Medals of Honor
Welcome to the sixth edition of the CED Broadband 50, where we once again offer a list of companies, technologies, trends (and even a person or two) that had significant influence in 2006, or are poised to do so in 2007.
Also returning for a sixth year is Area 51 (see p. 37), a region that lists trends and companies that were either this close to making the list or are still unproven and relegated to the category of "alien technology."
CED's editors and two key contributors (both past and present) put their heads and thoughts together (aided by libations, of course) to come up with (and argue over) this year's list.
Like last year, we also ranked each member of the "Fiddy" and compiled final tallies for each. In addition to CED's editors, these scores were also generated by a secret group of objective industry engineers and other luminaries.
1 BANDWIDTH - A chicken in every pot, 100 Megabits to every home
For cable, bandwidth is everything. (Duh.) It’s the shelf space for analog video, digital video, big-fat-HD video, broadband data, voice, video over cable modems, and everything in between.But if there’s such a thing as a defensive offense, bandwidth qualifies: There’s never enough, and there’s always enough, depending on who’s talking–and who’s listening.
As a result, cable operators spent 2006 defending their bandwidth potential–while simultaneously working to expand it.
They defended it economically to Wall Street–“we’re fine, we’ve got plenty!”–which typically punishes big capital spending. (Because the word “plant” followed by the word “upgrade” elicits such a deeply visceral response by Money People Who Matter, operators changed their expansion lingo to code words like “improvement initiative” and “plant migration.”)
They shielded it competitively against the fiber-to-the-homers, and especially Verizon Inc., who spent 2006 building consumer perception that fiber-deep FiOS means better bandwidth. Here’s one bouncy advertising sample: “Jump into a brilliant fiber optic future!”
Simultaneously, the “tools in the toolkit” strategy of 2005 shifted into “mark-set-go.” (Witness Switched Digital Video, ranked #4 out of this year’s 50.) Video switching and low-cost, high bandwidth “plant migrations” maneuvered into active duty.
One top-5 MSO (still too gun-shy of Money People to speak for attribution) gave a conditional green light to 860 MHz expansions. The condition: Less than 5 percent of plant touched; meaning, no amplifier re-spacing on 95 percent of plant.
Time Warner Cable remains the most aggressive with its switched digital plan. Columbia, S.C. and Austin, Texas, which began life as field tests, are at 60 percent efficiency, CTO Mike LaJoie says, meaning that the space that used to take 10 channels takes 6. “The more channels you put on, the more efficient it gets –it’s just how it works.”
–Leslie Ellis, Independent Analyst and CED Contributor
2 DOCSIS 3.0/CHANNEL BONDING - Cable’s next-next generation
DOCSIS 3.0 is so packed with features that it is sometimes referred to as a “kitchen sink” spec. If you were to print out all of the 3.0 specs (at press time, three had been issued), bind them together with a piece of twine, and swing the resulting bundle at someone, it’s quite possible that you could knock that person silly.
On the competitive front, one intent is to clobber FiOS and other fiber-to-the-prem technologies on speed alone.
But higher data rates (upstream and down) via channel bonding is just one of several features that make up the mass that is DOCSIS 3.0. Also crammed in there are IP multicast, IPv6, enhanced security, an extended upstream frequency range, better network management tools, and methods for business services over DOCSIS (yes, please add “BSoD” to your list of key acronyms).
While we’re still far from seeing fully-featured DOCSIS 3.0 technologies tested or deployed, the speed feature (a la “pre” DOCSIS 3.0 channel bonding) is emerging on the market first in several ultra-competitive markets in Asia and as an IPTV conduit in some parts of Europe.
Although most of those deployments have been highly targeted and in low volumes, it shan’t be long (read 2007) before U.S. operators begin to wield channel bonding Stateside and thrust the pointy end of this weapon at the heart of FTTP network deployments. –Jeff Baumgartner, Editor-in-Chief
3 BUSINESS SERVICES - Stemper to Comcast
As cable’s foray into the lucrative realm of business services tiptoes into the relative mainstream, a macabre joke is starting to make the rounds. It goes like this: “Why don’t cable operators do more with commercial services?” Punchline: “Because they hate money.” (You tend to hear it from people who think the industry is leaving money on the table.)
Outside of Cox, and until around Labor Day of this year, cable’s commercial services scene was earnest-but-smallish. Then, in late summer, the unthinkable happened: The guru of Cox Business Services, Bill Stemper, moved to Philadelphia to become president of Comcast Business Services.
The number-one cable operator with the number-one business services guy. Now there’s a match worth watching.
If Stemper does for Comcast what he did for Cox, he’ll quickly show that every dollar of capital invested into the segment returns 70 cents, in one year–and that 60 percent of it is cash flow. He’ll maneuver Comcast into a telecom role for health care facilities and schools, and businesses with 100 employees or less. He’ll push hard on commercial voice.
Industry-wide, the timing looks better and better for cable’s entry into business services. Think of it this way: In 2003, “Commercial Services” ranked #25 in the 50. Now it’s (again) #3.
We’ll go so far as to predict that business services will represent 10 percent of overall cable revenues by, oh, middle- to end of 2008?
That’d be good, because something needs to fuel the growth (read: keep the Money People happy) after Voice-over-IP. –LE *No change
4 SWITCHED DIGITAL VIDEO - Bandwidth maker
There’s not much to not like about video switching. It preserves spectrum, doesn’t require a plant upgrade, and introduces the potential for “unlimited bandwidth.” Maybe that’s why this entry leapt 16 places from last year.
The general reasoning behind switching: You don’t leave the lights on when you’re not home. You don’t leave the water running in the sink when you’re not brushing your teeth. So why put channels down the pipe that aren’t being watched?
Judging by the expected growth in bandwidth-slurping services–an anticipated 50 channels of high definition TV (over time) comes to mind–it’s probably wise to bump switching up on the to-do list.
What does that entail? According to those MSOs active with tests and launches, leave plenty of get-ready time to re-wire distribution hubs, which is where the switches usually go. That’s the most time-consuming part.
Along the way, rid yourself once and for all of any “non-responder” set-tops in the system. “Non-responders” are boxes that don’t or can’t communicate to the network, usually because they’re plugged into an outlet that gets turned off with the wall switch–or are otherwise “deaf” to the network.
Once the plant is ready, start slowly. Place “lightly viewed” networks on the switch first. Move only a few channels at a time. Keep an eye out for CE devices with CableCARD slots. And, most importantly: Breathe in. Breathe out. —LE
5 SEVEN-OH-SEVEN It’s no heaven
Look. Just swallow hard and get on with it, because at press time, it’s still real. You’re stuck. The waivers didn’t get you an extension, let alone an exemption. If you work for a cable operator located in the United States, by next July 1–no matter how small your systems are, no matter what kind of box it is–you can no longer install a digital set-top box that doesn’t have a CableCARD slot. That means you have to flush inventory before then.
You also have to query your set-top suppliers, to make sure you’ve ordered what you need, come July 1. You have to tweak your headend controllers. You have to figure out if you’re going to install boxes with pre-mated cards, or if you’re going to maintain card inventories yourself. It’s just a giant pain. And if you’re hearing this for the first time here, you’re really up a creek without a paddle.
Sorry. There’s just no silver lining here. No consumer benefit, plenty of get-started and maintenance costs, and worst of all, your satellite TV competitors don’t have to do it–even though both of them are moving to leased box models themselves. Hope for a miracle. —LE
6 COMCAST - Cable’s compass
When you’re the biggest MSO in the world, your spot in the Broadband 50 is virtually guaranteed. When you sneeze, your vendors can catch cold.
But getting on the list just for the sake of size and influence is one thing; how achievements are scored and how a bellwether performs largely determines a move up or down the chart.
As you can see, Comcast moved up this year to the No. 6 spot. The reasons can easily fill a page, but we’ll boil it down. While Comcast has already secured itself as a VOD leader, we’ve been impressed with how it is also moving the needle with the key category of HD-VOD, announcing earlier this year plans to offer about 100 hours of on-demand programming in HD format. For HD customers who are looking for anything pretty and interesting to fill those big screens, Comcast also introduced a free art-on-demand service.
After a slow rolling start, Comcast has also pushed ahead aggressively with VoIP and will next start to shift into mobility via the cable-Sprint J.V.
The Comcast Spotlight division, meanwhile, will be on the bleeding edge of advanced advertising, an important revenue driver.
It also bought digital media publishing company thePlatform, which already powers Comcast.net’s popular “The Fan” feature. We’re excited to learn more about how this connection will power Comcast’s cross-platform video strategies. Place-shifted video, anyone?
Then there’s the emerging RNG set-top project, which, if it enables a resident channel bonding feature, will complement the operator’s existing video delivery system with one that leverages IP and portends a whole new set of services and applications that the world is only beginning to think about. –JB
7 DCAS/POLYCIPHER - Get a (download) of this
While we’ve pondered the potential benefits of a downloadable conditional access system (DCAS) ad nauseum (it’s considered a cheaper, more elegant replacement for the clunky CableCARD, as just one example), a company directly associated with this effort finally emerged from the smoke last year: PolyCipher.
PolyCipher, spawned from the original NGNA LLC project headed by Comcast, Time Warner Cable and Cox Communications, has the role of steering (and quickening) cable’s important DCAS project.
The project remains in relative stealth mode, but it’s well known that Tom Lookabaugh (late of DiviCom) is its CEO. Its “currently under development” public Web site (http://polycipher.com) remains wafer-thin on details, but does note that the resulting DCAS system will carry the “Chameleon” name. A filing made by NCTA earlier this year divulged that the MSOs backing the effort had already poured $30 million into the PolyCipher effort, whose primary functions are based in the Denver area.
Although PolyCipher’s day-to-day efforts remain shrouded, the importance of its success is as clear as day, particularly with the July 1, 2007 ban on set-tops with embedded security not far off on the horizon. A person familiar with the effort said the cable industry is “desperate” to get DCAS working. Who are we to argue? –JB
8 HD-VOD - Give ’em more of what they want
Although the new, but warring, Blu-ray and HD-DVD formats/factions have not had much of an impact with consumers yet, the situation will certainly improve as high-definition televisions proliferate and HD set prices continue to drop. That picture will also brighten when universal Blu-ray/HD-DVD players eventually reach the market, thus removing some of the consumer angst that exists today about possibly investing in a format that could “lose” the battle and be somehow rendered obsolete.
But, whether that content is coming from the DVD world or from someone else, consumers with those fancy-schmancy sets will want to fill their screens with hi-def goodness.
And therein lays a great opportunity for cable operators–to serve as a primary source of that HD content and complement its linear hi-def feeds with a solid library of HD-VOD content.
Comcast is clearly leading the way here, but other operators are starting to follow suit. And the telcos and DBS (with high-def “push” DVR offerings) will be in the competitive mix as well.
If there’s a good place for an operator to expend bandwidth (and keep those high-end, trophy subs happy), this certainly could be it. –JB
9 SPRINT J.V. (SPRINT NEXTEL) - Is all well in mobileville?
This joint venture, which pairs Sprint with Cox, Comcast, Advance/Newhouse and Time Warner Cable, is the cable industry’s path to mobile services.
Other MSOs may soon join the mix, but the J.V. started with traditional voice services. Later on, the platform will certainly add video to the mix, and the application everyone likes to point to (and perhaps point to too often): the ability for customers to program their DVRs remotely. As many Slingbox users with smartphones will tell you, they can do this already, thank you very much.
J.V. trials and some deployments will get underway in late 2006 and into 2007, but we will see if the cellular-cable combination will stand the test of time, as both sides iron out and try to leverage how they are positioned in the deal. Comcast, meanwhile, has been rumored as a possible Sprint suitor (but denied by Comcast at deadline). –JB
10 IPTV - I know you are, but what am I?
If there’s one query that almost has to follow any mention of IPTV, it is this: What’s your definition? Here’s our view of what IPTV isn’t: It isn’t what happens when you go to a Web site, click on a video link, and watch a stream. That’s probably best called “Internet video.”
No, IPTV is probably best described by what it wants to be when it grows up: The delivery of broadcast-quality video (including HD), over an IP path, to a display device that could or could not be a large or small screen television.
It’s the “broadcast quality” part that makes IPTV something best served over a managed network, inclusive of QoS techniques to mitigate delivery glitches.
So far, the most vocal about IPTV is AT&T–probably because IPTV is its only option, since it is using its DSL lines as the primary delivery mechanism. Its year in IPTV was publicized with software problems, primarily with its main supplier, Microsoft.
Still, IPTV moved up nine notches from the #19 spot last year. The glitches are just that–glitches–and they will be resolved.
At the same time, cable operators remain in an admirable position: They can do IPTV if they want to, and in the meantime, they have MPEG delivery –LE
11 DIGITAL PROGRAM INSERTION - When ads become information
Chances are that if you’re reading this magazine, you spent a substantial part of last year or this year putting up a simulcast of your analog lineup. Right? And right on top of that comes DPI, so that you can splice more digital stuff (like ads) into your simulcast digital channels.
Given the amount of serious planning given to DPI this year–and the potential money it brings in advertising–we’re watching for DPI to be A Big Deal in ’07. –LE
12 GOOTUBE - If you can’t beat ’em, buy ’em
If you subscribe to Mark Cuban’s point-of-view, the people at Google must be a bunch of “morons” by putting up $1.65 billion for YouTube. That was the description Cuban gave for anyone interested in snapping up the Internet video sharing phenom, lamenting that YouTube will be “sued into oblivion” by studios and other content owners. Although Google is already setting aside a pile of cash should it have to go on the legal defensive, acquiring YouTube will help Google pick up where it stumbled with its own Internet video project. –JB * References last year’s ranking for Google Inc.
13 PACKETCABLE MULTIMEDIA - Okay, next year. Really.
Last year we said 2006 should shake out as a big year for PacketCable Multimedia (PCMM). Didn’t happen. This year, indications are that 2007 should shake out as a big year for PCMM, for the same reason as last year: it’s only a matter of time.The goal of the PacketCable Multimedia extension of PacketCable is to significantly improve the quality of IP services provided by cable operators, including but hardly limited to VoIP, enterprise networking and online multiplayer games. QoS is serious stuff.
The difference between last year and this is that PCMM has actually, finally begun to find its way into commercial applications.
StarHub in Singapore is using PCMM to back a “turbo” button that allows subscribers to order a burst of bandwidth, to facilitate Xbox online gaming traffic, and to enable SIP-based VoIP. Buckeye Cablesystem and Cox are using PCMM to enable speed trials.
Every major operator that hasn’t introduced a commercial application is said to be in the middle of testing PCMM technology. But they’re being understandably tightlipped about it. –Brian R. Santo, CED Senior Editor
14 TIME WARNER CABLE - Questions, questions?
Time Warner Cable has one of the most reliable M.O.s in the cable biz. Pick a technology, test it, roll it out nationwide, repeat. VoIP, VOD, Start Over. What’s next? The emerging Look Back service looks to be a fairly good bet. Look Back is essentially Start Over, except with a 24-hour window. That should be simple to implement.
Interactive advertising? TWC has been testing it in Hawaii and four cities in New York State (Albany, Syracuse, Rochester, Binghamton), and now the company has introduced it in its NYC system.
Maybe Quick Clips, which allows viewers to order up short-form IP-based videos, which TWC delivers via an Internet connection? The operator tested it in South Carolina, and decided to roll it out in a few other markets, including Greensboro N.C., San Antonio, and Rochester. Quick Clips is a more modest version of the IPTV trial TWC was conducting in San Diego, in which it was shipping video to PCs. TWC says it’s happy with the results, but hasn’t said much more. Perhaps TWC execs would prefer to focus on the TV. Perhaps they’re being coy.
People in the cable industry keep talking about rolling out OCAP–middleware that makes it possible for applications developers to write an app once that can work on any OCAP device residing on an OCAP-enabled network. The value of OCAP is compromised if it isn’t widely adopted. If the two biggest MSOs, Comcast and TWC, deploy it, that would be big. Will TWC roll it out?
And then there’s that possible spinoff from Time Warner. Will an IPO distract TWC? Slow it down any? Are you kidding? –BRS
15 Verizon - Can you feel me breathing down your neck now?
Ali had Frazier and Foreman, Magic had Bird and Jordan, Evert had Navratilova and Graf. Great competitors get more than one great rival. The cable industry has the DBS duo, and now here’s the fiber-fed up-and-comer Verizon.
Verizon somehow got dispensation from Wall Street to spend $18 billion to $20 billion to upgrade its network, so money is no object. There’s some bureaucratic franchise hoo-ha to deal with still, but the resolution of that issue is all about when, not if.
FiOS is the real deal–100 Mbps now with room to grow, and everything pretty much works the way it’s supposed to. Verizon unfairly shrugs off the DBS companies, but realistically, the heavyweight battle is between companies with fiber-to-the-home–basically Verizon (AT&T will get there too, it’ll just take longer)–and the cable industry.
A few more statewide franchises in the coming months, or even a national franchise, toss in cellular broadband through Verizon Wireless, and the fur is going to fly. –BRS * No change
16 Kevin martin - Who stole his lunch money?
In September, the Senate Commerce Committee granted Kevin Martin, who turns 40 this month, five more years as Chairman of the Federal Communications Commission. It wasn’t a big surprise. But at the same time, it’s doubtful that his office was beset with congratulatory flowers and cakes from his best friends in cable.
Granted, it’s no FCC Commissioner’s job to make sure an industry is happy. And there’s always a natural tension between regulators and industries.
But Martin’s views and actions on cable often seem to border on personal–so much so that a quip made the rounds this spring: “Which one of you cable guys stole Kevin Martin’s lunch money when he was a kid?”
Just in 2006, for instance, Martin supported legislation that relaxes local franchise requirements for telco video, imposed a 6.8 percent universal service fund tax on cable voice-over-IP revenues, and supported broadcasters in seeking multicast must-carry for their digital TV channels (he since backed off, but only because he lacked sufficient internal support to proceed).
In May, to the National Association of Broadcasters, Martin noted that cable TV rates have gone up since the 1996 Telecom Act, while rates for local, long distance, and wireless phone services have all dropped. “Trying to make sure that competitive barriers are lowered and that new service providers can come in and provide a competitive alternative is critical and is one of the most important things that the commission can do,” he said.
But if there’s one thing that will always be associated with Martin, it’s his passion for a la carte programming, as initiated by the notorious Super Bowl “wardrobe malfunction.” Cable responded with voluntary initiatives and family channel packages, yet Martin still talks a lot of a la carte.
So you’ve got that going for you! –LE
17 BIGBAND NETWORKS - Destination: IPOville
Two big things are going for BigBand as 2006 comes to a close. (OK, three, if you count that oh-so-serious mug of Doug Jones, its chief architect, on its Web page.)
One is its initial public offering, rumored to be in the works for spring of 2007. Kind of exciting, because it’s the first big supplier-side IPO we can think of since the boom-and-bust of the Internet.
Two is what got BigBand to the brink of IPOville, which is the whole unstoppable train that is switched digital video
And it can’t hurt that the company added consummate sales exec David Nicholas to its ranks early last month. –LE
18 Deep packet inspection - Brother, brother, what’s going on?
So you’ve got this high-bandwidth, high-capacity HFC network that can do a lot of really cool, whiz-bang things. You’re either about to try doing some of those whiz-bang things, or worse yet, you’re already doing some of them, and uh-oh–you’ve got a bunch of subscribers chewing up so much bandwidth it’s threatening to degrade service across your network.
You’d know what to do if you knew for a fact that some subs were swapping enormous video files. You’d know what steps to take if a virus had hijacked some of your subscribers’ PCs, forcing them to spew out spam. You can respond appropriately if you know what’s going on, but you don’t, because all that data clogging your pipes is encapsulated in packets that your HFC network was designed to pass along ASAP, no questions asked.
That’s where deep packet inspection comes in. DPI systems ask questions. They can peer right into those packets as they zip by, sniff out their contents, and identify not only what the data type is, but frequently the application, even if encrypted.
DPI can be used to detect activity an operator might want to prevent, discourage, or eliminate, but it can be used to improve the customer experience as well.
For example, an MSO can use DPI to detect when a subscriber is downloading a film, and elect to increase that sub’s bandwidth for the duration of the download. Operators can detect when a subscriber is multitasking, and prioritize the packets associated with one application over another, also to improve the user experience.
For years now, companies like Allot, Ellacoya, and Sandvine have been warning that operators would soon have to more actively manage their networks. With the addition of VoIP and other IP-based services, compounded by the recent explosion in P2P activity, that day has come, and DPI is becoming an indispensable tool for managing bandwidth. –BRS
19 Kyle Mcslarrow - He gets it
Maybe it’s that take-no-prisoners crew cut, combined with the cuts from Metallica and Corn on his iPod. Or his Rolodex, equipped to open doors on the Hill. Or just that he’s a quick study–the guy who can glance at a briefing sheet, then nail its delivery, moments later.
If the National Cable & Telecommunications Association wanted a general, ready for war, they got it in Kyle McSlarrow. Now nearly two years as president and CEO of the association, McSlarrow’s mission is to steer the industry through a maelstrom of regulatory pressure. At least five powerful groups are in motion. They all want a piece of cable.
There are the broadcasters, lobbying for multicast must-carry. And the phone companies, seeking relaxed local franchising requirements. And the FCC, with its laundry list. The consumer electronics industry wants its version of two-way Plug-and-Play, and the information technology/Google/Microsoft side wants network neutrality. Talk about a hot seat.
So far, “it’s been a simultaneous mission to fight the battles and avoid bad things from happening, and also to accomplish a longer-term strategy, which is changing the perceptions about” the cable industry, McSlarrow says of his work.
McSlarrow, a first-timer in the “Fiddy,” is in because he’s the kind of friendly badass you want at the helm at a time like this. In short, he gets it. –LE
20 OCAP/ETV - Synching up
We are almost a year removed from the 2006 Consumer Electronics show, when several major U.S. MSOs pledged aggressive support for the OpenCable Application Platform (OCAP).
Although much attention is given to OCAP in the set-top, the real challenge (and heavy-lifting) appears to be at the headend.
Although operators will continue to make OCAP a priority in 2007, OCAP continues to be scrutinized by the consumer electronics industry and could only slow things down further.
Meanwhile, operators will continue to push interactive television (iTV) and enhanced television (ETV) services and apps that can run on legacy, pre-OCAP set-tops. On the latter, we’re referring to apps that are synched up to the live broadcast, and include elements such as real-time voting and polling. Some operators, such as Time Warner Cable, are already doing lots of this kind of work, but other MSOs will certainly benefit from the CableLabs ETV-BIF (Enhanced Television–Binary Interchange Format) specs.
TVWorks, the iTV joint venture of Comcast and Cox, has already shifted into integration mode with Ensequence, maker of an iTV authoring system called “on-Q Create.” The result will outfit legacy cable systems to support ETV apps, and pave a path toward fuller, richer OCAP-based services. –JB
21 CABLEVISION SYSTEMS CORP. - Innovative mavericks
Leave it to Cablevision to tread where others dare not. Remember that Cablevision is one of only a very small number of U.S. operators that does not use the conditional access duopoly of Motorola and Scientific Atlanta. Cablevision may have had to inject some speed into its digital video plans by eventually going with digital boxes and headends from SA, but it was able to retain the security services of NDS Corp. Despite a mid-course correction in 2002 (Cablevision started off with a Sony box strategy), it now touts an impressive digital to basic penetration of 76 percent. It was also one of the first operators to launch HD-VOD services.
On the speed front, Cablevision, which is crossing swords in some markets with Verizon’s FiOS service, has started to leverage some technology from Narad Networks to push the needle to 50 Mbps. Initially viewed as an application for businesses, it’s being installed in “a VERY residential area,” according to a customer who is getting an early look at the service.
Meanwhile, Cablevision’s potentially most innovative (but also controversial move) involves its network DVR, which the company calls a “Remote-Server DVR.” Though mothballed for the moment as its legality is tested in the courts against angry programmers, the RS-DVR approach looks to put the old Sony Betamax copyright ruling to the test by providing digital customers the ability to set, record and playback shows from network-based servers. If the RS-DVR passes legal muster, expect other operators to give this concept some serious thought in 2007. –JB
22 IPv6 - Addressing an important problem
The primary problem with IPv4 (a dearth of IP address space) has finally hit the shores of North America and Europe, causing operators there to begin winding up and pushing ahead with plans for the new and vastly improved IPv6. IPv6, at 128 bits, increases address space dramatically–try on 340 trillion trillion addresses for size.
Juniper Networks, which helped CED put on a Webcast on just this topic in September, put the difference between IPv4 and IPv6 into perspective thusly:
- If an IPv4 address weighed one gram, the entire IPv4 address space would weigh 1/76th of the Empire State Building. Sounds impressive.
- But it’s not, when compared to IPv6. If one IPv6 address weighed 1 gram, the entire IPv6 address universe would carry the weight of the Earth–times 56.7 billion!
For some operators, IPv6 can’t come a moment too soon, and even some have already acknowledged that they have exhausted their pool of private IPv4 addresses. Alain Durand, the director and IPv6 architect for Comcast, has noted that the MSO would need 100 million IP addresses alone just to manage a fleet of IP-capable set-tops for about 20 million video customers (assuming 2.5 set-tops per home, and 2 IP addresses per set-top). That figure does not even consider MTAs and other devices that will require their own IP addresses, as well.
The good news is that IPv6 is supported by DOCSIS 3.0, and it, along with channel bonding, will be among the features operators will look to support first. Additionally, operators will be equipped to simultaneously support IPv4 and IPv6 in the core network, and IPv6-only at the network’s edge, where those IPv6 devices will eventually reside, so there’s little worry about stranded gear and capital, and also no need to consider an across-the-board, hard cut-over from IPv4 to IPv6. –JB
23 APPLE - ‘iTV’ on deck
Enough about the iPod already. It does music; it does video; it has transformed the way people use and buy digital music. We get it. I’ve got one. I like it.
Now, the world is anxiously awaiting Apple’s foray into a product codenamed “iTV,” which is being billed as a media bridge that allows consumers to download and stream video (even HD stuff) and view it on the big screen. While that doesn’t sound especially special, count on Apple to make it so. Even the prototype looks pretty cool.
My only suggestion is that Apple and Steve Jobs might want to drop the “iTV” name posthaste. That acronym has some serious baggage attached to it. If you were doing “iTV” circa 1998-2002, you’ve probably been forced to move on to new pastures or to a new industry by now. –JB
24 BROADBAND2GO - C’mon, c’mon, c’mon already
People want wireless connectivity, and being restricted to getting it at home, airports, hotels, and coffee shops ceased to cut it long ago.
And it’s not just individuals on the go who are frustrated. Entire cities want blanket connectivity so badly they’re turning to companies other than their local cable operators and phone companies. Local providers, of course, oppose muni wireless, but rarely do they volunteer to build such networks either.
The problem is that, even though muni wireless is a golden opportunity, it is at best complementary and at worst tangential to a cable operator’s main focus, residential service, as well as to an MSO’s growing secondary focus–commercial service.
Nobody likes watching subscription revenue going elsewhere, so something’s got to give. It’s entirely unclear what it will be, though.
The other component of the issue is fixed/mobile convergence–being able to use a handheld in both home/Wi-Fi and mobile cellular environments, complete with handoffs of the same call from one to the other.
The joint venture that a handful of major cable MSOs have with Sprint Nextel might be the vehicle to provide that. Sprint has been upgrading its cellular network from EV-DO to EV-DO revision A, which multiplies mobile broadband transmission rates by a factor of 10, to a maximum of about 700 kbps. –BRS
25 CISCO SYSTEMS INC. - Tech portfolio gains weight
Cisco was an 800-pound gorilla in the telecommunications market before it bought Scientific Atlanta last year, but no more.
Since then, Cisco has purchased VOD server and software specialist Arroyo Video Solutions, home networking software developer Ashley Laurent, and collaboration software company Orative.
So now it’s a 900-pound ape.
Can Cisco integrate everything it’s been buying? Notice that its 2006 acquisitions were all software companies. Cisco no doubt has some hardware lying around somewhere that can run those applications. And let us remind you that Cisco became what it is by buying scores of companies and making the aggregation work. It’s got some experience consuming other companies.
Cisco is getting pretty darned close to a one-stop shop for almost every system-level component necessary in a cable network, and what it doesn’t have, it can get from dozens of corporate partners who would jump through hoops for the opportunity to accompany Cisco as it pitches its accounts.
Looking ahead, Cisco is already gaining traction with its IP NGN architecture, which uses DOCSIS 3.0 technology as a stepping stone toward a unified IP-based network that can carry any service an operator might care to offer. Charter Communications, TV Cabo (Portugal), and VTR (Chile) are among those already committed to it.
There are other huge network infrastructure providers, wired and wireless, including Siemens, Nortel, Lucent, Fujitsu, Juniper, and Huawei, to name a few. Motorola and to a lesser extent C-COR can almost rival Cisco in the cable infrastructure market when it comes to depth and breadth of products. But Cisco is the only company with such deep roots in both worlds, an advantage that will help it remain a formidable competitor for the foreseeable future.
Cisco should maintain its dominance even if it doesn’t buy another company for six whole months. Actually, as you’re reading this, Cisco will be due for making yet another acquisition. –BRS
26 JOHN MALONE - Hardball behind the scenes
With the possible exception of Howie Mandel, John Malone currently has no peer as a wheeler-dealer. In the past year he sold UPC France for about $1.5 billion in cash; sold Liberty’s 50 percent stake in Court TV to Time Warner for $735 million; sold control of OpenTV to the Kudelski Group for over $130 million.
With the proceeds, he bought Czech cable operator Karneval Media for $415 million, and sank $500 million into a film studio called Overture Films. Overture will be part of the Starz agglomeration of companies, which not coincidentally includes movie download service Vongo.
Malone holds 20 percent of News Corp., and a 4 percent stake in Time Warner–not enough to control either, but more than enough to get his phone calls to Bob and Rupert returned.
News Corp. adopted some poison pill measures to discourage Malone from buying more of its stock, and at press time was preparing to trade its control of Broadband 50 lister DirecTV to Malone in exchange for Liberty’s shares in News Corp. Malone also happens to own 18 percent of yet another on the Broadband 50, WildBlue Communications, which is helping DirecTV provide satellite-based broadband data services.
How much fun do you suppose it must be to make a guy like Rupert Murdoch that nervous?
Meanwhile, Liberty Media fully owns communications service providers in Germany and Puerto Rico, and it has major holdings in others in Chile, Latin America, Japan, Romania, the U.K., and elsewhere.
It’s hard to tell if Malone is wheeling and dealing just to make money, or whether he’s constantly putting complementary companies in juxtaposition to see if he hits synergistic paydirt, and cutting his losses if he doesn’t. Either way, the man is stirring the pot and it will remain perilous in 2007 to forget he’s there. –BRS * But one of his companies, Liberty Global, was No. 35 on last year’s list.
27 NEXT-GEN HOME NETWORKING - Revving up the high-speed home
Speed wars are not just relegated to the access network. There’s just as much speed- and capability-related competition happening inside the home–namely with advanced home networking technologies that are designed to shuttle IP-based content (even hi-def video) over the home’s existing coax, phone lines and powerlines.
While new WiFi flavors will pretty much dominate the wireless end of this segment, there are multiple wireline standards and methods that appear poised to take their piece of this lucrative pie.
Among them, the Multimedia over Coax Alliance (MoCA) has gathered tremendous momentum in 2006, signing on numerous top silicon partners. MoCA technology, which offers speeds as high as 270 Mbps, is in more than 1 million deployed “nodes.”
Also squarely in this mix is HomePNAv3, which has the ability to leverage both home phone and coaxial lines. While HomePNA 3.0 can pump out data at a theoretical 240 Mbps, an emerging version, HomePNA 3.1, looks to push the bar to 320 Mbps.
And let’s not forget about the next generation of HomePlug–HomePlug AV, said to support PHY layer throughput of 200 Mbps, and a MAC layer throughput of 100 Mbps.
A wildcard in this bunch is not a standard, but a company: Pulse/LINK. Its “CWave” chipset is a UWB technology outfitted to do high-speed networking wirelessly, as well as over coax or home powerlines. With coax, the company claims application layer throughputs of greater than 400 Mbps. –JB
28 SLING MEDIA - The TiVo of ‘place-shifting’
Sling Media has done for place-shifting what TiVo has already done for time-shifting: given the category a brand identity and a mainstream coolness factor.
Oh, and also like TiVo, it’s practically become a verb, too. We’re already used to saying we’ve TiVo’d something–even when we use a generic, non-TiVo DVR. These days, Slingbox owners proudly proclaim that they are “Slinging” their home television content to a laptop or their cell phones.
Orb Networks, a Slingbox competitor, also does place-shifting purely in software, but I have yet to hear anyone utter that they were “Orb’ing” something.
On the coolness factor, I revel in showing off how my laptop PC can tap into my DVR at home to pull up a recording of “Team America: World Police.”
Sling’s marketing messages to sports fans are also getting through. Some of my old college buddies peppered me with questions about the Slingbox recently, wondering if there was a way for them to access Colorado State University football games when they’re on the road. There’s clearly a consumer desire for what Sling is doing. In fact, if you check some Internet boards, you’ll find that some of its more zealous customers enjoy discussing the Slingbox and its various uses in the same cult-like way TiVo customers do with their DVRs.
Consumer impact aside, cable engineers have been lamenting the potential impact Slingboxes might have on their bandwidth, particularly in the upstream, and particularly if Slingbox usage continues to grow and expand. In the same discussion, you might also find an operator (or several) that are using Slingboxes as cheaply-had remote video monitoring tools, which is, of course, not good news for vendors that market and make specialized and more capable monitoring equipment that also happens to cost much more than an off-the-Best-Buy-shelf Slingbox.
You’ll also discover that a couple of operators outside the U.S. (TVA of Brazil, for example) are co-marketing Slingboxes as a value-added component of high-speed Internet service. On top of that, EchoStar and Liberty Media are also big Sling Media investors. We’re still waiting to see how they will implement Sling’s technology.
So, from the cable operator’s standpoint, is Sling friend or foe? The answer: Yes. –JB * Last year: Area 51.
29 CLUB GIGAHERTZ - Expand your mind–and your bandwidth
The idea of expanding bandwidth beyond 860 MHz is no longer met with the scowl it once was. As long as it doesn’t mean digging up the streets with the word “upgrade” attached to it, vendors that are shopping around 1 GHz technology are no longer being met with a door to the face. In fact, when it comes to passives, 1 GHz is about all you can buy these days from some suppliers.
Besides, when a top engineer tells us that 1 GHz technology “has legs,” particularly because it gives operators some spectrum headroom for DOCSIS 3.0 channel bonding, we have no other choice but to pay attention.
So, who will benefit from this? Scientific Atlanta, for sure. Others with 1 GHz momentum and potential also include the likes of C-COR Inc., Harmonic Inc. and Aurora Networks.
The wildcard here continues to be Vyyo Inc., which offers 3 GHz spectrum overlay technology and has been pleading its cost and performance case in recent years. –JB
30 C-COR INC. - Next step, or stepping it up?
Along a path to redefine itself, C-COR Inc. went on a huge acquisition binge, picking up software companies Alopa and Stargus, and expanding into transport products with Lantern Communications and Optinel Systems. It also found itself in the middle of video-on-demand and digital advertising technologies by buying nCUBE.
A year later, it’s sometimes still difficult to determine what the company actually “is” these days, other than that it has positioned itself for the burgeoning IP world.
One of the best summaries we’ve seen of the company comes from Alan Bezoza of Oppenheimer & Co. Inc., who sees C-COR “positioned in the sweet spot of upcoming capex requirements” for cable and other broadband operators. Likewise, because C-COR has completed the integration of its acquisitions and figured out what will work and what hasn’t worked quite as well, “we expect the company to return to sustainable profitability,” Bezoza noted.
Now that C-COR has completed this part of its history, we’ll have to see how things shake out as C-COR considers its experience and the results of its recent past. Will C-COR try to tweak its strategy with some precise acquisitions, stay the course, or even shed what it doesn’t need, as it did by transitioning the development and support of some of its OSS assets to Sigma Systems, or selling its DV6000 digital video product line to Newfound Technology Inc.? –JB
31 MOTOROLA - Borg Jr.?
There are few things emptier than a marketing catchphrase. Coke adds life? Right. Then there’s Motorola’s “The Connected Home” which, against all odds, is not only a zippy line to splash across an ad but is also a pithy encapsulation of a purposeful corporate strategy.
Service providers are fighting for residential subscribers, and the winners will succeed by doing three things: 1) getting the fattest pipe possible into the home, 2) providing the widest array of ancillary services the fastest, and 3) enabling subs to use those services anywhere they want in their homes. Motorola has been making moves to help providers on all three fronts.
When it comes to increasing bandwidth, Motorola is pursuing DOCSIS 3.0 technologies, including advanced modems and the related-but-not-required modular CMTS. But now carriers are also getting into IPTV.
For that, Motorola bought IPTV set-top maker Kreatel, and in November bought IPTV CPE manufacturer Netopia. Earlier, Motorola bought Vertasent, a developer of edge resource manager technology for switched digital networks.
Motorola closed its acquisition of up-and-coming VOD company Broadbus Technologies in September.
Mobile phones will most certainly be part of the connected home. In 2006, Motorola bought Good Technology, a developer of enterprise mobile computing software; and TTP, a developer of silicon, protocols, and applications for mobile devices. –BRS
32 The iTvers - It’s not easy being iTV
It just never gets any easier to be an interactive TV provider–as an MSO to a consumer, or as a supplier to an MSO. The sector, arguably 25 to 30 years old, has more unintended set-backs than can be counted on both hands–and feet.
iTV, as a category, spent another year struggling for priority in 2006. But, progress did occur. Time Warner Cable led the pack (again) with showboats like caller ID on TV and “Start Over,” which lets you rewind a show you haven’t DVR’d to its beginning. Also: “Quick Clips,” which are short, on-demand video clips that allow a program network to re-purpose content it has developed for the Web.
At press time, Time Warner and its suppliers–BigBand Networks, Con-current, Harmonic, and Scientific Atlanta/Cisco– were up for a Technology & Engineering Emmy for Start Over. (They’re up against Digeo/Moxi and ABC on Demand’s “Guided TV.” Decisions will be announced on Jan. 8.)
Supplier BiAP also showed up strongly in this year’s Tech Emmys, nominated as a contender for enabling “NBC Olympics Now,” and Fantasy Football ticker. The former is a bound app; the latter, unbound.
Enhanced TV–a bound app in that a clickable trigger comes within a TV show, and is relevant to that show–also made some headway this year. Episodes of “Top Chef” (Bravo) and “Last Comic Standing” (NBC), for instance, were interactive-enabled in some Time Warner systems using Navic’s technology. Cox also tapped into Navic for targeted ads in San Diego.
Also active in the ITV sector this year: Ensequence, which hooked into a deal with Comcast and TVWorks; “OCAPers” Alticast and Vidiom; BlueStreak; Ensequence; ICTV; and OpenTV.
Gee. It’s getting to the point where the iTVers could make their own “Fiddy.” –LE
33 BROADBAND ANALYSTS - Bezoza, Wahlman, Moffett, Katz
No shortage of people who have opinions about what’s what in the industry. Of the Wall Street types, the one with the native affinity to cable tech is Alan Bezoza, SVP of Equity Research for Oppenheimer & Co. (He was raised by two optical engineers and counts among his possessions a trove of cable architecture designs–drawn on beer napkins.)
The analyst with the guts and good sources is bow-tie-man Anton Wahlman, of Needham & Co. He’s aces at early merger predictions (he called Scientific Atlanta/Cisco, among others) and a close watcher of the industry’s tech suppliers.
On the street side of the Street, follow Craig Moffett, of Sanford Bernstein, for prolific and accurate straight-cable analysis. And our hats off to longtime sell-side analyst Ray Katz, recently retired Sr. Managing Director of Bear, Stearns, & Co. (and newly-minted consultant), for his natural curiosity and commitment about cable’s technical side. And for that framed definition of “QAM” on his office wall. –LE
34 DBS - Slower growth, but still a dynamic duo
Every time FiOS is rolled out in a new town, Verizon issues a press release celebrating how that particular location is finally getting competition. Yet all along there have been DirecTV and EchoStar. Maybe you’ve heard of them?
DirecTV had 15.7 million video subscribers as of Q3 2006, and EchoStar’s Dish Network had about 12.8 million.
The DBS duo has been putting a great deal of pressure on the cable companies over the last few years with their promotions for digital transmission, high definition (HD) video, and DVRs.
But subscriber growth has been slowing for both for more than a year. The cable industry is storming back with video-on-demand, HD packages, increasingly more digital channels, and networked DVR. New applications keep coming, to which DBS will find it increasingly difficult to respond.
Plus, the MSOs have always had the advantage of being able to offer broadband data services, and they have knocked DirecTV and the Dish Network back on their heels with the introduction of IP telephony.
It’s true that EchoStar and DirecTV have co-marketing agreements with several telcos, but the telcos look at that as their play for the rural video market. Meanwhile, to offer data services, DirecTV and EchoStar have hooked up with WildBlue Communications, which can provide satellite-based broadband at a max of 1.5 Mbps.
But an integrated triple play from a single source is proving a more attractive proposition than a cobbled-together package of the three services from three different companies.
And all that before even considering what will happen when MSOs start offering wireless service, too. The DBS duo was going to bid on spectrum in the recent FCC auction, but decided against it. They certainly have options for wireless, but none are easy or cheap.
So what comes next? Speculation about a possible merger of the two never entirely dies away, but putting DirecTV and EchoStar together will just make a bigger company with limited options for growth. There are rumors News Corp., which owns over 38 percent of DirecTV, will sell or trade that interest to Liberty Media, but that just switches responsibility for DirecTV from Rupert Murdoch to John Malone.
DirecTV and Dish Network combine for nearly 29 million video subscribers. They will continue to attract more, and they will be competitive, especially in rural areas. The question is, for how much longer? Any rabbits left in those hats? –BRS
35 BROADLOGIC NETWORK TECHNOLOGIES - A headend for every house
If you’ve come anywhere near a BroadLogic executive in the last six or so months, you’ve probably seen the secret chip. It usually gets whipped out of a breast pocket and displayed in the palm of the hand.
Well, it’s no secret now. In mid-November, the secret chip went public as “TeraPIX,” a multichannel decoder for the side of the house. It means that signals can come to a house digitally, then be decoded into analog (for homes with analog TVs after the digital transition, for instance, or for additional outlets). In a way, it’s a headend clamped onto each house.
Because it allows operators to go “really all digital,” the bandwidth savings are potentially gigantic–a tripling, BroadLogic execs say.
There are some considerations to bear in mind. First is the packaging. Next step for this chip is for it to be built into something else, and it’s a something else that bolts onto the side of the house. Great at the outset, but what happens when the bill payer moves?
It also means a potential flash-cut to all-digital, in order to really get that tripling of capacity. Any kind of flash-cut is a tall order.
Then there’s the cost. One MSO exec who likes the BroadLogic idea says it still costs him more money to physically go to a house (as in to bolt the unit on the side of the garage) than it does to do a bandwidth upgrade.
Still. BroadLogic has seen the insides of the 50 before, and even spent some time in Area 51 in recent years. This year, it seems more poised than ever to get going. –LE * Make that “sorta new.” BroadLogic was relegated to Area 51 last year and in 2004.
36 TANDBERG TELEVISION - Sleeping, eating and breathing digital video
Self-proclaimed “televisionaries,” the folks at TandbergTV are developing prodigious expertise in digital TV, including IPTV, HDTV, video-on-demand, advertising on-demand, IPTV and interactive TV applications (that last through the acquisition of Goldpocket a bit over a year ago).
The company has established a bona fide strategy in MPEG-4 with an end-to-end system.
On the cable side, TandbergTV has a few nice bits of business; for example, helping Comcast Spotlight do on-demand advertising, and Charter Communications and Time Warner Cable, among others, with VOD.
The company has yet to establish itself as a heavy hitter in IPTV. To do that, it would need to score a series of fat contracts from some giants the size of, say, AT&T or Deutsche Telekom.
But until that happens, the company is making a perfectly acceptable living with deployments in such out-of-the-way places as China, Croatia, Norway, Estonia and Rochester, N.Y. –BRS
37 AT&T - Groovin’ on video
The good news for AT&T is that it has a multi-pronged approach to delivering video. The not-so-good-news is that one of those approaches (IPTV over VDSL tech in brownfields) has been the center of much scrutiny in 2006.
The big question there is whether that service, U-Verse, will provide enough bandwidth to support multi-stream HD services. The company, meanwhile, has expressed confidence that it will, noting that it can bond channels if need be, and essentially double up on capacity.
Of course, AT&T also has HomeZone, a hybrid service that combines DBS (via EchoStar) with DSL connectivity.
The one ace in the hole for AT&T is its pending merger with BellSouth, which will bring Cingular (and mobile services) into its broadening product mix. –JB
38 KUDELSKI/OPENTV - NDS’ foil
OpenTV’s cable strategy got a big push earlier this year when Time Warner Cable agreed to use the company’s middleware to bridge the MSO’s new in-house digital navigator with deployed, pre-OCAP Motorola set-tops and headends.
Since then, the future of OpenTV changed quite a bit. A deal emerged this fall that will send voting control of OpenTV to Kudelski Group, resulting in what they believe will be a one-stop-shop for conditional access, middleware, TV apps and advanced advertising.
OpenTV Chairman & CEO Jim Chiddix said the deal was “about aligned independence.”
It’s also about giving Kudelski, owner of Nagravision, the ability to compete on all fronts with NDS Group.
As for Chiddix, his role at the company appears to be in question. At last check, he will become vice chairman of OpenTV, while his role beyond that with OpenTV or Kudelski is in the “exploratory phase.”
Whether or not Chiddix remains with the company, OpenTV, with software in over 73 million set-tops, will seek to expand its role with domestic cable, an industry that is looking to move ahead on a new era of interactivity. –JB
39 HARMONIC INC. - Here today, but what tomorrow?
It seems that if a stream of IP video is being transmitted anywhere these days, Harmonic Inc. is standing somewhere along its path helping to pass it along. The company has its fingers in video compression, stream processing, broadband access, asset and network management software and, through the recent acquisition of some assets from Entone Technologies, it’s now deeper into VOD, as well.
Harmonic has been beefing up its line of MPEG-4 AVC encoders, expanding its portfolio of video stream processing products for both high-definition and standard definition video, and making progressively more money as more service providers offer more HD content, and as carriers, cable operators, and others transition to IPTV.
Harmonic is a relatively small company making a lot of the right moves in a hot industry, which inevitably leads people to wonder: wouldn’t Harmonic be a good acquisition for someone looking to get instant standing in the IPTV equipment market?
Well, since the question came up, yes. Harmonic could do just fine on its own, but we would hardly be the first to point out that ARRIS is positioning itself for an acquisition or two. Motorola and Cisco both have some product overlap with Harmonic (VOD, encoders), but either might consider Harmonic edible just because of its IPTV customer roster. –BRS
40 RGB NETWORKS - Retro name, future game
Gotta love a company with such a tech-retro name. Get it? RGB? Red, green, blue? This readership should see the cleverness of that, especially for a company focused on digital video processing.
And there’s another reason why RGB seems to keep an effortless grip on its presence as a hot little startup: its founder, Adam Tom, semi-famous in technical circles as the guy who came up with the statistical multiplexing for his previous startup, iMedia.
That’s the outfit that made the front page of the Wall Street Journal in the mid-’90s, because John Malone happened upon them while wandering The Western Show, and immediately teed up a giant order. Remember?
So far, 90 percent of RGB’s green, so to speak, is coming from its digital simulcast gear. But its sites are clamped on switched digital video, and targeted ad insertion. It doesn’t hurt that Motorola is its exclusive sales partner.
The remaining question: Is RGB still RGB next year, or does it get snapped up by somebody big who needs a video switch? –LE
41 SEACHANGE INTERNATIONAL - Consolidate this!
The past year, 2006, was marked by a consolidation trend in the VOD industry–Motorola bought Broadbus; Harmonic picked up the VOD assets of Entone; Cisco Systems snapped up Arroyo Video Solutions.
But the biggest and most widely deployed VOD vendor of them all, SeaChange, was left pretty much untouched.
Well, sort of.
While some other companies in the sector get absorbed by bigger fish in the vendor community, SeaChange appears to be shielded with plenty of money and influence. Or, if it does get acquired, it might not be a vendor that plays the suitor’s role.
As part of a massive, new master purchase license (minimum of $30 million in VOD gear, software and services) with none other than Comcast, there was a potentially significant clause in there that will allow the nation’s biggest operator to make the first offer, should the nation’s biggest VOD vendor opt to sell its assets.
The people in the know that we talked to chalked this up to “contingency language” that provides Comcast with adequate protection for making such a big commitment to SeaChange and its technology.
But, with that kind of protection, you can be sure that SeaChange–or at least its technology–will live to see many, many more days. –JB * Last year, SeaChange and several other vendors of its kind were listed as one entry called “The VOD Squad.”
42 TIVO INC. - Cable deals, broadband strategies
Once DirecTV told the world that it (as expected) would phase out TiVo’s DVR service in favor of one from corporate cousin NDS Corp., a lot of people couldn’t write TiVo’s epitaph fast enough.
But TiVo has managed to survive even as it has to move ahead sans a deal that has been responsible for most of the company’s subscriber growth.
TiVo has been undaunted in terms of deals and innovative services.
On the latter, the company has finally introduced a stand-alone HD-DVR–the snappy-looking but relatively expensive Series 3 –and has embarked on an ambitious broadband video strategy that leverages the high-speed Ethernet ports of its new box and legacy Series 2 devices.
As far as deals, the most significant are with Comcast and Cox, though exactly how those will work in practice and how quickly they will replace revenue lost to the DirecTV deal remain questionable.
Alan Bezoza, an analyst with Oppenheimer & Co. Inc., believes it will take more than these deals to make up for what TiVo is losing. Using an “aggressive” forecast, he estimates that the revenue opportunity for TiVo with Comcast and Cox will be just $18.6 million in 2010–not exactly a bounty when considering TiVo was getting $33 million annually from its DirecTV connection.
Additionally, acquisition questions have followed TiVo for several years. Will 2007 finally be the year that someone big steps forward and picks up this jewel of a DVR pioneer? –JB
43 ARRIS - What’s the video play?
ARRIS has done a tremendous job positioning itself for the surge of cable VoIP growth in recent years, having already cut its teeth with operators that were early to the voice game with traditional circuit-switched offerings.
More recently, ARRIS has become a key leader in the migration toward DOCSIS 3.0, having already scored several trials or deployments, particularly with MSOs in Asia, that leverage the company’s pre-3.0 “FlexPath” channel bonding modems and CMTS gear.
The big question now is how ARRIS will extend its reach into the coveted digital video space, and that answer will likely come in the form of an acquisition (or two or three). The rumor du jour, of course, is that ARRIS has had eyes for the VOD assets of Concurrent Computer Corp., but is holding out for a better price.
If that’s the case, it won’t be the first time, as ARRIS is known to be frugal in the way it waives around acquisition dollars. Remember that ARRIS paid just $60 million in late 2001 for CMTS startup Cadant Inc., and, in 2003, put up a mere pittance ($2.8 million) to score the CMTS assets of what was then known as Com21.
To put that in some perspective, ADC set the acquisition bar for CMTS startups in the fall of 2000 when it bought Broadband Access Systems (BAS) in a deal then valued at $2.25 billion. (BigBand has since acquired those assets from ADC.) Motorola later bought RiverDelta Networks for $300 million, and Juniper Networks picked up Pacific Broadband for $200 million.
And ARRIS is clearly heading toward buying mode. In November, ARRIS said it planned to raise $225 million in a proposed offering, with proceeds going toward general corporate purposes, “including the funding of future acquisitions.” In addition to Concurrent, ARRIS might also be interested in buying all or parts of companies such as Terayon Communication Systems, C-COR Inc. and Harmonic Inc., according to a recent research note from ThinkEquity Partners.
ARRIS has historically been willing to wheel and deal, particularly if something suits a long-term strategy, but it also knows how to drive a hard bargain. –JB * New this year vs. last year. However, ARRIS was No. 15 on the 2004 iteration of the Broadband 50.
44 MICROSOFT CORP. - Give ’em an inch...
Microsoft has never, ever, been about creating the best products. Microsoft is all about identifying a market it wants to be in and then being absolutely relentless about doing whatever it takes to entrench itself in that market. Sometimes in the process, it just so happens that Microsoft creates a great product.
Its IPTV middleware is not one of its great products. Microsoft has had its ups and downs creating IPTV middleware. Ups and downs aren’t the point. The point is delivering middleware that performs acceptably enough for AT&T, Verizon and some international accounts to keep using it. Microsoft is doing that. The rest is raking in license fees and selling software development kits. Prestigious? No. Lucrative? You betcha.
And by the way, did you notice that Microsoft is angling to become one of the biggest IPTV-based VOD (or at least “push DVR”) suppliers? That would be through the new Internet-connected Xbox 360.
Microsoft has announced agreements with CBS, MTV Networks, Paramount Pictures, Turner Broadcasting, Ultimate Fighting, Warner Bros. Home Entertainment, and has set up its own video download service, Xbox Live Video Marketplace.
First the Xbox 360 has to sell like the Xbox this Christmas and through 2007. We’re assuming it will. Then the Xbox 360 needs more than a paltry 20GB drive to store the films that customers download. Somebody–maybe even Microsoft–will figure out a palatable way to compensate for that shortcoming. All the while, expect Microsoft to keep signing distribution deals with other content providers. Then you might want to keep your ears open to hear if anyone starts to wonder why it is that anybody needs a traditional set-top box. –BRS * Not on the list last year, but has been on previous iterations of the Broadband 50.
45 PACE MICRO TECHNOLOGY - Keeping the duopoly honest
Pace has perhaps the unenviable job of keeping the U.S. conditional access (CA) duopoly of Motorola and Scientific Atlanta honest. One on hand, it offers some much needed competition on both sides of the fence during these remaining pre-OpenCable days. Even more so now that Pioneer has long since left the cable set-top biz. On the other, it’s perhaps too easy for operators to use Pace as a bargaining chip or as a weapon to keep the Motorolas and SAs of the world in check.
Still, that hasn’t stopped Pace in its quest to make it in the Americas. While it offers some nice gear on the high-end, such as HD-DVRs, the company will likely see plenty of business for its lower-end products as well, including the all-digital “Chicago” box and “Vegas,” an SD-DVR that could fit well with cable customers who don’t have an HD set and don’t plan on getting one soon, or those HDTV owners who also want to be able to record and time-shift on their standard-def sets, but don’t have a multi-room DVR in their immediate future. Count me in on the latter. I wanted a Vegas box yesterday. Thankfully, Comcast is taking orders on it now. Any word on when Vegas will make it to the Denver area? –JB
46 CABLE’S TEST CITIES - Willow Grove, Pa; Columbia, S.C.; Austin, Texas
If you’re reading this magazine, you probably work in or around the cable industry. If you’re reading this magazine and live in Willow Grove, Pa., Columbia, S.C., or Austin, Texas, you either work for or are served by a uniquely resourced cable operator.
Operators pick test markets for an assortment of reasons. Could be system size, for instance, or demographics (affluent, early adopter-heavy, etc.). Or high-grade network performance and technical staff. Or proximity to the corporate engineering office. Or the number of “friendlies” (employees, and not necessarily engineers) who live within the system’s footprint.
Comcast tends to run small, quiet trials of new technologies and new consumer products in Willow Grove, Pa., a suburb of Philadelphia. Why? In part, because that’s the hometown of Charlie Cerino, VP of new services technology, and one of Comcast’s longest-running engineering tinkerers. (He even has a basement full of test equipment.)
If you’re in Columbia, S.C. or Austin, Texas, you’re in a system hand-picked by Time Warner Cable for an assortment of tests, including switched digital video.
We just thought it made sense to give a nod to the system employees working in cable’s test markets to run those tests–while doing everything else jostling for “priority one” attention. –LE
47 EXENT TECHNOLOGIES - Games + advertising = money
Exent does digital distribution of video games. It has developed ways to make PC and video games playable on platforms other than PCs and game consoles, and it has a technology that enables anyone–from game developers to service providers–to insert ads inside games, whether they were designed to display ads or not.
Want to sell a billboard inside Grand Theft Auto? Exent will let you do that. Want to sell ad space on the blade of a big honking battleaxe in Warcraft? Exent will let you do that, too.
Generally speaking, maximizing revenue opportunities is good. Exent is doing that in spades with its combination of games and advertising. That’s why the list of Exent’s investors and customers looks like somebody skimmed the cream of the crop out of the latest Who’s Who in the electronics industry.
Customers include Comcast, Verizon, Intel, Turner Broadcasting, Bell Canada, RCN, Deutsche Telecom (T-Online), Telefonica (Terra), France Telecom (Wanadoo), Portugal Telecom (Sapo), KPN, Swisscom, Telenet in Belgium, Telstra in Australia, and HiNet in Taiwan.
Shareholders and strategic investors, meanwhile, include Intel Capital, Cisco, Time Warner, Comcast, and Singapore Telecom. The company has partnerships with nearly every major game manufacturer. –BRS
48 LEVEL 3 COMMUNICATIONS - Stiffening (and growing) the backbone
While continuing to score backbone and long-haul IP transport deals with scads of cable operators and other types of service providers (even YouTube), Level 3’s dealmakers probably burned midnight oil by the barrel in 2006.
This year alone, Level 3, which was down but not out in the earlier part of the decade, expanded its fiber backbone through the acquisition of Looking Glass, Telcove, Wiltel, Progress Telecom and–still pending at press time–Broadwing.
Now look for Level 3 to take a deep breath as it figures out how it’s going to tie all of that together and form a new, broader strategy.
“We’re going to want to make sure we properly integrate the acquisitions we’ve made before we take on anything else,” company CEO James Crowe told The Denver Post recently.
But that doesn’t mean Level 3 will be sitting still, either. Crowe acknowledged that the next five years will be about content and wireless, and his company plans to be right in the middle of both.
If you’re a cable operator and you want to build or buy your backbone for services such as VoIP and to get positioned for cost-saving IP peering arrangements, Level 3 is more than happy to provide you with either option. –JB
49 WILDBLUE COMMUNICATIONS - Allowing DBS to turn a double play
These guys are here because they had a plan and they executed. WildBlue’s satellite-based broadband covers all those households that cable operators and the telcos wouldn’t touch.
At 1.5 Mbps max, it’s already slower than most DSL services, but it’s still way faster than anything available to a lot of rural and otherwise out-of-the-way customers.
The original idea was to hook up with DirecTV and EchoStar’s Dish Network to provide a video/data bundle. That plan was put on hold for much of late 2005 and early 2006 as the DBS duo flirted with the telcos, but WildBlue kept plugging along.
By June, satellite guys realized they weren’t going to get far with their telco partners, and they both signed five-year contracts with WildBlue, impetus for WildBlue to raise yet another satellite into orbit and triple its capacity.
All by its little lonesome, WildBlue is going to keep DirecTV and Dish competitive for at least another couple of years. Definitely worth a mention. –BRS
50 IMAGINE COMMUNICATIONS - Covering the bandwidth variables
Every year we try to add to this list a start-up or two that could easily land in Area 51, but appears to have “the right stuff” or is positioned correctly to address key technology or service issues faced by cable operators. Because this year’s No. 50 has a lot to do with No. 1 (bandwidth), Imagine Communications easily fits the bill.
Its claim to fame is simple: The introduction of its bread and butter technology–variable bit rate VOD and, later, switched video broadcast–can save operators precious bandwidth.
In the SD-VOD world, the company claims its platform can cram 15 streams (instead of 10 in a constant bit rate world) into 256 QAM. In HD-VOD (No. 8 on this year’s list), Imagine can pack in three streams, rather than two. Either way, we’re talking about a savings of 50 percent. The company believes it can help operators save even more when its technology, which includes something called a QOD (Quality On Demand) Gateway, is applied to SDV.
But it’s still too early to declare Imagine as a long-term winner (we’re still waiting to hear about specific trials or deployments), hence, why this startup is ranked as it is, sitting here at the very edge of where the Broadband 50 and Area 51 meet. But that also means there’s a lot of room for improvement, and we think Imagine is positioned to do just that: improve. –JB