xOD Capsule Newsletter - October 24, 2006

Tue, 10/24/2006 - 2:52am

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October 24 , 2006

Jeff Baumgartner, Editor in Chief, CED Quantity and quality go hand-in-hand
Whether you're in the camp that believes cable has a bandwidth crisis on its hands or that HFC still has plenty of capacity to serve the needs of the future, both sides can probably find common ground that video quality, particularly in this new age of HDTV, really counts.

And I'm not talking about those millions of fuzzy clips on YouTube. I am referring to what one views at home, on the couch, on those drool-on-yourself big screens.

AT&T, you might recall, has been questioned a lot lately about its strategy to offer HD services with advanced VDSL technology, rather than ponying up for FTTP in its legacy markets. But as Dave Burstein of DSL Prime points out, AT&T might have to compress the heck out of the signals (in a two stream HD environment) just to fit everything into the pipe. That, he writes, could degrade the signal to the point of becoming what he calls "fake HD" and run the "risk of a reputation for inferior quality" if customers are able to detect the difference.

Meanwhile, with hi-def DVD formats creeping on the scene, the quality issue will certainly come into play as cable operators widen their high-definition VOD libraries. In fact, Comcast already has.

But what good will this be if the HD picture does not look anything short of wonderful? At the same time, there's only so much capacity available to deliver these pristine signals.

Such a quandary.

However, one company that is hopes to make things better for standard- and high-def VOD on both ends of the spectrum - quantity and quality - is a startup called Imagine Communications.

We've covered these folks before, but at a basic level, the company is hitting the market with a variable bit rate (VBR) architecture that will help cable operators squeeze 50 percent more on-demand streams into a 256 QAM. In SD, that means 15 streams instead of 10. In HD, it can accommodate 3 streams instead of 2.

Oh, and the company claims it can offer this efficiency and maintain the video quality of the original constant bit rate (CBR) source (ie. the CableLabs specs for SD VOD clamps the bit rate at 3.75 Mbps). HD-VOD is presently also formatted in CBR, so there's no way to improve on the source, but Imagine says its system, which uniquely separates the encoding from the multiplexing, will ensure that the quality is equivalent to that of the source.

This system will also give operators a "pathway to end-to-end VBR," says Imagine President & CEO and former @Home and BigBand Networks exec Jamie Howard.

Once operators can do VBR end-to-end, the argument goes, they can really push out the eye candy, because the peaks of those pretty signals will not longer have to be chopped off as they are in the CBR world.

The big question, of course, is whether this will all work as intended. It's still too early to tell, at least from this vantage point, since Imagine's just starting to get some traction with cable operators (Imagine also plans to work with IPTV providers and "over-the-top" video services). Howard said one MSO has launched a lab trial, and field trials are expected by the first half of 2007.

—Jeff Baumgartner, Editor in Chief, CED magazine and xOD Capsule

AOL Video loads up on Paramount movies
AOL Video has expanded its slate of downloadable movies after scoring a deal with Paramount Pictures.

AOL Video will offer Paramount older library titles such as "Failure to Launch" and "Chinatown," as well as newer flicks such as "Nacho Libre" and "M:i:III," for prices ranging from $9.99 to $19.99 per movie.

AOL Video has similar movie deals in place with 20th Century Fox, Sony Pictures Home Entertainment, and Warner Bros. Home Entertainment Group. Overall, AOL said it now offers more than 300 titles from major movie studios, putting it in direct competition with other Internet-based services such as CinemaNow and studio-backed Movielink, not to mention cable operators.

However, the movie deals complement AOL Video's broader TV strategy. This week, the service also announced content partnerships with niche programmers BlueHighways TV, The Employment & Careers Channel, The Hip Hop Hall of Fame, MyPath*TV, and Plum.

Kudelski/OpenTV combo to battle NDS
Kudelski Group has inked a deal to acquire the voting control of OpenTV Corp., with the aim to create an integrated, one-stop shop for conditional access, middleware, TV applications and advanced advertising technologies that will better position the two against their big rival, NDS Group.

Under financial terms of the deal, Kudelski will acquire 6,533,951 Class A ordinary shares and 30,206,154 Class B ordinary shares of OpenTV from John Malone's Liberty Media Corp. The aggregate purchase price will be roughly $132.2 million, and will give Kudelski a 26.7 percent economic interest and a 74.7 percent voting interest of OpenTV's ordinary shares outstanding as of Sept. 30, 2006. The companies expect to close the deal by Q1 2007.

The combination will open up new opportunities for each company, but allow each company to continue to operate its own line of business, they said.

"This transaction is about aligned independence," said OpenTV Chairman & CEO Jim Chiddix, during a call last week with reporters and analysts.

In a research note, Alan Bezoza, the SVP of equity research at Oppenheimer & Co., said the firm was "encouraged by the change in ownership," but will maintain a "Neutral" rating on the company for the time being. Oppenheimer presently has a "Buy" rating on NDS.

"While some may point to OpenTV's loss of Liberty as a global partner as a negative, we feel that a combination with Kudelski is strategically beneficial to both companies as they compete with NDS' full product suite," Bezoza explained. "As competition heats up between NDS and the combined OpenTV/Kudelski, we feel that this transaction makes strategic sense."

As for what each company brings to the table, OpenTV's primary business is set-top middleware, representing about 80 percent of the company's revenue. OpenTV's middleware is in more than 73 million set-tops across the globe with 36 pay TV operators. It has also issued more than 400 patents, with another 700-plus still pending. OpenTV has also been growing a set-top applications business, but sees its advanced advertising operations as having the most significant long-term potential.

The Kudelski Group, meanwhile, provides content protection and digital rights management technologies. One of its primary divisions is Nagravision, a leading supplier of conditional access (CA) systems. The company said its CA solutions are active in more than 66 million smart cards and digital devices for a range of satellite, terrestrial, cable, IPTV and mobile TV customers. In addition to NDS, Kudelski's main CA competition comes from the likes of Irdeto, as well as the U.S. cable CA duopoly of Motorola Inc. and Scientific Atlanta.

OpenTV and Kudelski have also been technological partners in several instances. In the U.S., for example, EchoStar Communications uses Nagravision's CA system and set-top middleware and applications from OpenTV.

In addition to cross-selling products, OpenTV and Kudelski will now be able to offer a "best in class suite" for content protection, on-demand services, interactive apps and advertising, Chiddix said.

One key question with the deal is the future role of Chiddix, who has been key to OpenTV's U.S. cable strategy. During Chiddix's tenure at the company, Time Warner Cable announced in June that it would use OpenTV's middleware to ensure that the operator's new in-house digital navigator and associated apps run in systems already outfitted with Motorola digital pre-OCAP set-tops and headends.

Upon closing of the deal, Kudelski expects to appoint Alan Guggenheim, currently the CEO of NagraStar (the J.V. between Kudelski and EchoStar), to CEO of OpenTV. Chiddix, meanwhile, will assume the position of vice chairman of OpenTV. Chiddix's future role with OpenTV is in the "exploratory phase," with more detail on that to be shared in the coming weeks, Kudelski Group Chairman & CEO André Kudelski said during a conference call last Thursday morning.

"I'm very happy with what we've been able to accomplish over the last two-and-a-half years," Chiddix said. "There is much more for the company to do."

The rumor that won't die
We don't know if ARRIS is going to buy Concurrent Computer, and neither does anyone else outside those two companies, but we can report that a pair of prominent analysts think ARRIS ought to acquire the VOD server and software vendor, and, further, they say it probably will.

ARRIS is entering the digital video space with its D5 modulation device, but an entry isn't enough, say Anton Wahlman and Eric Kainer of ThinkEquity, who believe ARRIS needs to move into video-on-demand to remain competitive with rival CMTS vendors Motorola, which just bought Broadbus Technologies, Cisco Systems, which just purchased Arroyo Video Solutions, and QAM and encoder specialist Harmonic Inc., which just grabbed the VOD assets of Entone Technologies.

Wahlman and Kainer argue that if ARRIS is to get into VOD, Concurrent is not a perfect fit, but of ARRIS' two likeliest options - Concurrent and SeaChange - Concurrent is not only less risky, but also more in ARRIS' price range. Also, don't forget that Comcast Corp. has the right of first refusal should a suitor emerge for SeaChange's VOD assets.

They also note the geographical proximity of the two companies, and the fact that there are a number of people who have worked for both, which could make integration of two go smoother. That proximity could make consolidation go quickly.

Sylvania, Emerson parent signs CHILA accord
Funai Electric Co. Ltd. of Japan is the latest consumer electronics company to sign on the dotted line with CableLabs for CHILA, also known as the CableCARD Host Interface Licensing Agreement.

The license will give Funai, which makes and markets products under the Sylvania, Symphonic and Emerson brands, access to the secrets required to develop interactive, two-way digital cable products (televisions, in this case) that run the OpenCable Application Platform (OCAP), a middleware platform specified by CableLabs. Those products will also contain an interface for the multi-stream CableCARD, or M-Card, which is a removable security module supplied by operators that authorizes the TV or set-top for cable services.

Today, all deployed OpenCable hosts can support only unidirectional services, but coming two-way devices, when coupled with the M-Card, will be able to handle interactive cable offerings such as video-on-demand. TiVo Inc.'s new Series 3 DVR is a one-way host, but provides dual CableCARD slots to enable the watch-and-record function for cable channels broadcast in the digital domain.

In addition to Funai, the following companies have signed the two-way CHILA agreement: Samsung, Panasonic, LGE, Thomson, Toshiba, ADB Global, Scientific Atlanta/Cisco, Motorola, and Digeo Inc. Three chip developers have also signed the license: Broadcom Corp., ATI and ViXS.

Padma Lakshmi
Best-selling author
Padma Lakshmi hosts
this season of 'Top Chef.'

Cooking up some iTV
Bravo is serving up another interactive season for its "Top Chef" reality TV series.

Once again, Time Warner Cable will offer same-screen (rather than a synchronized combo of PC and TV) support for the show's iTV elements in tandem with Navic Networks.

The new season premiered Wed., Oct. 18. Last season, nearly 30 percent of viewers participate in the polling in TWC markets where the interactivity was made available.

This season, Sears is the exclusive sponsor of the iTV app and is posting its logo and offering "text prompts" during the show. During each show Navic will record and compile votes from polls and post results in real-time.

Sony delays 'LocationFree TV' device
Additional competition for "place-shifting" devices and services from Sling Media and Orb Networks is apparently on hold.

Sony's LocationFree TV box
Sony's LocationFree TV box.
A Sony site is offering it at the
pre-ordered price of $229.99.

AP reports that Sony Corp. needs to conduct some additional tests on its "LocationFree TV" box, and will need to postpone its formal rollout. In Japan, shipments will slip from Oct. 27 to Nov. 17, AP said, noting that no specific shipping date has been set for the U.S., "but it had been promised for sometime in October."

This follows the already-delayed PlayStation 3 gaming console, which will come equipped with the company's Blu-ray high-def DVD technology. It's expected to become available in November in the U.S. and Japan, and not until next March in Europe.

YouTube purges on request

YouTube has agreed to remove almost 30,000 videos from its servers after a consortium of Japanese media companies complained about copyright infringement, says this story from CNNMoney.

The source of the complaint, The Japan Society for Rights of Authors, Composers and Publishers, represents 23 media companies.


YouTube, about to be swallowed up by Google Inc., has been mending fences with copyright holders as of late, including deals with Warner Music Group Corp., CBS, and Sony BMG Music.

In addition to legitimizing its business, YouTube and other video sharing services might do well to avoid litigation, an option that is starting to grow some teeth.

Last week, Universal Music threw the book at and for alleged copyright infringements, claiming the sites had generated traffic by encouraging users to share music videos without permission.

CED’s Webcast Series
Live seminars and panel discussions moderated by the members of the CED editorial team are offered to you absolutely FREE, thanks to underwriting from some of broadband’s leading suppliers. Every event is archived for post-webcast reference. Checkout the latest event and register now. Click Here

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


CED September, 2006
October 2006
Issue Contents »



Company: UpdateLogic Inc.
Headquarters: Southborough, Mass.
CEO: Tripp Blair

Claim to fame: Leverages datacasting and cable-line delivery of software updates to digital televisions. Its approach is considered more elegant and less expensive than requiring TV manufactures to mail out software updates or rolling technicians to perform upgrades.

Recent news of note: Secured a non-exclusive deal with CableLabs that will enable digital cable devices, including OCAP-capable TV sets, to receive software updates via cable networks. Trials have already been conducted with Comcast Cable, Insight Communications, Time Warner Cable, and Cox Communications.



Interactive TV Show
Europe 2006

Oct. 30-31, 2006
Berlin, Germany
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TelcoTV 2006
Nov. 6-8, 2006
Dallas, Texas
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Parks Associates
Berlin, Germany
Nov. 14-16, 2006
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Fixed Mobile
Convergence Congress

Barcelona, Spain
Nov. 21-23, 2006
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SCTE SoCal Vendor Days
Dec. 6-7, 2006
Doubletree Hotel
Ontario, Calif.
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Understanding Mobile and Cellular Networks
Dallas, Texas
Jan. 23-24, 2007
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SCTE Conference on Emerging Technologies 2007
Jan. 23-25, 2007
Houston, Texas
More information: Click Here

China Broadband Triple Play/IPTV Forum 2007
April 18-19, 2007
Hong Kong
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China DSL Forum 2007
April 18-19, 2007
Hong Kong
More information: Click Here

China VoIP
Conference & Expo 2007

May 23-24, 2007
Hong Kong
More information: Click Here

June 18-21, 2007
Chicago, Ill.
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SCTE Cable-Tec Expo 2007
June 19-22, 2007
Orlando, Fla.
More information: Click Here

Wireless & Mobile
Expo & Conference

July 17-18, 2007
Toronto, Canada
More information: Click Here


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