BBH Report Home Page
December 14, 2003 Provided by System Dynamics Inc.

IN THIS ISSUE:

Editor's Note
Thanks and Best Wishes for a Very Broadband 2004

Heard on the Net

Fiber To Every Home In Reykjavik
A Guest Article by Hjalmar Gislason

Connected by Design
A Picture Is Worth 1000 Words

The Western Cable Show
Nostalgia and Pride

DigitalDeck -
Another Piece of the "Whole Home Networking" Puzzle

IP-TV -
Thomson Encourages Telcos to Move Fast

IP Telephony -
Coming of Age in the US

Your Voice -
Readers' Comments


Editor's Note: Thanks and Best Wishes for a Very Broadband 2004

As 2003 winds down and we look forward to 2004, we want to thank our readers for their contributions, not just to us by way of your feedback and guest articles, but more broadly for hanging in there while the broadband industry went through some tough times. We're delighted to see things looking up. The contributions all of you have made toward making residential broadband services and products real has been pretty awesome!

As we have madly dashed to pull together today's affordable broadband products for the Connected by Design tour at a Las Vegas showhouse, we've been struck by our industry's enormous progress since we started writing this newsletter in early 2000. Broadband is becoming part of many peoples' lives, new services that take advantage of broadband connections are multiplying, IP telephony is turning from dream to reality, new digital media adapters seem to be announced almost every day, HDTV and flat screens are growing--and the consumer electronics industry is on a tear to figure out how they can leverage broadband to and in the home. Pretty amazing!

We're proud to be part of an industry that aims to make people's lives better, simpler and more enjoyable. If you're going to be at CES or the International Builders Show in January, please stop by to say "Hi" and let us say a personal "Thank you!"


Heard on the Net

News about People and Companies Influencing The Broadband Home


People News

Ken Carroll was named president and CEO of WildBlue Communications. Carroll was previously Senior VP and CFO of Primestar Inc. ( www.wildblue.com )

John Connelly was appointed EVP of marketing and business development at BigBand Networks. Connelly was previously at Network Physics. ( www.bigbandnet.com )

Colin Dixon was named chief marketing officer of Kasenna. Previously he was with Liberate Technologies. ( www.kasenna.com )

Andy Paff was named President and CEO of Cedar Point Communications. He was previously CTO at Broadband Services, Inc. ( www.cedarpointcom.com )

Mark Pascarella was appointed President of Gotuit Media. Martin Wahl, previously Director of Product Management at Broadbus Technologies, was named as Gotuit's Director of Engineering. ( www.gotuit.com )

John Petter was named director of customer strategy at Telewest Broadband. He had been director of marketing and planning. ( www.telewest.co.uk )

Michael Pulli is becoming President of the Americas division of Pace Micro Technology. Current Americas President Neil Gaydon is returning to the UK as EVP worldwide sales and marketing. ( www.pacemicro.com )

Michael L. Talley has joined 2Wire as VP, customer service and support. He was previously with Fujitsu and Mitel. ( www.2wire.com )

Brad Warnock was promoted to VP of Business Development at Phonex; he was their Director of Marketing ( www.phonex.com )

Gerald Wesel was appointed chairman of the board of Ellacoya Networks, and will oversee day-to-day operations; previous CEO Ron Sege is relocating to the West coast for personal reasons. Wesel presently is chairman of Orthogon Systems. ( www.ellacoya.com )


Company News

--Acquisitions

AOL acquired Singingfish, Inc., a provider of audio and video search services. ( www.aol.com )

Cisco is acquiring Latitude Communications Inc. for approximately $80 million. This will add rich media conferencing to Cisco's portfolio. ( www.cisco.com ) ( www.latitude.com )

DirecTV approved the use of wireless phone jacks from Phonex Broadband to use the existing home power lines to connect their set-top to the phone line. ( www.DIRECTV.com ) ( www.phonex.com )

Motorola has agreed to acquire the assets of XtremeSpectrum, a pioneer of ultra-wideband (UWB) solutions for multimedia connectivity. Financial terms of the deal will not be disclosed. ( www.motorola.com ) ( www.xtremespectrum.com )

Polycom agreed to acquire Voyant Technologies, a provider of voice conferencing and collaboration network solutions, for approximately $110.7 million in cash consideration. ( www.polycom.com ) ( www.voyanttech.com )

Sigma Systems has re-acquired the company from Liberate Technologies for about $3.6 million in cash and the assumption of roughly $7 million in lease obligations and other liabilities. ( www.sigma-systems.com ) ( www.liberate.com )

--Funding

Amino Communications, a set-top box vendor, closed a £5 million funding round. ( www.aminocom.com )

Azimuth Systems announced its formation and entry into the wireless data communications performance validation market. It received $12.9 million in preliminary and second-round capital. ( www.azimuthsystems.com )

Brix Networks, a provider of service assurance solutions, raised $8.1 million in a fourth round of financing. ( www.brixnet.com )

Mimix Broadband, a fabless semiconductor company for wireless communications, announced closing its second funding round with $8 million. ( www.mimixbroadband.com )

Net2Phone closed a public offering, generating gross proceeds of approximately $63 million. ( net2phone.com )

ReefEdge Networks, a provider of managed and secure wireless LAN systems, raised $13 million in its latest round of financing. ( www.reefedge.com )

Sylantro, software provider for hosted communications services, raised $4.5 million in seried D funding. ( www.sylantro.com )

Visible World, a technology company providing a solution for getting consumers to watch TV ads, raised $8 million in a second round of funding. ( www.visibleworld.com )

Vonage, a provider of broadband phone service, raised $35 million in new financing. ( www.vonage.com )

--Other News

Broadcom announced InConcert™, a new technology to allow wireless devices, such as Bluetooth and Wi-Fi, to collaboratively co-exist within the same radio frequency. ( www.broadcom.com )

Buffalo Technology introduced LinkStation(tm) - a network storage center for storing media files such as videos, photos and music which can also be used as a file and print server. The product, targeted to the home and SOHO markets, is a plug-and-play network storage center with a pre-formatted 120GB hard drive that connects directly into a network, an Ethernet Interface and two high-speed USB 2.0 ports and has a street price of $299. ( www.buffalotech.com )

Free Telecom of France is offering digital TV services via ADSL to their Internet access and telephone clients, according to La Tribune. Free's clients get a telephone line and internet access for €29.99 a month. The new offer provides individual or packages of channels, of which about 30 are free. Users receive the service via their Freebox terminal, which has an installed base of about 100,000 in France. ( www.free.fr )

N2 Broadband and Gotuit Media announced a partnership to integrate N2's VOD platform with Gotuit Media's content indexing technology. The solution is currently being trialed by a major MSO. ( www.N2Broadband.com ) ( www.gotuit.com )

Time Warner Cable confirmed that the Interactive Personal Video Group--which has been developing the networked PVR MystroTV service--has been folded back into the MSO and will report to Mike LaJoie, according to Multichannel News. ( www.timewarnercable.com )

Verizon's CTO outlined their four-pronged fiber network strategy at a Lehman Brothers' Conference. He confirmed that they plan to pass one million homes by the end of 2003, with at least 100 COs equipped in nine states, according to Converge. They also intend to use a converged network for both existing and new services. ( www.verizon.com )


Briefly Noted

--Standards

At the Wi-Fi Planet conference, speakers indicated that the new 802.11e QoS standard is expected to be published by the summer of 2004 and in first products by yearend. The Wi-Fi Alliance says it will skip an interim certification for multimedia and VoIP extensions to 802.11x, since the IEEE standards body will fast track the full standard. ( www.jupiterevents.com/80211/fall03/ )

--Senior Citizens Lead Internet Growth

Nielsen/NetRatings reported that senior citizens 65 and older were the fastest growing age geoup online in the U.S. ( www.nielsen-netratings.com )

--Competition in the UK

UK: Six UK communications companies have come together to launch the Broadband Industry Group, an organization aimed at promoting competition in the broadband market in the UK. ( www.bigfuture.org )

-- Gotuit Media -- Moving Us Toward the On-Demand World

We had a brief telephone interview with Mark Pascarella, the new CEO of Gotuit Media. We'll cover them more in the future, but were intrigued by their technology to help create non-linear viewing experiences. Just as we can get almost any text information on the Web today, we look forward to a world in which this can also apply to images and videos. Gotuit's technology is a step in that direction. It is designed to make watching broadcast content more like browsing a magazine--so you can "get to the good parts". ( www.gotuit.com )

Their proprietary workstations simplify the task for human editors to generate metadata to enable quick reference to specific parts of content after it has been broadbcast. This can enable viewers to see all the homeruns in a ballgame after it is over, or see all the plays by their favorite players. Gotuit intends to license their tools, but for now they generate the metadata themselves.

Mark said they are currently in trials with a major services operator and expect deployments in 2004. While the business model is still far from clear, we're interested in their trial results and next steps.


Fiber To Every Home In Reykjavik: A Guest Article by Hjalmar Gislason

Note from the Editors: We've been fascinated for some time with Iceland, which has one one of the highest penetrations of home Internet usage. Several months ago we were invited to speak at the Digital Reykjavik conference. Unfortunately, it coincided with the the U.S. Thanksgiving holiday and we had long-standing plans for a family get-together, so we were unable to attend. We did the next best thing, which was to ask the conference organizers to provide us an article summarizing the conference. We appreciate their contribution, which enables us to share the material with you.

Hjalmar Gislason, our guest author, works as an independent IT consultant. He was one of the organizers of the Digital Reykjavik conference, working for fiber-consultancy company Industria. Hjalmar has founded two software companies and worked as a product manager on computer games, multimedia products and mobile phone applications. Working as a free-lance journalist, Hjalmar has been covering IT, science and technology since 1997. If you would like to share your views with Hjalmar, he can be contacted at hjalli@hjalli.com.


A whole society fiber enabled

Reykjavik Energy, a utility company owned by the city of Reykjavik and surrounding municipalities in Iceland, has ambitious plans: to connect every single home in the area with a fiber connection. If the plans are carried out, Reykjavik could become the first city in the world with Fiber-To-Every-Home.

While FTTH projects elsewhere--notably in Japan, South Korea and Italy—already have fiber-connected areas with larger populations than Reykjavik, the Reykjavik plan might be the first where an area that represents a whole society is to be connected with FTTH. Most other projects have selected high-income areas or targeted their implementation to new construction areas. The planned network in Reykjavik surpasses most of these projects in actual reach and advanced technological implementation.


Digital Reykjavik: Exploring the fiber-enabled society

The Reykjavik plans and similar projects elsewhere were discussed at a conference in Reykjavik, in November. The conference, called “Digital Reykjavik – Society in Light of Fiber” attracted more than 300 industry professionals from around the world.

Organized by Icelandic fiber-consultancy company Industria (http://www.industria.com), Digital Reykjavik gathered speakers from key players in the field such as Fastweb (http://www.fastweb.it), Telenor (http://www.telenor.com), Telecom Italia (http://www.telecomitalia.it), Cisco (http://www.cisco.com), Microsoft (http://www.microsoft.com), Intel (http://www.intel.com) and IBM (http://www.ibm.com). They were joined by analysts from OECD (http://www.oecd.org), ITU (http://www.itu.int) and Ovum (http://www.ovum.com) as well as smaller technology and service providers, each airing their views on the state and future of FTTH.

Pall Erland, Director of Operations at Reykjavik Energy (http://www.or.is) presented the company’s FTTH strategy; what has been done so far and possible future plans.


A logical step for utility companies

Already providing the citizens with electricity and both cold and hot water (Reykjavik homes are heated with geothermal water), Reykjavik Energy sees the fiber connection as the “fourth element” in their utility offering. This seems logical for several reasons. They already have a business relationship with every single home in the area.They already have pipes and other infrastructure in the ground that can be utilized when installing the fiber optic network.

The infrastructure for the electrical grid has proven to be of special value. In 1999, following a major revamp of local telecom regulations, Reykjavik Energy decided to enter the telecom market and started implementing an advanced core fiber network. The core network connects 450 substations of the city’s electrical distribution network with fiber optic cables. The distance from each household in Reykjavik to one of those substations is usually less than 400 meters with an average distance of about 200 meters.

Based on this distribution network, Reykjavik Energy offered fiber connections to businesses and planned to offer residential connections over power lines. This plan allowed them to build a distribution layer ready for FTTH when it became viable, yet capitalized on the distribution network right away.

Reykjavik Energy quickly became a major player in connecting businesses with their fiber connections, in competition with the less sophisticated and more diversified network operated by Iceland Telecom (the original state-owned PTO). On the other hand, the power line connections got off to a slow start--initially because of technological issues--and lost the race for residential connections to ADSL lines offered by the country’s two telecom operators: Iceland Telecom and Og Vodafone. Today a majority of businesses in the Reykjavik area are connected with fiber, and over 15% of all households in the Reykjavik area have an ADSL connection with 256 kbit/s or more. Iceland is usually at or near the top of lists for Internet penetration, now with around 70% of the population using it from home.


FTTH trial explores the potential

Last winter Reykjavik Energy, working with local technology and service companies, initiated an advanced FTTH trial – a predecessor to what is to come when the roll-out starts. 100 homes in three different areas of the city were equipped with 100 Mbps fiber connections. A Customer Premises Switch from Swedish company PacketFront (http://www.packetfront.com) was installed in every one of those homes. This box – a CPE device that looks very much like a wall-mountable Ethernet hub – connects to the fiber on one side and has 8 10/100 Mbps Ethernet ports on the other. The CPS, together with PacketFront’s Access Switching Routers and a network management system called BECS, extend QoS control and user/service identification down to several Ethernet ports in customers home, allowing the connection speed and reliability for each connected device to be set from the network side in real-time, giving the operator unique flexibility.

In the trial, four of the CPS’ ports are dedicated for IP TV set-top boxes, two for Internet access and two for general purpose. Through the TV connections, trial users access and control Video-On-Demand content streaming in DVD-quality. The service includes a broad range of TV broadcast content, all controlled using a single remote control and simple on-screen menus. The Video-On-Demand content is every bit as responsive as playing a movie from a local DVD player, allowing users to pause, rewind, fast forward and locate movie chapters in a familiar manner. If a user switches from a VOD movie to some other content, the movie will be bookmarked and available at the same location when the user switches back to it. An addition currently being implemented in the trial is a network-based DVR service (think TiVo or ReplayTV in the network). The service will record and store the broadcast material from all available channels and allow users to access them up to a week later, mostly depending on agreements with the right-holders.

A DVD-quality video stream requires approximately 4.5 Mbps connection, so with a 100 Mbps connection several family members can easily watch different video streams simultaneously. As for the Internet connection, the standard offering is 2 Mbps scaling in steps all the way up to 100 Mbps for additional fees. At 2 Mbps, the bottleneck is usually not the connection to your home but rather the load on the web server and other servers routing your traffic.


The Self-service Portal

If a user requires more speed, the Self-service Portal – also a part of the trial – comes to the user’s assistance. The Self-service Portal, designed by fiber-optic consultancy company Industria (http://www.industria.com), is the customer's interface to Reykjavik Energy's offering. It displays the services available on the network: different VOD offerings, Pay-Per-View and subscription channels, IP-telephony services, different Internet service packages and other networked services such as networked security systems, energy saving programs and other services that may apply to the household in question.

The Self-service Portal, together with the flexibility of the PacketFront technology, also allows for very interesting service possibilities. Let’s say that a user wants to download an 800MB program file, and feels the 2 Mbps connection is too slow (with 2 Mbps it still takes almost an hour). No problem. Using the Self-service portal he or she buys a “Turbo” package allowing up to 100 Mbps download speeds, charged by the minute.


Portal could play a key role in business strategy

The Self-service Portal could also play a key role in Reykjavik Energy’s business strategy. Whereas typical telecom providers that have started offering broadband tend to provide all the services themselves, the tendency of utility companies – now increasingly entering this field – has been a so-called “open network” strategy. Utility companies like Reykjavik Energy see themselves only as the providers of the infrastructure, not the actual service providers. Anyone that wants to offer services on the fiber-optic network can sign up with the utility company according to a set pricing scheme, regardless of their offering--Video-On-Demand, audio broadcasts, Internet access, networked home appliances or a totally new and innovative service that nobody else has.

Utility companies and telecom operators are also increasingly realizing that when building Fiber-To-The-Home networks, an “overbuild” strategy pays off quickly. Overbuild in this case means not merely connecting the household but actually installing Customer Premises Switches in the passed residential homes--regardless of whether the household has already bought any services that use the connection. If the engineers are in the building to connect one apartment, they connect all apartments in the building at the same time, free of charge to the home-owners. Once the CPS is there, the barrier for the customer to sign up for a service has become miniscule. You might not be able to call the engineers in to wire your apartment before the big game starts in an hour, but if all it takes is plugging into the box already sitting on your wall, it is not only possible but highly tempting.

Once again the Self-service Portal plays a big role. When you plug either your computer or your TV set-top box into the CPE for the first time, the portal is the only thing you’re able to access. The portal lists all the available services that apply to the devices that you have connected to your CPE. If you only have a set-top box connected, it displays the video offerings; if you have a computer hooked up it lists the ISPs and other Internet related services; and if you for instance have a security system, the network detects it and lists the available service plans that apply. As the household is already authenticated and a billing relationship with the utility company is in place, purchasing any service is simply a click of a button.

Once any service has been enabled, the utility company charges the household a low monthly fee -- a fixed price regardless of the number or nature of services being used. The service providers bill the households directly and don’t have to hand the valuable billing-relationship over to the utility company, but instead pay a revenue-share to the utility company for use of their infrastructure.

Also worth noting is that the Self-service Portal and the active equipment on the network apply intelligence to the network, making it literally impossible to steal any services. The reason? It is not the set-top box or the CPE that is limiting the access to services. If your household isn’t subscribed, the network will not send the stream down your pipe. This is true even of multicast services.

Needless to say, this model is also very tempting for service providers. With access to the utility company’s infrastructure, they can dedicate their resources to the equipment and services that are needed to offer their specific service, rather than spending money on catching up with infrastructure already in place by the competition. In many cases this not only makes competition easier, but is in some cases flat out the enabler for any competition to take place at all. Hooking up with a network already installed in a great number of households is far more inviting than starting to dig your own ditches and build your own physical network. Several large service providers have already stated their interest in providing services on the network, ranging from telephony and other basic communication services to security systems, video content, large-scale hosting and more.

Out of Iceland’s 290,000 inhabitants (approx. 100,000 households), almost 200,000 live in the greater Reykjavik area (approx. 70,000 households). My sources claim that every household in the country -- “including Fiber-To-The-Farm and Fiber-To-The-Glacier” to quote one of them directly -- could be fiber connected for less than 200 million USD. This is certainly a large sum for a small society, but still on the same scale as some local road construction projects that are approved quite naturally. As most of the country is sparsely populated, the cost in the Reykjavik area is significantly lower with estimated costs running between 1,000 to 1,800 dollars per household – including CPE – depending on the existing infrastructure in each case and different implementation options.


Fiber isn’t everything

Speakers at Digital Reykjavik reminded the audience that other alternatives to fiber may be applicable in certain cases. Gordon Graylish of Intel said that while FTTH is the “no compromise solution”, wireless solutions such as WiMax may deliver almost the same quality and speed for often only a fraction of the cost. Others, like Fastweb’s Mario Mella and Cisco’s Guido Romagnoli also emphasized that -- at least in the short term -- the only viable solution in most areas is a mixed network, using fiber where it can be implemented, but relying on other technologies such as DSL or wireless links as a compromise solution for parts of the coverage areas. All seemed to agree that nothing was on the horizon that had the same reliability, transmission speed and flexibility as using fiber for the last mile.

The business models were also debated. Fälth Diedrik of Öresundskraft (http://www.oresundskraft.se), a Swedish utility company already deploying FTTH in some areas, stated that utility companies would often be aiming for different return-on-investment goals than private telcos and--as they are often state owned--the aim may be not only profit, but also seeing the broadband connection as a quality service to the local community.


The Fiber Connected Society

As its title suggests, the Digital Reykjavik conference was not only about business and technology, but also about how Fiber-To-Every-Home could and would affect society.

The topic of distance education and telecommuting was brought up several times. Despite the potential of telecommunications, keynote speaker reminded everybody that work and education is not a collection of individuals working separately, but heavily involves face-to-face communication that no current or foreseeable technology can replace. Most people speculated on some sort of video services as being the killer app for the fat pipes. Tim Johnson of Ovum was one of the speakers that said he believed that two-way high-definition video telephony was the number one candidate and reminded everybody that for such a service, the connection must be able to carry heavy streams of data symmetrically -- i.e. both to and from the household -- something that many of the aforementioned compromise solutions are unable to deliver.

To Tim’s point and extending it somewhat, Industria’s Gudjon Mar Gudjonsson demonstrated how he set up his own TV channel using his 100 Mbps FTTH connection, his $1,000 digital video recorder, an ordinary $1,500 laptop computer and free software from Microsoft. While the audience listened to his 3 year old son playing the guitar live on the conference room’s large screen, he predicted that in a fiber-enabled society such “home broadcasts” would become as commonplace as home videos are today. With 100 Mbps available everywhere, why not do a broadcast from the daughter’s soccer match or a wedding in the church to relatives that are unable to attend?

Widely available fiber connections surely open a lot of interesting possibilities and, quoting Geoffrey A. Moore, author of Crossing the Chasm and Inside the Tornado, from Digital Reykjavik’s website: “Clearly Iceland is going to be a living laboratory for broadband taken to the next level.”

Reykjavik may not be there yet, but if Reykjavik Energy goes forward with their ambitious plans – a decision that might be made as early as the first half of 2004 – Iceland might soon become an ideal test bed for FTTH services with this advanced infrastructure in an almost “lab-sized” society.

( www.digitalreykjavik.com )


Connected by Design: A Picture Is Worth 1000 Words

We've recently written about the beautiful showhouse (http://www.broadbandhomecentral.com/report/backissues/Report0311_4.html) for which we have the privilege of acting as "broadband architects". Now we're creating audio and video assets which we'll share with you as soon as they are available. If you can't visit the house, you can still have a good sense for how it is building upon the broadband foundation.

Thanks to our readers and colleagues, we'll be including broadband infrastructure and services from Cox; fiber from Corning and fiber electronics from Wave7 Optics; lighting controls and structured wiring from Leviton; energy management from Leviton, Square D and Nevada Power; -- and much much more. We expect to have an Internet cafe where you can check your email and make free VoIP phone calls.

This experience is giving real context to new reports like the one from ABI on "The US Digital Home Enterprise 2003" which says: "Within the home enterprise, residential wireless networking, high-speed Internet services, and smarter connected intelligent devices are reshaping the home by connecting security, entertainment, HVAC, lighting, and appliances in new ways. These trends are pushing traditional home automation markets closer to those traditionally occupied by the PC and consumer electronics industries. In short, the trends are creating new guidelines for the digital home and the applications available to the consumer." ( www.abiresearch.com/abiprdisplay2.jsp?pressid=214 )


The Western Cable Show: Nostalgia and Pride

The Western cable show ended a 36 year tradition with only 6150 in attendance, but with many visions of past shows now translated into market realities. With the glitter of great give-aways and lavish parties only a memory, and the outrageous one liners from Ted Turner ancient history, the opening panel discussions were rooted in serious business topics, like the cost of sports programming and the inevitability of PVRs for skipping ads.

For those who have been around the cable industry for a while, there was also a sense of accomplishment. Starting from the concept of cable modems and high speed data services a few years ago, Brian Roberts pointed out that high speed Internet now accounts for 15% of Comcast's revenues. VOD and HDTV which were always coming "next year" are in the here and now and will soon be available almost everywhere; and with about 3 million cable telephony customers already, 2004 and 2005 will see the start of the big cable telephony ramp up. PVRs are now embraced by cable and Comcast expects they will be available to 80-90% of Comcast's customers in 2004 -- providing one box and one remote control for digital cable, VOD and PVR.

Although there was clearly a sense that much has been accomplished, there was no feelng of complacency from the panel. Competitive threats are very real and Roberts stated cable's focus on staying ahead: "Cable will use IP to deliver all the future dreams of the industry." Another panelist stated that cable’s superior network platform is the industry’s key weapon in battling competition.

When asked by Larry King what the killer app for the future would be, the panelists agreed that it was the use of their large amount of spectrum to provide whatever the customer wanted. Brian Roberts mentioned that he and some of the other CEOs had been in Silicon Valley the day before, looking at innovative ways to use the spectrum. He reiterated his previous statements that if cable had a service that required 50 Mbps "we could provide it".

It wasn't all serious however. Bill Schleyer, Adelphia's CEO, got a hearty laugh from the audience when he answered a question about escalating sports content costs by saying "we've uniquely solved the sports problem by declaring bankruptcy". The sports discussion was far from lighthearted in general however. Glenn Britt of Time Warner explained the dilemma that arises when some network operators feel like they've got to have certain sports to compete. That raises the price of the rights, with the money going to the players. Then the rights holders assume they can get the money through the cable operator, funded by the consumer. But consumers are saying no to higher prices. There are no simple solutions.

One of the messages from many of the opening speakers was cable indsutry support of both openness and standards. Spencer Kaitz, President of CCTA, pointed to CableNet, with its inclusion of many diverse and entrpreneurial companies as a statement by the industry about openness. In another accomplishment promoting openness, CableNet included a working system demonstrating OCAP, the industry initiative that will allow retail sale of settops that can be supported by any operator. These are expected to be in the market in late 2004 and 2005. There seemed to be increased recognition that the retail partnerships that satellite has leveraged for so long would increasingly be sought after and cultivated by the cable industry. Starting in the spring of 2004, CableNet will move to the National Cable Show.

While there was a sense in the crowd that the Western show would be missed, many participants will be relieved not to have that huge commitment of effort and time coming right after Thanksgiving and before the December holidays.

( www.thewesternshow.com ) ( www.cablenet.org)


Cablenet

CableNET has been a major feature of the Western Show since 1993. It showcases equipment, services and applications by companies from various industries, which may play a part in what MSOs deliver to their customers in the future. Recently, as the programmers stopping exhibiting and the glitz faded, technology and the CableNET exhibit have taken on a more central role in the shows. This year it certainly seemed to be the place where many of the attendees were congregating. Its new venue will be the NCTA's National Show: Cable '04 wlll take place in New Orleans in early May.

Here are just a few of the exhibits that caught our eye as we visited this year's collection of demonstrations:

Exavio

At the Western show, we talked with Ji Zhang, CTO of Exavio. He showed us their new ExaVault Media Storage System -- a huge low-cost video server.

ExaVault is based on the latest low-cost IDE/ATA PC hard drives which today store 250 GB each; Exavio packages three drives in each "hot-swap disk tray module". Four removable modules fit in each chassis, which stores 3 TB, occupies a single 1U (1.75") slot in a standard 19" rack and includes one or two power supplies and can be configured for up to 8 IEEE 1394 ports.

The "head server/controller" also fits in a 1U slot, and provides all RAID functions in software running under Linux. A single standard 7' high 19" rack has 42 slots and can provide 120 TB of raw storage, with Gigabit Ethernet or Fiber Channel interfaces.

A typical DVD stores about 4 GB. Without RAID reduncancy, each ExaVault chassis can store about 750 DVDs; each full rack can store the equivalent of 30,000 DVDs. In a world moving toward "everything on demand" video, systems like the ExaVault will play a big role.

( www.exavio.com )

Entropic

We visited Entropic at their suite, and saw their demo on the show floor. (See "Whole Home" Networking over Coax -- An Interview with Entropic (http://www.broadbandhomecentral.com/report/backissues/Report0311_7.html) in last month's issue.)

In their suite, Entropic showed us a complete coax-based network with multiple video streams playing simultaneously. On the show floor, they showed HDTV over coax.

( www.entropic-communications.com )


DigitalDeck -- Another Piece of the "Whole Home Networking" Puzzle

We've written several times about "whole home networking": a unified network carrying all data, voice, audio and video around the house. While we're confident that such networks will emerge to replace the crazy-quilt of different technologies now in use--Category 5 UTP, RG-6 coaxial cable, speaker wiring, phone wiring--it's not clear just what technologies will play a part. Right now, it looks like a big jigsaw with some key pieces still missing.

Last month, we wrote about several emerging technologies for high-speed communications -- both wireless What's Next for Wireless Networking (http://www.broadbandhomecentral.com/report/backissues/Report0311_6.html) and over coax "Whole Home" Networking over Coax -- An Interview with Entropic (http://www.broadbandhomecentral.com/report/backissues/Report0311_7.html).

Now we're beginning to see some how some other pieces of the puzzle might fit into place. DigitalDeck, a Silcon Valley startup, is developing the DigitalDeck Entertainment Network "to bridge the gap between your PC and TV, and allow your household DVDs, VCRs, PVRs and computers to share and play video on any television anywhere in the home."

During a visit to Silicon Valley last month, we met with Marty Levine, Vice President of Strategic Development at DigitalDeck to learn more about the system and to see a demonstration. The DigitalDeck Entertainment Network is not another home networking technology. Instead, it rides on top of any and all of these technologies providing the mechanisms to share video, audio and image content between all of the PCs and all of the TVs in the home. They aim to "aggregate and manage content distribution in the home."

Media Adapter and Remote Control

The system is based on a Media Adapter connected to each grouping of audio/video equipment. The media adapter has an Ethernet connection to the home network (later models will incorporate other networking technologies) and a set of standard video and audio connections to VCRs, DVD players and TV sets. An IR receiver is placed near the equipment, and a remote control is provided to control the system and the existing components.

The other major component is the Media Manager software, installed on one or more networked PCs. It leverages the PC's power and manages the networking system. This permits the Media Adapters to focus on moving media content while the Media Manager provides the user interface and network control.

Unlike any other system we have seen so far, the Media Adapter includes both analog audio and video inputs as well as outputs, and is capable of moving audio and video content from any place in the house to any other as long as both are equipped with Media Adapters. It also integrates room-to-room remote control: "For example, make a simple one-click request to watch video from a remote DVD." The IR system "will translate that click into the necessary infrared signals to turn on the DVD player, commence the video and route it to the TV of your choice for viewing."

Although these devices will be packaged to look simple and consumer friendly, they make use of very sophisticated underlying technology. The mechanism for moving analog video from one room to another is based on a low-cost real-time MPEG-2 encoder/decoder chip from Broadcom. Only a few years ago, MPEG video encoding could not be done "on the fly" but required $50,000 computers running for many hours to produce a half-hour video. Now it's on a chip in a consumer-priced box.

Marty told us that the system is based on UPnP and will incorporate emerging networking standards such as DENi and DHWG as they are implemented by consumer electronics vendors.

Media Applications

Running on one or more PCs, the Media Manager provides a user interface on each networked TV, and incorporates several applications for media management. These include:

  • A Program Guide for tuning the TV and selecting programs for recording and later playback. It also organizes prerecorded videos and photos.
  • A PVR function - a personal video recorder which stores video programming on any PC hard drive for playback on any TV.
  • Pictures, Channels and Music applications for organizing photos, videos and MP3 music on PC hard drives and selecting them for playback.

Back-office Platform

In addition to what is visible in the home, DigitalDeck has a back-office platform that provides programming lineups for the electronic program guide (EPG), IR codes for controlling consumer devices, billing interfaces and content protection.

The Demo

DigitalDeck has a showroom with several stacks of TVs and audio equipment--labelled "Living Room" "Bedroom" and "Den"--each with a media adapter, IR receiver and remote control. The Den has a PC running the Media Manager and applications, plus a cable set-top box and a cable or DSL modem for connection to the outside world.

We were very impressed by the demonstration of the DigitalDeck Entertainment Network. We saw how the PVR could start recording a program from the cable set-top box in the Den while we were watching a different program in the Living Room. When the program we were watching was over, we started watching the PVR playback on the Living Room TV. Then we paused the playback and moved to the Bedroom, and used the remote control to turn on the TV there. The on-screen display from the Media Manager asked us if we wanted to continue watching the paused program, and as soon as we said "yes" the program continued playing without missing a beat.

We have been looking for this kind of functionality for a long time. The ability to watch TV when and where we want to fits very well into our hectic schedule. A single central view of all the media content would be a lot better than a different user interface and different available content on each separate PVR and digital media adapter.

Marty said that DigitalDeck will show their system at CES next month and will start shipping it to beta testers "soon after." We're hoping to test this system in our home and report how it works in the "real world". We're particularly interested in how easy it is to set up and what compromises it makes from stand-alone devices already offering some of these content management functions.

( www.digitaldeck.com )


IP-TV -- Thomson Encourages Telcos to Move Fast

We have written about IP-TV--the carriage of television content over IP-based networks--for more than two years. Until recently, this has mostly been the province of start-up vendors and FTTH service providers. Now we are seeing a flurry of announcements of complete end-to-end IP-TV systems from major players and industry consortia.

In November, Thomson announced a new product line for large-scale deployment of IP-TV. The IP900 or Cobra platform supports advanced compression technologies, including MPEG-4 Part 10 (JVT) and Windows Media 9 (WM9) video. Thomson says these "advanced compression technologies make it possible for telephone companies to deliver high quality audio and video entertainment to large audiences of consumers through existing DSL networks." It announced that the new platform "lets consumers receive digital audio and video programming, surf the web and check email through one device using broadband IP networks such as DSL. It fully supports interactive applications including broadcast video, video on demand, online gaming, and messaging. The new decoder is compliant with middleware platforms from Alcatel, Minerva Networks, and Videotele.com." It said it had worked closely with Intel, Microsoft TV and Alcatel to develop the platform.

Following the announcement, we interviewed Keith Wehmeyer, General Manager of Thomson's IP Video Business. He told us that Thomson started working on IP video "in bus dev mode", introducing an MPEG-2-based product for European carriers and independent operating companies in North America doing "pioneering" work on IP-TV. Now interest in IP-TV has become strong enough that Thomson has now moved from "bus dev mode" to creating "a full-blown business unit" incorporating product development, market management and system integration.

He said that Cobra is a "flexible product supporting a variety of different business models." It is based on the same basic silicon platform as the earlier models, but as a result of "big cost reduction" is priced to support "six digit volumes" as telcos deploy IP-TV.

The new compression technologies represent the biggest change and the biggest opportunity for telcos. Keith said that the older technologies would need about 8 Mbps to carry two channels of MPEG-2 video plus best-efforts data; this would limit telcos to ADSL customers within 9,000 feet of a CO. The new compression technologies should be able to carry two video channels plus data in 4 Mbps; Keith says most telcos can reach about 12,000 feet at this speed, which Thomson calculates to be an increase of 60% in coverage.

Thomson worked closely with Intel to develop the software decoder; since it operates on an Intel Celeron processor in the box, it is flexible for future changes in compression technologies. Keith walked us through a product progression, starting from "a basic set-top box" to one incorporating a hard drive, optical drive and PVR capability: "a home theater in a box". Thomson demonstrated Cobra running these advanced technologies at speeds from 750 kbps to 2 Mbps at the recent TelcoTV conference.

Keith thinks Thomson would be a good partner for telcos that want to roll out IP-TV. Its Technicolor division is the leading processor and distributor of motion picture film and a leading producer of CDs and DVDs; its Grass Velley division provides digital video production equipment to many studios and TV broadcasters. Thomson could leverage its retail brands--RCA in the Americas and Thomson in Europe--to help telcos avoid "truck rolls" by distributing set-top boxes and sell video services through retailers.

Keith said that telcos planning to provide video services now have a choice. They can start building out advanced networks with new DSL and FTTP technologies and eventually get much higher speeds. Or they could get the advantage of market timing by investing in systems based on the new compression technologies and deploy video to most of their existing or potential DSL customers right away.

( www.thomson.com )


IP Telephony -- Coming of Age in the US

IP telephony has been "in the works" for many years, starting with pioneers like VocalTec. In the US this month, there suddenly seemed to be that confluence of events that marks the tipping point for a technology. Local exchange carriers, interexchange carriers and cable companies all announced new VoIP services.

Here are some examples:

  • AT&T announced plans for providing a full suite of VoIP services in 2004, with initial deployments beginning in some metro markets in 1Q2004. ( www.att.com )
  • Cablevision Systems, a cable MSO, announced plans to roll out several new VoIP service features in 2004, including enhanced voicemail, voice over instant messaging and whole-house wiring. ( www.cablevision.com )
  • Qwest Communications, a LEC, has begun offering IP phone service to some customers in the Minneapolis-St. Paul area and said it would expand the service to other parts of its 14-state area in the first half of 2004. ( www.qwest.com )
  • SBC Communications, another LEC, launched a new suite of business data and IP-based voice services to be marketed both in and outside its regional U.S. markets. It will also support IP-enabled phones, so customers may use their office number when they are on the road. ( www.sbc.com )
  • Sprint is expanding the marketing of its telephony services to cable MSOs to fulfill as many of the cable operators' telecommunications needs as they want—--from basic transport to a fully outsourced solution including IP voice, wireless and data services. ( www.sprint.com )
  • Time Warner Cable, the second-largest MSO, announced that it will offer Internet telephony service in its 27-state serving area via a deal signed with Sprint and MCI. These IXC companies will terminate IP voice traffic to the PSTN, provide local number portability, carry long distance traffic and provide enhanaced 911 service. ( www.timewarnercable.com ) ( www.sprint.com ) ( www.mci.com )
  • Vonage, the insurgent VoIP broadband telephony provider, now has over 75,000 subscribers and introduced a low end calling plan providing 500 minutes of local and long distance phone service in the U.S. and Canada for $14.99 a month. They are also targeting the Spanish-speaking population by launching a Spanish version of their Web site (http://www.vonage.com/lx) and offering Spanish-speaking Customer Care reps. ( www.vonage.com )


Your Voice -- Readers' Comments

"Too much info"

Yaron Ziv of ECI Telecom Ltd. wrote to say "nice newsletter but too much info. No one has the time to read long newsletters". We replied "We have an HTML summary version of the newsletter to make it easier. It has just a one-paragraph summary of each article, with a link to the full article on the web. That way, you can read only what's interesting to you." Yaron immdediately changed his subscription from the text to the HTML version.

If you feel overwhelmed by all the information in our text report, you too can switch: Go to our Change/Unsubscribe page (http://www.broadbandhomecentral.com/report/change.html), enter your email address, click on "Change my preferred report format" and select "HTML summary". That way you can see the pictures, glossary and other features which are only in the Web version.

A connected apartment in Milan

Adam Peake of GLOCOM Tokyo wrote in reference to our Connected by Design article that:"Cisco and a bunch of Italian household product and service providers have already built such a "house" (it's an apartment) in Milan. It's not a show house in the sense of a pilot, all services are commercial products and it runs on fastweb IP over fiber service. See www.casacomoda.it .

Thanks Adam! We're aware of Fastweb's services, but haven't had the opportunity to visit this apartment. If you are intersted in visiting, the Web site indicates visits to the Internet Home are reserved for the press and the trade.