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IN THIS ISSUE:
Broadband Home Summit 2000 - June 5-7
San Jose, CA
Heard on the Net
A View From the Valley -
Silicon Parkway Summit -
California in New Jersey?
pulver.com 2000 Calendar
Upcoming VON conferences
New and Improved
Changes To Our Website
The Broadband Home Summit 2000 ("BBH Summit 2000") will take place June 6-7 at the Doubletree Hotel in San Jose, CA. There are still a few slots left to register for this event that will feature senior executives responsible for driving this industry forward.
The conference will start with a reception for delegates and participants on the evening of June 5. This will be a great opportunity to network so we suggest that you plan to arrive on the evening of the 5th and take advantage of unique business and personal networking opportunities.
Visit the conference Web site ( http://TheBroadbandHome.com/Summit ) for an updated list of participating companies, schedule, registration and hotel reservations.
(Please email firstname.lastname@example.org to report a change in your position.)
With the many shows and conferences over the past month, there has been a steady stream of press releases. Here's a brief selection...
One of the hot areas for VCs has been investments in the OSS/BSS sector. Here are a couple of items from companies focused on easing broadband installation and technical support and increasing ease of use:
Sprint Broadband Direct - While would-be acquirer WorldCom tries to address US anti-trust concerns over the purchase of Sprint, Sprint has moved forward on the residential broadband front, announcing the launch of its first broadband wireless market in Phoenix, Arizona. Using fixed wireless technology, the service is available to over 85% of the homes and offices in the Phoenix metroplex. Those of us who can't get any form of broadband residential access envy our Phoenix friends who can choose cable, DSL or fixed wireless. (http://www.sprint.com)
Sega.com and 2 Wire partner on broadband - When the Ethernet port for Sega's Dreamcast console becomes available later this year, connecting with the 2Wire HomePortal will provide gamers the benefits of a distributed broadband connection, including allowing multiple users in a home to use their Dreamcasts and PCs on SegaNet simultaneously. (http://www.2wire.com) (http://www.sega.com)
Intel continues to support applications and content requiring "more MIPS on chips". They announced a $200 million investment in Intel Internet Media Services, which includes two communications centers connected to a dedicated communications network. The goal is to bypass Internet unpredictability for demanding Web content such as live concerts or video. MeTV.com, an Internet broadband video-on-demand movie service began posting content to Intel's broadcast operations server on May 1st and will launch its consumer service this summer. ( http://www.intel.com ) ( http://www.metv.com )
ShareWave gets new funding - ShareWave announced a new $17 million round of venture funding. The funding will allow their continued development of IEEE 802.11b (11Mbps) and 802.11a (up to 54 Mbps) with added QoS and multimedia support features. Their announced relationships include Cisco, NETGEAR and Panasonic. ( http://www.sharewave.com )
RespondTV received $21.5 million in funding for its infrastructure for real-time enhanced TV services. Marquis name investors include AT&T, Comcast, GE Capital and Showtime Networks. ( http://www.respondtv.com )
Telia providing access to more content - In an effort to bring more content to customers over their high-speed networks, Telia announced a partnership with Exent Technologies to deliver Games-on-Demand. This follows a previous Telia announcement with Microsoft to deliver Windows programs for home entertainment and productivity, which will also use Exent's technology. (http://www.telia.se) (http://www.exent.com)
California-based Echelon Corporation and the giant Italian electric utility, Enel SpA announced they will integrate Echelon's Lonworks system into Enel's digital meter project. Called "Contatore Elettronico", the projects' goal is to provide digital electricity meters and a complete home networking infrastructure to more than 27 million Italian households. Enel also owns a controlling interest in WIND, a telecom industry JV with Deutsche Telecom and France Telecom, signaling potential telecom access to the networked home. (http://www.echelon.com) (http://www.enel.it)
Compaq has announced a USB-based home networking solution starting at $99. Using Proxim's HomeRF-based product, it runs at 1.6 mbps. Compaq will also support IEEE 802.11b wireless products, which run at up to 11 mbps. (http://www.compaq.com) (http://www.proxim.com) (http://www.homerf.org)
Pace Micro and NDS Group collaborate on personal video recorders (PVRs) - Pace, a leading digital set-top box provider, showed a hard drive-enabled digital set top box at Cable 2K. It uses NDS' extended TV concept, XTV, which embeds meta data (data about data) in the video stream and local storage to provide "advanced features such as highlights, interactivity and intelligent recording". NDS is owned by News Corporation and its approach is designed to "protect an operators business model". The press release points out that "The flexibility of XTV allows operators and advertisers to reduce or restrict the possibility of viewers skipping ads." Sure sounds like the stage is being set for a debate on operator-provided versus user-purchased set-tops and who controls what the user can or cannot block. Stand by to see how this plays out in the OpenCable context (see the Canal+ article below). ( http://www.pacemicro.com ) ( http://www.nds.com ) ( http://www.opencable.com )
And from the popular press, page 1 of the May 26, 2000 NY Times had an article on home networking and high speed access. "For a growing number of home buyers, high speed Internet connections are becoming as important as a two-car garage, fireplace or new kitchen". If increasing awareness is an important part of making The Broadband Home a reality, count this as one small step in that direction! (www.nytimes.com)
While we were in San Jose recently to finalize arrangements for the June BBH Summit and arrange the October BBH 2000 conference, we visited a few more companies that have their sights set on the Broadband Home.
Sonicbox: Internet radio made easy
Many of the Silicon Valley companies we've visited bear scant resemblance to the "garage shop" start-ups of the early days, but Sonicbox is a throwback. It's located in a retread industrial space in Mountain View, building desks as new employees come on board. We visited there with Jonathan Sass, John Alfano and Niko Bolas, President.
Since one of our hot buttons is ease-of-use, we were strongly attracted to their notion of making listening to high quality Internet radio as easy as tuning your radio dial. They're trying to change the model of Internet radio which (like Internet telephony) typically has the user sitting at a PC, using the keyboard and mouse and listening on the PC speakers.
The Sonicbox model has listeners tuning into a broad range of Internet audio, and enjoying it on their stereos (or wireless headphones) anywhere in the home. A broadband connection is recommended for two reasons - reasonable bandwidth provides audio quality, and a continuous Internet connection makes this model work best.
Sonicbox is offered in two flavors:
The Sonicbox tuners work with both Internet-only and broadcast radio stations, selected to provide consistent audio quality when delivered over IP. The tuner can reach 800 channels (25 stations in each of 32 genres). In addition to selecting stations, the tuners incorporate interactivity via a "tell me more" button for song info and music purchase and smile/frown buttons for voting, contests and feedback.
In its next phase, Sonicbox wants to enable stand-alone Internet radio - no PC required. To do this they have created an OEM proprietary tuning technology that they are expecting to embed in consumer electronics devices. Discussions are underway with the obvious target companies to bring this to reality.
Sonicbox doesn't host any content, but points to the stream created by the radio station, thus extending existing radio into the Internet space. Since radio contains many local ads, Sonicbox can work with the radio station to replace the station's local ads with ads targeted to specific user demographics. Targeting is based on the listeners' usage patterns or an opt-in questionnaire. Their business model is attractive to radio stations, which get the lion's share of the incremental revenue.
Unraveling their business model is complex, since it involves Sonicbox, the radio station, ad buyers, merchants, partners like the streaming media companies who enable the radio stations, and OEMs to embed the technology in stand-alone audio products. Their model has analogies with Dolby (embedding their technology), cable TV (creating the "channel lineup," except the streams don't actually go through their system), portals for advertising and e-commerce (seeking eardrums not eyeballs), etc.
Sonicbox's focus is on helping users find and tune in what's on now. Their target price point for the Remote Tuner (including all the above-mentioned pieces) is $75 through their Web site. We believe they're going to need some big consumer electronics partners in short order to be successful at this aggressive price point.
When we asked about competitors, Kurbango was mentioned. Like Sonicbox, it provides an "Internet radio" console with some interactive capabilities. It differs in being a self-contained unit (doesn't require a PC); in using a dial-up connection rather than always-on broadband; in having a catalogue of archival concerts, speeches, radio programs and MP3 computer files (not just real-time radio); and a $300 price point. (http://www.sonicbox.com) (http://www.kurbango.com)
CANAL+ US TECHNOLOGIES (CPT)
We visited the US technology arm of the large French pay-TV company and met with Arthur Orduna, VP of marketing; we also met briefly with Jean-Marc Racine, CEO. Our European readers need no introduction to Canal+ Group since it is a major player in the European market.
CANAL+ TECHNOLOGIES is the company's engineering arm, formed to develop hardware and software for the group. It was spun out as a wholly owned subsidiary last December. The Group's other two major operations are CANALSATELLITE, one of the largest European "direct to home" service providers (analogous to DirectTV in the US) and CANALIMAGE, the film and TV programming arm.
CPT is focused on making the TV a fully interactive broadband device (not unlike Microsofts's approach with WebTV). But it views itself as different because of its unique heritage. Arthur said "We understand TV and we understand broadcast. We're the only ones coming from the broadcast and TV world - that's where we were born. All the others are coming from the PC."
CPT believes that the TV is destined to become the primary interactive home platform. This led to some discussion since we view the digital set-top box as just one element of a broadband home, with PCs and TVs coexisting for many years to come.
Our differing views may come from different experiences with technology penetration. The North American view comes from nearly ubiquitous availability of cable for delivery of pay TV; the high home penetration of PCs and even multiple PCs; and the aggressive roll-outs of high-speed internet access (cable modems and DSL). The French experience has satellite in place of cable for pay TV; Minitel terminals playing part of the PC role in many homes; and ubiquitous availability of ISDN. (We plan to explore the question of how geographical differences impact Broadband Home evolution at the Broadband Home 2000 Fall conference -- and what this means for vendor product lines, marketing and evolution paths in different regions.)
CPT's approach to digital television is based on the open DVB (Digital Video Broadcasting) standards developed and adopted in Europe. These standards enable a high degree of commonality between many types of digital video, whether delivered by satellite, cable, or terrestrial broadcast (as with OnDigital in the UK). The result is that many vendors compete to offer compatible interoperable devices. This has substantially reduced the price for digital set-top boxes in Europe and has increased the market size accordingly.
CPT's US operations are closely linked to the "OpenCable" effort of the US cable industry. Beginning this summer, the first US customers will be able to buy OpenCable digital cable set-top boxes enabling them to receive the full range of cable services.
CPT's strong push for DVB provides a healthy competitive alternative to the entrenched proprietary digital standards used throughout North America. Most North American cable operators are basing their OpenCable approaches on the proprietary technologies offered by General Instrument (now part of Motorola) and Scientific Atlanta, but some are adopting the European open standards. MediaOne has launched a DVB-based digital rollout in Jacksonville, Florida, using CPT's MediaGuard and MediaHighway. (DiviCom and Philips are the other main technology providers for Jacksonville.)
With substantial resources committed to the North American market, CPT will have a prominent role as digital cable set-top boxes move into the retail marketplace and programmers start to develop content for them.
France Telecom: California and France have more in common than just wine
No wonder real estate is so expensive in Silicon Valley - almost every information technology-related company feels the need to have an office there. France Telecom established its US operation conveniently near San Francisco airport in Brisbane, CA to serve as "a conduit between the US and Europe". We met there with Steve Bjorgan, R&D Director of the US operation, who told us that their focus is "Internet, Multimedia and Wireless and the convergence among those technologies."
FT is one of the world's leading telecom carriers. While its roots are as the French monopoly "PTT" (and is still majority owned by the French government), it is moving toward complete independence from the government. In its drive toward "internationalization" it is now the sole owner of Global One (originally formed together with Deutche Telekom and Sprint), and holds major stakes in other carriers such as Telecom Argentina, the UK's NTL and the Netherland's Casema.
FT is pursuing broadband home networking (particularly wireless) and the use of advanced digital set-top boxes as a platform for interactive broadband services. They are interested in multiple forms of broadband delivery, based on the facilities available in particular regions. Since PC penetration in France is about half that in the US, but wireless is higher, WAP enabled phones and the move to UMTS are of great interest for interactivity. DSL and cable are also very much a part of their broadband focus.
FT is undertaking a project with Sprint R&D (just down the road from FT in Burlingame) to test MPEG4-based interactive television programming delivered over fiber. This will combine FT's R&D work on MPEG4 with the Sprint "test-bed" of 200 homes in Pacifica CA. This work appears to be quite timely, given the parade of recent announcements supporting MPEG4 (e.g., Microsoft, Philips, Liberate, TI, etc.).
Steve brought to our attention the establishment in January of the new Stanford Networking Research Center (SNRC) in partnership with IT corporations and Silicon Valley industries. He thought the Broadband Home's focus across the value chain was a good fit with the SNRC initiatives in convergent network technologies. In addition to the R&D organization, FT has a venture capital group at this location, involved with strategic investments in companies.
We accepted an invitation to attend the "First Annual Silicon Parkway Summit" hosted by soft-switch startup Tachion in West Long Branch, NJ. The event focused on the key role played by New Jersey companies in telecommunications. The message was that "Silicon Parkway" will be an increasingly important player in the New Economy. (The expression was coined by The New York Times last year as a reference to the Garden State Parkway, which runs the full length of the state from North to South - residents ask "What interchange?" to identify where another lives.)
The Summit included speakers from established companies such as AT&T, Lucent and Telcordia; large new players like IDT; and startups like Redwood, Tachion and Tellium. It also had a financial panel with speakers from Goldman Sachs, Lehman Brothers, and PriceWaterhouseCoopers.
New Jersey is central in the history of telecommunications development in the U.S. Samuel Morse developed and demonstrated the first telegraph in 1837-38 at the Vail estate in Morristown (about 2 miles from our office). Alexander Graham Bell and Thomas Edison established their laboratories here a century ago. The long-time headquarters of Bell Labs, the state is now the headquarters and major R&D center for many of AT&T's progeny, including the "new" AT&T, Lucent (including Bell Labs), and Telcordia (formerly Bellcore and before that part of Bell Labs).
We listened to speeches by folks from the NJ state government and three roundtable discussions moderated by Seth Schiesel (chief telecomm reporter for the Times). While we were impressed by New Jersey's long-term leadership in telecommunications technology, we came away feeling that it has some ways to go for its future to be compared favorably with Northern California.
We were struck by the way people were dressed. Perhaps we've spent too much time in Silicon Valley, but we were surprised that almost every man in the room had a jacket on, and most were wearing ties; the only difference from fifteen years ago was the brighter color of the shirts and ties. The average age of the audience seemed to be in the mid-forties, almost all engineers and financial types. Perhaps these are the kinds of folks who attend these events, but we didn't sense the entrepreneurial drive that's so palpable wherever you go in Silicon Valley.
Several of the speakers compared the "low turnover" of New Jersey companies with the high turnover in the Silicon Valley and Boston. Perhaps that's an advantage, but it's more likely an indication of the slower pace and paucity of hungry startups.
The most refreshing voice was that of Chuck House of Intel, who's moved to New Jersey as EVP of Communications Research and heads the Dialogic unit Intel purchased a year or so ago. He listened to all the talks extolling the "quality" of New Jersey products, and finally burst out that Californians believed that "good enough quality" was perfectly good enough for product release. In his impromptu talk, he implied that the emphasis on "carrier class quality" can easily lead companies to be slow to market.
It seemed to us that there were two major differences between Silicon Valley and Silicon Parkway. One is cultural - as Chuck House implied, New Jersey will have to work hard to overcome its long-standing tradition of having all the time in the world to complete the next release of a product while making sure its "quality" is up to snuff. California (and Washington) companies are focused on time to market - they'll release a product and fix it with the next release.
The second issue is the direction of technical investment. Most New Jersey companies (with the notable exception of IDT) seem pretty tied to the old forms of telecommunications - circuit-switched, TDM, centralized - rather than the packet-switched, IP-based, highly distributed world that's central to most SV companies. New Jersey seems to have a lot of chips placed on a future based on the old architectures and protocols dressed up in fancy new clothing, rather than on one which casts the old models aside in place of a "pure" IP model based on open standards. That really means betting on the continued dominance of the existing telecommunications carriers (who have a big stake in extending the old model so they can avoid huge "stranded investments") rather than on the emerging carriers (who have nothing to lose). Companies in California (and lots of other places) seem to be spreading their bets more evenly.
We will be organizing and moderating the Broadband track at several upcoming VON conferences. (See the complete calendar at http://pulver.com/conference )
VON Europe 2000 - June 19-22, Stockholm, Sweden (http://pulver.com/europe2000) We have organized three sessions at this conference. Two are specifically on IP voice over broadband; the third is "Visions of the Broadband Home" and includes speakers from Telia and chello broadband. We're also leading a Broadband Home "birds of a feather" session on the evening of June 20. Stockholm is a major center for Internet development and broadband deployment so we're looking forward to meeting many of our European readers.
Fall 2000 VON - Sept 11-14, Atlanta, GA (http://pulver.com/von)
Broadband Home Fall 2000 -Oct 3-5, San Francisco, CA
If you're interested in speaking at future conferences, please visit http://www.pulver.com/speak , enter your proposal and be sure to check the box for the appropriate conference at the bottom.
Since our last issue, we've made several changes to our website, theBroadbandHome.com. If you haven't visited in a while, now would be a good time to check it out. ( http://www.theBroadbandHome.com )
We expanded the BBH Report section to include back issues in HTML format. New subscribers can catch up on older issues they missed. It's also an opportunity to read our May 4 email edition in case your copy got bitten by the "love bug" virus the same day. ( http://www.theBroadbandHome.com/report/3.html )
We updated and expanded the Resources section. ( www/theBroadbandHome.com/4.html )
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