News summary for 10/26/07

Fri, 10/26/2007 - 8:58am
CED staff

AT&T gears up for new U-verse features
By Mike Robuck

AT&T is working on various prototype applications for its U-verse platform in an effort to distance itself from its cable and satellite competitors.

AT&T’s roll out of its IPTV video services has been slower than it originally anticipated, but with more than 126,000 current subscribers, the company feels as though it’s on the right track. AT&T started the year with 3,000 video subscribers, then grew that base to 16,000 and 60,000, respectively, in the first and second quarters.

“We’re past the point of last year where the question was, ‘Will IPTV scale?’,” said Peter Hill, VP of converged services at AT&T Labs Research, during the first keynote address Wednesday morning at TelcoTV.

“You can’t get to that number (126,000 subscribers) without significant flow through and automation. We do have a competitive service and we can do it to scale.”

AT&T has whole home DVRs on its radar for deployment for next year, which will allow set-top boxes in other rooms of a home to access video content that has been downloaded to a DVR set-top box. Like its cable and satellite competitors, Hill said AT&T will also add to its current stable of 30 HD channels next year.

“The encoding rates for H.264 have come down faster than we projected,” Hill said. “We’ll be able to do more channels in the same amount of bandwidth.”

Other new features for U-verse subscribers slated for next year include photo sharing via Microsoft middleware and a VoIP service.

While cable executives have said there is no compelling reason to move to an IP infrastructure to deliver video services, Hill contends that IPTV is “very different from cable and satellite” because the nature of IP allows for easier integration among services while also allowing it to take advantage of Internet partners such as Amazon.

Hill spent part of his presentation talking about prototype features that could, at some point, be added to the U-verse stable. One of those features is “Cinema Center” that allows movies to be purchased from Amazon with one click. The movie portal content would be dynamic and would allow subscribers to view trailers prior to making their purchases.

“We don’t have to create this stuff in IP because it reaches out to Web devices and incorporates them into IPTV,” Hill said.

Hill also demonstrated a feature that used an i-Phone to remotely configure channel favorites on a home TV. The application would give four different i-Phone users the ability to program their favorite shows on their own TVs in a household. The favorites feature allows subscribers to use their TVs as personalized devices, Hill said.

A Web cam feature would let viewers in different locations view a live performance of a sporting event or dance concert based on IP technology that uses switched digital video.

While features such as TV Caller ID aren’t new to cable - Time Warner Cable has deployed an in-house TV Caller ID service while Intergra5 has enabled the service with several cable operators – Hill said it’s the ease of IP in enabling these features that separate the IPTV versions.

During the question-and-answer segment, Hill said AT&T would continue to rely on the Motorola set-top box with the Sigma Designs processor as its main workhorse, although it’s also working with Scientific Atlanta on a box with the same signature.

Hill expected new set-top boxes with second-generation chipsets from Sigma and Broadcom to be available in 2009.

EarthLink struggles, United Online flies in Q3
By Traci Patterson

EarthLink Inc. had a net loss of $79.4 million in Q3 and will cut back its sales and marketing in its ongoing restructuring, while competitor United Online reported a net income of $20.5 million for the quarter.

In the quarter, EarthLink’s consumer value-added services revenue totaled $31.9 million, an increase of 6.8 percent year-on-year. But the increase was offset by a decline in subscribers and consumer access services revenue. The company ended the quarter with 4.2 million total subscribers, down from 5.3 million a year ago.

EarthLink brought in $298.8 million in revenue but reported a $35.9 million loss from operations. The company said its net loss of $79.4 million included a $41.9 million Helio equity loss and a $54.8 million facility exit and restructuring charge. The company said SK Telecom had preliminarily agreed to an additional investment in Helio - up to $270 million.
“The third quarter was transformational for EarthLink as the company began implementing its restructuring efforts,” said Rolla P. Huff, EarthLink's president and CEO. “A key component of our restructuring was our decision to reduce sales and marketing spending as we reduce activity costs aimed at attracting potentially unprofitable new subscribers.”

United Online, on the other hand, brought in $51.4 million in content and media revenues, an increase of 37 percent year-on-year, and 255,000 net content and media pay accounts. Communications revenue was $75.4 million, making United Online’s total revenue for the quarter $126.8 million.

“Our financial results demonstrate the flexibility of our business model that allows us to profitably and efficiently manage a mature communications business while continuing to achieve strong growth in our content and media segment,” said Mark Goldston, United Online’s chairman, president and CEO.

Vonage settles with Verizon in patent dispute
By Brian Santo
Vonage Holdings has finally come to an accommodation with Verizon, which had sued Vonage for patent infringement – Vonage has agreed to pay up. The question that remains is: how much?

Vonage was found to be violating several patents, but has asked for a rehearing on two of them; that decision is pending. If Vonage gets a favorable decision, it will owe Verizon $80 million. If the decision goes Verizon’s way, Vonage will owe Verizon $120 million.

Vonage came up on the losing side in another patent dispute, this one with Sprint Nextel. In October, Vonage settled, agreeing to pay Sprint Nextel.

EchoStar to deliver IPTV for third-party providers
By Brian Santo

EchoStar Communications plans to launch a service that will provide up to 300 channels via satellite to telcos, private and rural cable operators, municipalities, and providers serving master-planned communities.

These other providers are responsible only for obtaining distribution rights – no small consideration.

EchoStar is calling the IPTV service ViP-TV. The company is describing it as a turnkey solution for wholesale multichannel content transport and distribution, offering scalable and aggregated MPEG-4 IP encapsulated radio and television programming.

ViP-TV’s suite of channels includes ViP-Premier, which offers more than 100 channels of television programming; ViP-HD, which has 40 channels of HD programming; ViP-Movies, a menu of 40 movie services; ViP-Latino, with 30 Spanish-language programming services, and ViP-International, with more than 30 programming channels in 10 different languages.

In a separate statement after announcing the service, the company said ViP-TV includes what it’s calling a “push and pull” video-on-demand (VOD) service.

The VOD content for ViP-TV is based on EchoStar’s existing VOD service, which is currently offered to DISH Network satellite TV subscribers.

Concurrent’s finances continue to improve
By Brian Santo

Concurrent reported Q1 2008 revenue of $16.3 million, which is $1.5 million more than the company brought in a year ago, but down 23 percent from the $21.1 million registered in the quarter immediately prior.

On a sequential basis, orders for both on-demand and real-time products were both down. Concurrent said the variation was largely due to the timing of its largest orders from its customers.

Over the course of the last year, the company’s profit trend was from red to black. A year ago, Concurrent lost $4.8 million; the quarter before last, the loss had been shaved to $712,000. In the recently-completed Q1 ’08, Concurrent logged a profit of $1.7 million. Helping the company swing to a profit were payments of $1.9 million and $1.4 million, from the Vicor settlement and the patent settlement with C-Cor, respectively.

Concurrent President and CEO Gary Trimm said, “We believe our business fundamentals are sound. We have effectively managed costs and expenses, generating improved margins and a lower breakeven point. We also believe our product portfolio and service offerings are ahead of our competition and we are winning the majority of competitive projects.”

He added, “In VOD, we expect a robust market in 2008 as operators address the need for time shifted video, more HD content, and advanced advertising, all driving stream counts and reporting requirements to higher levels. In real-time, we believe we have an improved financial model and the project pipeline is beginning to grow. While our quarter to quarter revenues will likely remain highly variable, we expect the last half of fiscal 2008 to be strong, resulting in improved overall results.”


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