayPackets, Inc. Previously he was with BeVocal. ( www.baypackets.com )

Dave Marples has returned to Telcordia as Chief Scientist in the Network Systems Lab of Applied Research. He was previously VP of European Operations at Global Inventures. ( www.telcordia.com )

Bill McCall has been appointed CEO of TVGateway. ( www.tvgateway.tv )

Arthur Orduña has become VP of strategic initiatives at Advance/Newhouse Communications. Previously he was VP of marketing for Canal+ Technologies. ( www.advance.net )

Dan Pike has been named CTO of the cable unit at General Communication Inc. Pike previously was at Classic Communications and Prime Cable. ( www.gci.com )

Scott Slater has been named VP of i-BURST strategic development at ArrayComm. ( www.arraycomm.com )

Gary Weis was named President and CEO of Cometa Networks. Weis had previously held senior positions at AT&T and IBM. ( www.cometanetworks.com )


Company News

--Acquisitions

Anadigics is acquiring the WLAN power amplifier and RF module product line of RF Solutions. The purchase is being made for $2.8 million and a contingent payment of up to 3.0 million common shares, based upon achieving certain revenue targets. ( www.anadigics.com ) ( www.rf-solutions.com )

Cisco Systems has agreed to acquire privately-held Linksys by issuing approximately $500 million in stock. Separately, Cisco is also paying $13.5 million in stock to buy SignalWorks. ( www.cisco.com ) ( www.linksys.com ) ( www.signalworks.com )

Motorola completed its cash tender offer of $1.18 per share for all outstanding shares of common stock of Next Level Communications, Inc. Motorola will acquire the remaining ownership of Next Level, paying $34.05 million for the 26 percent of the broadband access equipment maker it does not already own. ( www.motorola.com ) ( www.nextlevel.com )

SR Telecom is buying wireless broadband company Netro for $121 million. Netro had previously bought the "Project Angel" fixed wireless technology from AT&T. ( www.srtelecom.com ) ( www.netro-corp.com )

--Funding

BayPackets raised $21.7 million in its latest funding round. ( www.baypackets.com )

BeamReach Networks, a broadband wireless equipment provider, obtained $15 million in a third round of financing. ( www.beamreachnetworks.com )

BitBand Inc. a leading provider of video and audio on demand solutions for broadband IP networks, closed its second round of investment, totaling over $9 million. ( www.bitband.com )

Myrio Corp, an ITV software supplier, raised $6 million in financing. ( www.myrio.com )

Navini, a broadband wireless equipment vendor, raised $25 million in series C funding. ( www.navini.com )

Wi-LAN, a wireless broadband technology provider obtained C$8.8 million (US$6 million) via an R&D investment agreement with the Canadian government. The company has patents for wideband-orthogonal frequency division modulation (W-OFDM). ( www.wi-lan.com )

--Other News

Advent Networks and their Japan distributor, Mitsubishi, announced that Tokai Broadband Communications (T-com) will be the first cable operator in Japan to commercially deploy Advent's ultra-high speed data system. Tokai's AIC company will initially offer guaranteed 10 Mbps transmission speed for home users for 4,980 Yen (US$42) per month. ( www.advent.net )

America Online launched a $35 million marketing campaign to retain its dial-up subscribers if they switch to high-speed Internet access. AOL will offer its add-on broadband service for $9.95 a month to existing subscribers -- after year-end the rate goes up. The new service includes exclusive video content, a new voice mail service and five hours per month of dial-up use. ( www.aoltimewarner.com )

ARRIS publicized the VoIP system expertise gained from their PacketCable-based VoIP interoperability testing lab. Through the end of March, 2003, they tested interoperability with 16 VoIP Call Management Servers (CMS) and LCS Gateways. ( www.arrisi.com )

BroadLight, a supplier of communication semiconductors and optical transceivers, announced a major step toward reducing the cost of FTTH Customer Premises Equipment (CPE). They claim to have cut transceiver prices dramatically. ( www.broadlight.com )

BT announced they will be cutting the wholesale price of business broadband by over 50%. CEO Ben Verwaayen also announced that BT will be bringing ADSL within potential reach of 90 per cent of UK homes and small businesses, up from the currently enabled footprint of 67 per cent. ( www.bt.com )

Boingo announced their Platform Services offering of private label software and network aggregation services to allow service providers' end users to access a network of Wi-Fi hot spots, under the carrier’s brand. Boingo subsequently announced an agreement with T-Mobile for co-developing software and services for accessing T-Mobile’s Wi-Fi hotspots and its GPRS data network. Boingo will use PCTEL's software modules for Windows and PocketPC platforms to enable Wi-Fi customers to also access GPRS, CDMA2000 1X and iDEN networks. This is part of a trend toward helping subscribers move easily between Wi-Fi and WWAN networks with one account and one carrier-branded user interface. ( www.boingo.com ) ( www.t-mobile.com/hotspot ) ( www.pctel.com )

CableLabs announced that during Certification Wave 25, another 12 DOCSIS 2.0 cable modems had were certified; eight companies gained certified status for DOCSIS 1.1 products and one gained DOCSIS 1.1 qualified status for headend equipment; three more home networking products were certified for CableHome 1.0; Call Management Servers (CMS) from Cisco and Syndeo gained qualification status and nine PacketCable devices were certified or qualified. ( www.cablelabs.com )

Comcast is offering personal firewall software for its high-speed data customers through an alliance with Network Associates. Customers receive the "McAfee Personal Firewall" service at no extra cost for one year. AOL's enhanced broadband service also bundles in the McAfee Personal Firewall service. Cox Communications announced they will begin selling McAfee’s online security solutions to Cox High Speed Internet customers; Cox will bill customers as part of their subscription. ( www.comcast.com ) ( www.nai.com ) ( www.mcafee.com ) ( www.aoltimewarner.com ) ( www.cox.com )

IPWireless announced availability of a QoS platform for their UMTS mobile broadband network solution. It allows operators to offer services such as voice, "push to talk," and streaming applications. ( www.ipwireless.com )

Jungo announced that its OpenRG residential gateway software has been chosen to power TMT's coaxial networking systems for homes and Multi-Dwelling Units (MDUs). Each TMT system consists of a gateway and numerous outlets. The gateways convert Ethernet to coax. Ordinary TV outlets become Ethernet and USB sockets, allowing the coaxial TV infrastructure to provide broadband home networking. ( www.jungo.com ) ( www.tmt3.com )

Linksys has begun shipping wireless access points and routers supporting all three major 802.11 types: 802.11b, 802.11a and the draft version of 802.11g. The equipment, called Wireless A+G, is intended for high-end consumers and businesses. Separately, Linksys and Ricochet Networks have teamed to produce the Linksys Ricochet Router. It enables users to attach an 802.11 wireless LAN access point for a fully wireless network, or to connect as many as four computers to the Ricochet service through Ethernet switch ports in the router. ( www.linksys.com ) ( www.ricochet.com )

Microsoft announced that its upcoming version 4.2 of Windows CE .NET will support IP telephony. Hitachi, NEC, Casio Computers, Samsung and others intend to develop IP phones using the new version and chip/processor makers like Texas Instruments, ARM, Broadcom Corp., Conexant, and Intel are optimizing CPUs and building reference designs for VoIP devices running Windows CE .NET. ( www.microsoft.com/windows/embedded/devices/voip )

SONICblue filed voluntary petitions for reorganization under Chapter 11 in March. As part of the bankruptcy proceedings Opta Systems, LLC bid successfully for the GoVideo business and D&M Holdings (parent company of Denon and Marantz) won the ReplayTV and Rio business units. ( www.sonicblue.com ) ( www.dm-holdings.com )

Time Warner Cable of Maine is now offering primary telephone service in addition to video and high-speed Internet service. The "Digital Phone" offer replaces their earlier Line Runner offer which targeted 2nd line phones. Available only to customers of TWC high-speed data services, the package costs $39.95 a month for unlimited US and local calls, plus additional features. ( www.twcdigitalphone.com/get.htm )

TiVo launched their Home Media Option for subscribers with their Series2 DVRs. Tivo customers who take the service will be allowed to manage and share video, digital music and photos with other devices in the home. When used with a second TiVo box, customers can use the new option to record TV programs on one set, and watch the same program in another room in that household. The Home Media Option can be downloaded for a one-time fee of $99. Activating it on additional Series2 DVRs within the home costs $49 per unit. Users must also purchase a network adapter. ( www.tivo.com )

Verizon Communications announced it will expand DSL availability in 2003 from 60 percent to 80 percent of its market. Verizon also expects to begin wider deployment of last-mile fiber connections to homes and small businesses and homes in 2004. ( www.verizon.com )

VideoTele.com, a division of Tut Systems, and iVAST announced a partnership to demonstrate an MPEG-4 based digital headend solution. The demonstration at the National Association of Broadcasters (NAB) showcased MPEG-2 content transcoded to MPEG-4 and encapsulated in an MPEG-2 transport stream. The stream is later decoded on an MPEG-4 enabled set-top box. ( www.videotele.com ) ( www.tutsys.com ) ( www.ivast.com )

ViXS Systems announced that its XCode chip for video distribution over local, wired or wireless IP networks has been integrated with the new Toshiba America Electronic Components, Inc. reference design, targeted at media center/home entertainment gateway applications. The reference design is expected to be used by manufacturers of digital set-top boxes, media gateways and other multimedia consumer electronic platforms that manage networked home entertainment products. ( www.vixs.com ) ( www.toshiba.com/taec/ )

Disney plans to begin testing a new VOD film service later this year, according to Michael Eisner's talk at the NAB. The Movie Beam service will use part of the digital broadcasting spectrum from its ABC network to provide up to 10 films a week into U.S. set-top boxes with storage for 100 feature films. ( www.disney.com )

--Standards, Certifications and Interoperability

The Internet Streaming Media Alliance (ISMA) has released for review a new content protection specification designed to secure digital streaming and downloaded content. The consortium expects the specification to be finalized in June. The specification builds upon the ISMA's v1.0 specification released in 2001, which defines an end-to-end, implementation agreement for streaming ISO-compliant MPEG-4 video and audio over Internet Protocol networks. ( www.isma.tv )

WiMAX, a non-profit corporation to help accelerate, promote and certify the compatibility and interoperability of broadband wireless access equipment based on the IEEE 802.16 technical standard, has gained seven new members since the start of the year. WiMAX's current members now include Airspan Networks, Alvarion Ltd., Aperto Networks, Ensemble Communications Inc., Fujitsu Microelectronics America, Intel Corporation, Nokia, OFDM Forum, Proxim Corporation and Wi-LAN Inc. ( www.wimaxforum.org )


Briefly Noted

The Corporation for Public Broadcasting released a report called "Connected to the Future -- A Report on Children's Internet Use", indicating the U.S. "digital divide" between rich and poor children is shrinking. The good news is that Internet use among minority and low-income children has surged over the past two years. The bad news is that white children and those from rich families are still more likely to have high-speed Internet access at home. The study, performed by Grunwald Associates in partnership with the National School Boards Foundation showed that more than two-thirds of low-income households now have a computer at home. See the report at http://www.cpb.org/ed/resources/connected. ( www.cpb.org ) ( www.grunwald.com ) ( www.nsbf.org )

Tiering of broadband-related services is occurring more frequently in the US. This is happening both at the low-end tiers and the high end. It seems to be the solution of choice for service providers who want to move away from "all you can eat" flat-rate services.

  • GCI in Alaska announced availability of LiteSpeed, offering existing dial-up Internet users always-on service for as low as $24.99 when the customer has GCI long-distance. ( www.gci.net )
  • Earthlink is offering EarthLink Plus to its dial-up Internet subscribers, using a Web acceleration tool to give speeds up to five-times faster than standard rates, for $28.95 per month. Plus service also includes "premium" technical support, eight e-mail boxes and 10 megabytes of Web server space. EarthLink's standard dial-up plan costs $21.95 per month. ( www.earthlink.net )
  • Comcast is focusing on tiering the high end first. Comcast Pro offers data at 3.5 Mbps down and 384 Kbps upstream for $95/month with a free modem and no annual contract. ( www.comcast.com )


Power Line Communications: Third Wire To the Home?

The Columbia Institute for Tele-Information (CITI) held Power Line Communications III, the third in a series of conferences on PLC as a potential access competitor to DSL and cable. The focus was primarily on the US market, where PLC is not as advanced as in Europe. The configuration of Europe's power grid is more suitable than the US grid for the delivery of broadband communications. Companies like Main.net Communications have services running to thousands of customers in over 40 countries, including Germany, Sweden and the Netherlands, whereas their services are still under trial in the US.

Our experience with conferences on a particular access technology is that a group of technology suppliers, joined by service providers noted for their enthusiasm for the technology, promote the virtues of their approach. Our hats off to CITI, which did an excellent job including a couple of presenters who represented more skeptical perspectives.

Much of our recent work on PLC has focused on the in-home aspects, with testing of HomePlug as one of its elements. This conference was a good opportunity for an update on PLC access developments over the last 18 months -- during which time PLC access in the US has gone from theory to trials.

After hearing the day's roster of speakers, here are some of our conclusions on the pros and cons of PLC as an access technology in the US. Our bottom line is that PLC access works, but big hurdles remain to make it a major business.


Positives

Power lines reach virtually every home. Power companies own rights of way and have a significant fiber infrastructure which they could leverage. They generally have excellent reputations in their community and their reliability is taken for granted.

PLC does not require plant upgrades like those required by the cable plant. It has the potential to provide services roughly comparable to current cable modem and DSL services, with the potential for increased speeds in the future.

In contrast with the asymmetry of current cable and DSL services, PLC provides symmetrical bandwidth, a better fit for emerging consumer applications.

Power companies are running PLC trials now and early trial results show promise. Companies currently trialing systems say that the service can be self-provisioned by the user, and are supportive of the PLC concept in industry groups like PLC Forum.


Concerns

There is no standardized technology approach. Vendors don't agree on either (1) the best way to carry data over "medium voltage" (MV) from the substation to transformers, and (2) the best way to get from the MV side to the home.

Premature standardization is not a good thing, but getting volumes up and prices down would take a major effort led by utilities to create a common procurement specification. Much of the market success of cable came from getting key vendors together to define the DOCSIS standards. At the conference Oleg Logvinov, CEO of Enikia, warned "Lack of standards could kill this market."

PLC is coming from way behind compared to cable and DSL, which already have a large and growing market share. MSOs and LECs have gone through all the growing pains of initial market entry: technology shake-out, provisioning, installation procedures, customer service, establishing a brand, etc. The utilities have yet to learn all the vagaries of their plants (in the way LECs learned about bridged taps, for example). And even if utilities move quickly, the timeframe to deploy the requisite technology will take years -- not weeks or months -- for big deployments.

PLC has some of the negatives of both cable and DSL. Like cable it is a shared medium and subject to the traffic imposed by multiple users. Like DSL it has distance limitations since it uses copper wire, whose bandwidth capacity decreases over distance.

The cost of PLC systems -- CapEx and OpEx -- compared with today's broadband systems is far from clear. CapEx costs were estimated at $160 per home passed by Main.net and at $50-$150 by Jeff Tolnar of Amperion. A model created and using assumptions by Rahul Tongia, of Carnegie Mellon University, came up with costs of $30-$35 per month. If Rahul's assumptions are anywhere near correct, its hard to see a business there. The vendors disagreed with many of his assumptions but had not reviewed his model to comment.

Utilities could adopt a variety of potential business models, depending on their mindset and situation. These range from selling access to their wires, to being a wholesaler, or being a complete service supplier to the end user.

There is significant regulatory uncertainty at both the federal and state levels. At the federal level it relates to the FCC part 15 emissions standards. Alan Scrime of the FCC Office of Engineering and Technology (which is involved with a PLC notice of inquiry) expressed concern about what happens when you plug devices that could be radiators and antennas into an existing network that supports other services, some of which are military. At the state level there is enormous variation -- but most regulatory issues relate to the potential for cross subsidization and fairness to rate payers.


Reality Check

Charles Boddy of PPL Telecom described PPL's trials in Allentown, PA using technologies from Amperion and Main.net. PPL Telecom's business model is to roll service out to the end user. They have finished their technical beta trials, are currently into customer betas to test the business-case assumptions, and will then move to market trials to assess market reaction to the service on a paid basis.

Whether the utilities roll out broadband services to their end users themselves or use broadband pipes from others, there are clear benefits from using an always-on broadband connection to control and reduce costs of their mainline business. These include Automatic Meter Reading (AMR), which is already implemented in many utilities, and load management.

There was some discussion of whether voice, data and load management could be the "triple play" for utilities, and whether AMR and load management should be counted as part of the business case for utilities thinking about deploying PLC. Some utilities are testing PLC for these applications, while others are testing cable broadband (more next month).

We're planning to visit with PPL Telecom in Allentown, and will track their progress in translating their trials into revenue producing services.

( www.citi.columbia.edu ) ( www.citi.columbia.edu/powerline3.htm ) ( www.mainnet-plc.com ) ( www.enikia.com ) ( www.amperion.com ) ( www.cmu.edu ) ( www.fcc.gov/oet )( www.ppltelcom.com )


Reference Material

Please see http://www.plexeon.com/power.html for an overview of PLC. See http://www.citi.columbia.edu/events/powerline/shpigler.pdf for a list of trials currently underway.


Wireless: The Road to "Broadband Anywhere"

It's routine to carry a phone to place and receive calls wherever you are. But it was only thirty years ago that the first public telephone call was placed on a portable cellular phone. That call was made by Marty Cooper, then a general manager at Motorola, from the streets of New York City, to his rival at AT&T's Bell Labs. Fast forward 30 years and Cooper is now chairman and CEO of ArrayComm, which is trying to cause the same technology and communications market shift for wireless broadband. The notion is that broadband (like voice) will come to the person and not the place.

In the February issue, we wrote about the move toward "broadband anywhere". We followed up by organizing and moderating a session on this topic at the recent FastNet Futures Conference in San Jose.

Dave introduced the session by reminding the audience that although the press seems to view "Wi-Fi" and "broadband wireless" as synonymous, other technologies such as 3G, 4G, 802.16 and 802.20 have potential roles in this space. He framed the notion of "broadband anywhere" and described two approaches toward this goal: one operating from the "inside out" by expanding the range of local area network technologies such as Wi-Fi to reach outside the home and office to public places and streets, the other from the "outside in" using new metropolitan area network technologies to reach into buildings.

The first two speakers focused mainly on expanding Wi-Fi to extend beyond the home. Our first panelist was Mac Agan, Intel's Market Development Manager for Wireless. Mac painted the vision of a wireless future that supports "any device, any time, anywhere". Mac has been an evangelist for Intel's Centrino push: portable, long battery life computers with Wi-Fi are a key element in Intel's view. Intel has long believed in communications and computing convergence, and their current push is to add mobility. Intel is one of the founders of Cometa Networks which states its goal as becoming the leading wholesaler of secure, carrier grade, nationwide wireless Internet access. Although Mac's talk largely centered on the Wi-Fi portion of wireless, Intel is promoting wider-area technologies and is a sponsor of WiMAX and the 802.16 standard for MANs.

Tim Pozar, a founder of the Bay Area Research Wireless Network, provided a counterpoint to Intel's strongly commercial approach to wireless. Tim represents the utopian idea that "if everyone has the tools to exchange ideas then the world will be a better place." He's a founding member of the Bay Area Wireless Users Group and has written extensively about "community networks". BARWN is building a large-scale experimental network providing a wireless backbone across the San Francisco Bay Area, to serve community groups and public safety. Users can point directional antennas to the tops of nearby mountains and connect into the network.

The next two speakers focused on the wide-area aspects of broadband wireless. Marc Goldburg, CTO of ArrayComm, examined the economics and technologies of wireless broadband. He first discussed capital and operating expenses for Wi-Fi and 3G, asserting that Wi-Fi has attractive unit economics but unattractive network economics, while 3G has attractive network economics but difficulties in affordability for enough bandwidth and spectrum. He thus concluded that Wi-Fi and 3G will each play a role, but leave a gap to be filled by a wide-area broadband solution with better consumer economics. Several companies -- including ArrayComm and IPWireless -- aspire to fill that gap.

Our final speaker, Thierry Maupile, VP of Business Development at IPWireless, addressed how broadband wireless has moved from fixed (like the original Sprint high-speed-data offerings), to portable (like hotspots) to early generations of mobile data, which were very bandwidth limited. IPWireless believes it is well positioned to allow service providers to offer these plus real mobile broadband data. He drew a timeline for future evolution showing the development of wireless broadband to laptops, then PDAs, and finally embedded in connected consumer electronics.

The value proposition Thierry described is one we resonate with: full mobility, high bandwidth, indoor as well as outdoor coverage, low network latency, low deployment cost, high capacity and a business case that allows a low monthly subscription rate. For us, it remains to be demonstrated which technology, business plan and vendor will be able to deliver these.

Following Marty Cooper's first public portable cellular call in 1973, it took ten years to bring portable cell phones to market, and seven more years to reach a million US subscribers. Today's rollouts of broadband wireless by companies like ArrayComm in Australia and IPWireless in New Zealand show that we have traveled part of the way down the path, but there is considerable distance to go before mobile broadband subscribers outnumber those now fixed to a home or office.

We're convinced there's a real need for mobile broadband -- over time, it will develop to play a major role in the overall communications landscape.

( www.pulver.com/fastnet/ ) ( www.intel.com ) ( www.cometanetworks.com ) ( www.barwn.org ) ( www.bawug.org ) ( www.arraycomm.com ) ( www.ipwireless.com )


Reference Material


VoIP Coming of Age -- Thoughts on the VON Conference

We attended our first Voice on the Net (VON) conference in the Fall of 1997, where we organized and spoke in a session on telephony over cable. At that time, voice over IP (VoIP) was synonymous with hobbyists speaking to each other through their PCs -- a little better than tin cans, but not much.

Today, most people in the telephone industry accept that packet-switched telephony will supplant circuit-switched. They may argue about the specific protocols and devices, and about the timing and path, but agree that it's just a matter of time.

We've been to many VON conferences, in the US and abroad, but we've missed the last few. The FastNet Futures conference was held simultaneously with VON under the same sponsorship, so it was interesting to attend some of the VON sessions and walk the show floor to see where the industry is now -- with a focus on residential broadband.

SIP is becoming accepted as the preferred call control protocol. H.323 is important in Europe, and many products support both. Many companies are making SIP telephones, both for office and home use.

We were particularly intrigued by the $75 SIP phones and MTAs shown by Grandstream Networks. We talked with David Li, Grandstream's CEO, and hope to test these in our house soon.

We attended an interesting session on SIP through NAT. Most corporate firewalls block SIP; so do many home gateways/routers, although the latest ones with UPnP do not. Probably the best solution is a SIP-aware firewall, such as those made by Intertex. Since we have an Intertex IX-66 (on loan from ABP International), we stopped at the Intertex booth on the show floor. We learned that the IX-66 has many SIP features we had previously missed; we will start using them as part of our SIP testing. We saw the latest model of the IX-66, which has a slot for a Wi-Fi card and acts as a wireless access point as well as a firewall and router.

Microsoft used the show to announce a comprehensive voice over IP (VoIP) solution for IP-based client devices; these enhancements will be included in Windows CE .NET 4.2. Many companies including Samsung and Broadcom showed prototypes of SIP phones based on the upcoming software, due in the second quarter of 2003.

We stopped by the Global IP Sound booth to see and hear a demonstration of their GIPS Soundware product suite. A call through a PC to the GIPS office in Stockholm provided a convincing demonstration that VoIP can be "better than PSTN quality". GIPS specializes in advanced sound software, including a royalty free Codec submitted last year to the IETF for consideration as an open standard, and software approaches that compensate for jitter and losses over packet networks. Several vendors demonstrated commercial products based on GIPS Soundware.

( www.grandstream.com ) ( www.intertex.se ) ( www.samsung.com ) ( www.broadcom.com ) ( www.globalipsound.com )


An All-Digital, All-IP Future? -- Read the Fortune Cookie

The April, 2003 cover of Communications Technology did a great job of summarizing our article on planning the future of cable service delivery. The magazine -- the Official Trade Journal of the Society of Cable Telecommunications Engineers -- shows a fortune cookie with the prediction "You will advance triumphantly by re-examining some long-held assumptions about network infrastructure." That's the essence of our article "Planning for the All-Digital Future--The End of Analog Television" (see http://www.cabletoday.com/ct2/0403_digital.asp ).

The theme of the article is that as the mandated US transition from analog to digital TV is completed, the rationale will disappear for many of the fundamental assumptions underlying how cable plants have been engineered. The basic physical infrastructure could handle lots more capacity and symmetry if some of these assumptions were reassessed; this could provide cable operators with significant competitive advantages. It's a careful balancing act, however, so that customers can be migrated gracefully from analog to digital, and investors can understand how past investments are leveraged. Since big industries don't create change overnight, the article suggests that the industry start working together now on the road map and technologies for true all-digital.

Although the article is directed to North American readers, it points out that some new systems in Europe and Asia are taking an all-fiber, all-digital, all-IP approach. Fastweb in Italy is one example.

In other countries, the digital transition is in various stages. In the U.K. the Independent Television Commission and the BBC just issued a joint report on "Progress Towards Digital Switchover". The target window for the nationwide switchover is 2006-2010. The report says that "over 40 per cent of households now have digital television and nearly all viewers have access to at least one delivery platform (Digital Terrestrial, Satellite or Cable)." The report suggests that the penetration could increase to between 58 and 78 per cent of homes by 2007 and that 95 per cent take-up could happen by 2010 if a number of "favourable developments" occur, such as the free-to-air digital terrestrial platform establishing itself successfully and BSkyB continuing to win new subscribers. Please see http://www.itc.org.uk/latest_news/press_releases/release.asp?release_id=693 (press release) and http://www.digitaltelevision.gov.uk/pdfs/ITC_BBC_switchover_report.pdf (report)


Sony: The Passage to Competitive Set-top Boxes

North American cable operators have been trying without success to break the iron grip of their two principal vendors, Motorola and Scientific-Atlanta, who control the "conditional access" systems used to encrypt premium services such as HBO and Showtime. The choice of one of the two CA approaches in a given cable system effectively requires that all additional cable boxes be purchased from the same vendor, since only that vendor's boxes will work with previously-purchased equipment.

While other companies make CA systems, running multiple CA systems in a single cable system has been uneconomical, since it would require broadcasting premium channels simultaneously in both CA formats. Few if any cable systems have sufficient spare channel capacity for this.

At the "BroadbandPlus" conference in December, Sony offered MSOs a way out. It announced a system called "Passage" which it says would allow a cable system to operate two simultaneous encryption systems with only a little additional bandwidth. This would open the door to competitive CA systems - and to competitive set-top box vendors, led by Sony.

We interviewed Greg Gudorf, recently promoted from vice president of business planning to Senior Vice President of Sony's Digital Platform Division of America (DPA).

Sony's Passage technology is based on the realization that only a small portion of the MPEG digital video stream needs to be encrypted to scramble the picture. Instead of encrypting the entire stream, only "critical" packets -- a small fraction of the total -- are encrypted. The "non-critical" packets are transmitted in the clear along with the encrypted critical packets down the cable system to the home, where a digital set-top box (STB) reassembles the stream. Using an alternative CA system in parallel with a legacy system requires duplicating only the critical packets. Sony says the alternative-encrypted packets are "invisible" to legacy STBs and the legacy-encrypted packets are invisible to alternative STBs. MSOs could choose to select 2% to 10% of the packets as critical, using more for especially-critical content such as pay-per-view fights.

Greg told us that Sony has already done lab trials with three MSOs, using both S-A and Motorola technology. It is preparing to do a field trial "with both friendlies and customers to prove it in the real world with pay-per-view and VOD", probably later in the second quarter.

Greg made sure we understood that Sony is not in the conditional access business; the consumer device is where they want to be. Sony's set-top technology gives MSOs a lot of flexibility, since it includes browser-based presentation rather than being limited by embedded code. Today's devices are set-top boxes, but tomorrow Sony envisions this technology as being embedded in televisions, other audio/video products and more.

Greg said that Sony will "work with all players -- conditional access, set-top box, content and chip makers" and its web site includes a list of partners from all these categories whom Sony is working with to ensure their products are capable of supporting it. He believes "Passage is the way into the cable business for us" and said Sony will provide a royalty-free license to all partners except other box makers.

Charter Communications -- the third-largest U.S. MSO -- has signed a licensing agreement for Passage, and other MSOs including Comcast (the largest) have publicly expressed their interest. If Sony can prove that Passage works as claimed, and MSOs buy and deploy it, the door will finally be opened to a competitive market in set-top boxes.

We have long believed that a truly competitive market, with boxes available at retail as well as leased from MSOs, would provide customers with a wide set of choices of features, functions and price -- and would accelerate the shift from analog to digital television.

( www.sony.com ) ( www.sony.com/passage )


SercoNet's NetHome -- Making Customers More Sticky

We have covered SercoNet, a startup company with a novel approach to home networking, for several years, and have talked with its founders several times. SercoNet has now launched its NetHome system and is working to convince broadband service providers to install it in customer homes. We recently interviewed Amir Eldad, CEO, and Jim Gayton, Director of Marketing.

The NetHome system provides standard Ethernet and Wi-Fi networking over existing home telephone wiring, while simultaneously carrying two analog phone lines. The system is based on replacing two or more existing telephone outlets with NetHome Smart Outlets. These have front connectors for standard 10BT Ethernet and two phone lines, and rear connectors to the existing phone wiring.

What makes SercoNet's approach different from other phoneline systems (such as HomePNA) is that the Smart Outlet regenerates the data signals at each outlet. Since North American homes have telephone outlets in many rooms, SercoNet's approach makes it possible to add Ethernet outlets wherever they're needed and claims to preserve signal quality and guarantee system performance.

Unlike HomePNA, NetHome does not require adding special-purpose network interface cards to existing PCs. The SercoNet system provides an independent networking infrastructure and works with standard Ethernet interfaces included with most PCs today.

For homes with wireless notebook computers and PDAs, SercoNet offers a Wi-Fi access point as an add-on module to the Smart Outlet. This permits locating one or more access points wherever there are telephone outlets, using existing phone wiring to distribute both Ethernet and Wi-Fi throughout the house.

A power supply is the other major component of the NetHome system. It is designed so that phones can connect to the outside line in the event of a power failure.

We asked Amir and Jim what the system costs, and were told that a "basic system" with a power supply, two Smart Outlets and a Wi-Fi access point has a list price of $275. SercoNet has not published prices for the individual components.

SercoNet would like to sell the system to service providers offering data and voice services. The system architecture makes it easy to connect a single analog line and data networking in an initial installation, and then move a few wires to connect through an MTA for VoIP telephony.

Many cable operators are planning to offer VoIP in the near future, and installing the SercoNet system would seem like a natural progression: first equip the home with home networking over the phone wiring, then offer multi-line phone service through the networking system. SercoNet argues that putting their brand name on the networking face plates would make it easier for MSOs to transition data subscribers to telephony and make customers more "sticky".

Frankly, we're a little skeptical about MSOs' willingness to touch the existing telephone wiring. Their natural medium is coaxial cable, and they are all working with Wi-Fi networking because of its popularity. But they'll all be in the telephone business soon and most are focused on the existing analog phones. So they might be willing to deal with the phone wiring once the SercoNet system is proven.

The system is currently installed in about 200 "beta" homes, split between Europe and North America, and is now going to "general availability". We'd like to see the system proven in a much larger base of real-world customer homes.

Our final concern is the speed of the current system. It has a 10BT Ethernet interface and we were told that the measured throughput is almost 9 Mbps. That's somewhat faster than networking technologies such as 802.11b Wi-Fi and HomePlug -- but much slower than 100BT Ethernet over structured cabling, or 802.11g, the newest version of Wi-Fi now moving rapidly into the consumer market.

Jim says the next version will have a 10/100 Ethernet interface and early lab tests show speeds of about 25 Mbps. At that speed it would be very competitive with 802.11g.

( www.serconet.net )


Coming Next Month

We're pulled between the desire to share all the interesting new things we've learned in the past month and the tendency for our newsletters to grow ever longer. This month we've decided to shorten the interval since our last report and postpone some items until the next issue in May. This will include some thoughts on the Broadband Wireless World conference (see http://www.bbhcentral.com/presentations.html#bbww03), which we attended and spoke at twice, as well as what we learned from visits with several Silicon Valley companies.

Also coming next month will be another guest article: Mark Francisco, Director of Engineering - Home Services for Comcast, will describe Comcast's energy management trial with Pennsylvania utility PECO.

We're hoping to strike a balance between two conflicting views: "Brevity is the soul of wit" and "Brevity is the soul of superficiality". I guess the length of our reports says we believe in the latter more than the former!


Your Voice -- Readers' Comments

Hyperlinks in the Plain-Text Newsletter

Danny Briere wrote: "When you reference web sites in your newsletter, precede them with http:// as most email programs look for that to turn then into hyperlinks. Makes it easier to use your info you embed into the newsletter."

If you receive the plain-text version of this newsletter, you'll see that we've taken Danny's advice. Please let us know how you like it.

More on Vonage

Josh Auerbach wrote: "You can add me to the list of cable-modem users who have had mediocre experiences with Vonage. I'm about to cancel my Vonage line, after about two months. Although I consider my cable broadband connection to be superb (Road Runner, in NYC), the Vonage voice quality just isn't good enough for me to keep it.

"Both my fiance and I find ourselves choosing 'the good phone' (POTS) instead of the Vonage line for any calls that matter -- the calls to friends and family far away. Since those personal calls are the ones on which we'd benefit from the no-marginal-cost aspect of Vonage, keeping it just doesn't make sense. I'd rather pay a few cents a minute to be sure I can hear the emotion in a caller's voice, not just the words."


Website Changes

We made three major changes to our website:

  • We redesigned the entire site. All main pages now appear as links in the menus to the left and right of each page, and the menus are the same on every page, making it much easier to find pages and to navigate between them. We also changed all the menu links to text, which will substantially reduce the download time for readers using narrowband to access our site.
  • We updated the "Site Index by Topic" (formerly the "Topical Guide") and reorganized many pages to make it easier to find specific topics. We also put links to all index pages on the page menus. There's a wealth of information on our site, and the topical index makes it easy to find it. Check it out: http://www.bbhcentral.com/guide.html .
  • We revised the page layout to accommodate a limited number of sponsors and ads. We have had requests from a number of companies to advertise on our site and have decided to permit a small number of relevant companies to do so. Please rest assured that we will continue to maintain our independent editorial policy -- our integrity and judgment are our most important assets. For sponsorship opportunities see http://www.broadbandhomecentral.com/advertising.html .