A cable speed trap?
There's an interesting debate going
on these days, as cable operators continue to increase speeds
and new "over-the-top" IP video services continue
to emerge.

Cable is dilating the pipe and ratcheting up speeds, while keeping
prices relatively static, in order to maintain an edge over
the telcos. But, at the same time, those speed increases are
giving the green light to IP video bypass services, which parasitically
sap bandwidth and revenue from the operators that are providing
the connection. Earlier on, we saw a lot of this kind of activity
with bypass VoIP services such as Vonage, and with some digital
music services.

But now, it's video's turn. Just last week:

To be fair, many cable operators are matching faster speeds
with broadband content--by striking out on their own or with
the help of aggregation partners. The best, most recent example
of this is what Time Warner Cable is doing in San Diego (look
below for much more on this).

Speed and content. Seems like a great combination, doesn't it?
Maybe. Maybe not.

Michael Harris of Kinetic Strategies has posted
some thought-provoking points that one might jot down on the
"maybe not" side of the ledger.

Harris writes that cable's recent "speed addiction"
has caused the industry to fall into a telco trap, finding itself
"simply selling 'megabits' rather than quality, value or
services." Worse, he forwards that cable's high-speed networks
have become "dumb pipes"--exactly what the industry
has been trying to avoid from the get-go.

Considering the evidence available today, what's your position
on this? Has cable found itself in a speed trap? Is it too late
to change this strategy? Further, should cable even consider
changing this strategy?

Send your comments to me via
e-mail. I'll share your thoughts in a future issue.

—Jeff Baumgartner

Time
Warner test drives 'Broadband TV'
Time
Warner Cable has quietly embarked on a trial in the
San Diego area that delivers a raft of channels on the operator's
television lineup via IP to the PC.

The six-month trial, launched July 8, involves about 9,000 eligible
customers who take the MSO's video and Road Runner data services.
Those customers can access 75 channels (all of Time Warner's
expanded basic tier) via their DOCSIS cable modem connections.
The trial does not offer access to premium channels such as
HBO, Starz! and Showtime. Eligible subscribers must log on to
the system via a special
Web site.

It marks the first such public trial for a major U.S. cable
operator.

According
to Peter Stern, Time Warner Cable's EVP of product management,
the MSO embarked on the trial after research indicated that
a "significant group" of customers wanted to watch video via
a broadband-connected device.

The trial will help the MSO determine what kind of programming
customers want to watch over broadband, and how much they use
it.

It also gives Time Warner "the opportunity to follow up with
subscribers on what programming they'd seek if we were to develop
this product further," Stern explained. RealNetworks
Inc. is playing a big role on the technical end of the
trial, providing the overarching media player, and Helix-branded
digital rights management system and streaming servers.

Time Warner's Advanced Technology Group (ATG) in Colorado "did
a great deal of the heavy lifting" on the project, but also
collaborated with the MSO's San Diego team and Virginia-based
Road Runner division, Stern said.

Although still a test, such a service could rival non-cable
affiliated companies such as Sling
Media and Orb
Networks, which sell IP-enabled devices or services
that, once connected to the set-top or DVR, enable viewers to
"place-shift" their programming to a PC, laptop or any other
type of broadband-connected device.

Time Warner Cable, however, is not supporting place-shifting
in the same sense for the purpose of the San Diego trial. Customers
can only access the service via any PC in the home connected
to the Road Runner service. Time Warner is offering it via its
managed network, and not through the public Internet. The trial
does not support digital video recording.

The trial provides proof that cable has the capability to offer
high-quality video delivered via IP, a technology several telcos
are using to launch their own video services.

Comcast-Cox J.V. buys MetaTV
Ending
a week of speculation,
TV Works, a joint venture of Comcast
Corp. and Cox
Communications, has inked a deal to acquire interactive
television application specialist MetaTV
Inc.

Financial terms were not disclosed, but Comcast and Cox led
a $21 million investment in MetaTV in September 2002.

TV Works will absorb about 80 MetaTV employees, and will continue
to run the division out of Mill Valley, Calif. There, akin to
an in-house iTV application developer, the unit will create
iTV products for Cox and GuideWorks, a joint venture of Comcast
and Gemstar-TV
Guide International.

Those apps will be designed to run on a range of set-top and
software platforms, including OCAP (OpenCable Application Platform)
and OnRamp to OCAP, a project for legacy digital set-tops being
championed by Cox.

The deal represents another piece of the interactive television
(iTV) technology puzzle for Cox and Comcast, both of which had
investments in MetaTV. In January, TV Works (a.k.a. Double C
Technologies) gained control of the middleware component of
that strategy when it put up $82 million to acquire most of
the assets of Liberate Technologies. SeaChange
International just picked up the balance of Liberate's
international assets for $23.5 million.

The Liberate and MetaTV agreements tighten Cox's commitment
to OnRamp and OCAP, and place the application and middleware
elements under one umbrella, noted Jeff Brown, executive director
of development and investment for Cox Communications.

Cox has been working with MetaTV for several years, and has
deployed a number of customer MetaTV interactive applications,
including some that enable customers to add services and pay
bills, in its Gulf Coast Florida systems. Comcast, meanwhile,
has used the MetaTV information application to pipe data to
Microsoft TV Foundation, a digital set-top software platform
the MSO has deployed in Washington State.

Cox and Comcast officials said the acquisition of MetaTV will
not preclude other iTV application developers from creating
products for the MSOs. It's designed instead to create a more
open environment, because the joint venture will also provide
developers with APIs based on the MetaTV application layer.

"We're looking forward to simplifying, not complicating, applications
that are to be deployed by the company," Brown said.

OCAP license fees revealed
Via
Licensing Corp. has released lower-than-expected licensing
terms for patents linked to the 1.0 versions of OpenCable Application
Platform (OCAP) and the Digital Video Broadcasting Multimedia
Home Platform (DVB-MHP).

Under those terms, OCAP fees will run $1.50 per consumer device
(a digital set-top or television, for example) for manufacturers,
and, for cable operators, 30 cents per subscriber per year,
or a one-time five-year license for $1.50.

DVB-MHP fees will run $2 per device, and 25 cents per household
per year, or $1.25 under the five-year option.

Those terms should put CE manufacturers at ease. Many feared
that the license could run upwards of $5 or $10 per device.
The terms might also remove a financial hurdle for operators
that might have been holding back OCAP or MHP trials and launches
until those fees were known.

"I think everyone was pleasantly pleased" about the licensing
terms, said Mike Malcy, vice president of marketing and business
development for Vidiom
Systems, a maker of OCAP stacks and developer tools.
"If it came out too high, it could have impeded the market."

Having those fees identified will enable operators and manufacturers
to "fine-tune their analysis on whether to deploy either of
the technologies," said Mark Allen, executive vice president
of technology licensing at OpenTV,
one of the pool's patent holders.

Although most CableLabs
specifications are created under a royalty-free pool, OCAP incorporates
the bulk of MHP, which uses a royalty-bearing model.

Via Licensing, a wholly-owned subsidiary of Dolby
Laboratories, is administering the OCAP and DVB-MHP
patent licensing programs and patent pools on behalf of the
patent holders.

Patent holders include
Time Warner Cable and Comcast
Corp., which run the OCAP Development LLC joint venture.
In addition to OpenTV, other identified patent holders include
Panasonic, Royal
Philips Electronics, Samsung
Electronics and Thomson.

Via Licensing did not say how the fees will be divvied up among
the pool members, but noted that allocations will be made on
a formula approved by the pool members.

The goal is to have a final patent license agreement available
by Q4 2005. But that's considered an "aggressive target," according
to Jason Johnson, Via Licensing's director of licensing and
business development. He anticipates the launch could happen
by early 2006.

"No one is legally committed, or even on a handshake committed,
until the definitive agreements are done," Allen said.

Forgent singles out cable, DBS in DVR patent suit
Forgent
Networks is throwing the book at a spate of service
providers, including several cable MSOs, alleging that they
have infringed on a patent for digital video recording (DVR)
technology.

Defendants named in the suit include Cable
One Inc., Charter
Communications,
Comcast Corp., Cox
Communications,
EchoStar Communications Corp., DirecTV
Group Inc. and Time
Warner Inc.

The patent (No. 6,285,746), scheduled to expire on May 21, 2011,
describes a computer-controlled video system that enables playback
during recording. Forgent said the patent originates from an
application filed in mid-1991.

Forgent decided to take the legal route after it was unable
to make any headway in securing licenses with the defendants,
company Senior Director of Investor Relations Michael Noonan
said. Forgent has yet to obtain any licenses linked to the '746
patent.

The lawsuit did not generate an immediate response from the
group named in the suit.

Those contacted declined to comment on the allegations.

The timing of Forgent's lawsuit is key as the DVR becomes a
central component of cable and DBS video strategies. Both camps
have also have had success in scaling up deployments in recent
months.

DVR pioneer TiVo
Inc. has not yet been named in the suit, but that may
not be for long.

"We have technology experts…looking at all potential claims
and all potential defendants," Noonan said, noting that the
suit against the operators merely represents "a first move."

Forgent, which was known as VTEL Corp. until 2001, said it has
generated more than $100 million in licensing revenue since
its inception three years ago. Among its holdings is a critical
JPEG patent (No. 4,698,672).

Willamette, Uvision switch up IPGs
Willamette
Broadband and parent company Uvision have made a big switch,
opting to launch the new i-Guide interactive program guide (IPG)
from Gemstar-TV
Guide.

In 2002, Willamette and Uvision of Oregon were among the
first operators to go with a new IPG from Microsoft
TV.

i-Guide, already in service on Motorola-based systems with operators
such as Comcast
Cable, features HDTV support and dual-tuner DVR applications.

Willamette has also switched out the Zap2It service in favor
of the TV Guide Channel.

Microsoft TV said the decision to part ways with Willamette
and Uvision was mutual, adding that Microsoft no longer offers
a separate standalone IPG product, but only bundles it with
the Microsoft TV Foundation Edition and Microsoft TV IPTV Edition
products.

"Willamette Broadband and Uvision have no immediate plans to
grow their services beyond the IPG, and as a result, we've mutually
decided to part ways," said Microsoft TV Director of Marketing
Ed Graczyk, in a prepared statement.



We are making changes and additions (including several international
deployments) to our Web-based
"living" deployment chart. If you have
a new deployment to report for the VOD Scorecard and the more
comprehensive deployment chart, please contact CED Editor Jeff Baumgartner.