IN THIS ISSUE:
South Korea: Living Laboratory for Broadband
CES: The Good Housekeeping Seal, Magnets & Watches
Broadband Wireless Access
Your Voice -
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Mitch Auster has become Director of Cable Product Marketing at Internet Photonics. The company also appointed Peter Dale as VP of its cable business unit. Peter was previously with Narad Networks. ( www.internetphotonics.com )
Margaret A. "Maggie" Bellville has been named EVP and COO of Charter Communicatiaons. ( www.charter.com )
Steve Bucholz and Mike Kropf have joined ICTV as vice presidents of sales, and will be responsible for securing field deployments of HeadendWare with cable system operators in the United States and Canada. ( www.ictv.com )
Kevin Mardesich has joined Bob Gold & Associates. Kevin was previously at Fox Cable Networks. ( www.bobgoldpr.com )
Corey Walker has joined Broadband Services, Inc., as Director of MapVantage GIS Operations. He was previously with AM Broadband Services, Inc. ( www.broadbandsvc.com )
Wray West has been named VP, Systems Engineering, at Cedar Point Communications. He was the Founder of Indus River Networks. ( www.cedarpointcom.com )
Hanaro, South Korea's second largest broadband service provider, is acquiring 72 percent of Thrunet Co. The total cost of the deal is about $106 million. ( www.hanaro.com/english ) ( english.thrunet.com/ )
Home Director has become a public company, due to transactions completing Netword's acquisition of the company. Home Director's existing Chairman and CEO, Don Witmer, and its President and COO, Robert Wise, have the same positions at the public company. ( www.homedirector.com )
Motorola, Inc. announced that it intends to make a tender offer for the outstanding publicly held shares of its subsidiary, Next Level Communications, Inc. Motorola currently owns 74% of the stock. Acquiring the balance will cost approximately $30 million. ( www.motorola.com ) ( www.nextlevel.com )
USA Broadband has purchased the interests and operations of Las Americas Broadband Inc. in Cable California SA de CV, a Mexican cable operator in the Northern Baja California region of Mexico.
ArrayComm's Australian subsidiary CKW Wireless has received AUD 14 million ($7.9 million) from Mitsubishi and e-millennium Asia for the pre-commercial rollout in Australia. ( www.arraycomm.com )
Ellacoya Networks has closed a new $14 million round of venture capital funding from Atlas Venture and Flagship Ventures as well as previous investors. ( www.ellacoya.com )
Intel Communications Fund is investing an undisclosed portion of the $150 million targeted for Wi-Fi technology companies on STSN and TeleSym. ( www.intel.com )
NetMotion Wireless has raised another $6 million to close its Series B round with $10.8 million. The company's NetMotion Mobility Software permits secure connection to wireless networks and seamless movement across coverage gaps from wireless devices such as PDAs and laptops. ( www.netmotionwireless.com )
Occam Networks Inc. has sold approximately $11 million of Series A Preferred Stock at a price per share of $7.50 in a private placement. ( www.occamnetworks.com )
SiGe Semiconductor, a supplier of analog integrated circuits for wireless access, cable telephony and high-speed optical systems, has raised $42.8 million in Series B funding. ( www.sige.com )
Unique Broadband Systems has acquired 20 per cent of Look Communications which provides digital TV and high-speed Internet using wireless technologies, for $2.35 million. ( www.uniquesys.com ) ( www.look.ca )
WildBlue Communications announced an investment of $156 million by Liberty Satellite & Technology, Inc., Intelsat, NRTC, Kleiner Perkins Caufield & Byers, and David Drucker. They expect the investment to close in the second quarter of 2003. WildBlue will offer two-way wireless broadband services via satellite beginning in 2004. ( www.wildblue.com )
ArrayComm, Inc. and LG Electronics signed an agreement for LGE to license ArrayComm's i-BURST Personal Broadband System. LG, a Korean electronics leader, will manufacture and distribute base stations and wireless modems, with commercial product availability expected in the second half of this year. ( www.arraycomm.com ) ( www.lgeus.com )
InnoMedia, a supplier of Internet and broadband access IP telephony solutions, introduced InfoTalk 7, a standalone Internet appliance that works over the Internet without a personal computer; it allows users to place Internet calls to any regular or cell phone using InnoSphere™, InnoMedia's Global IP Telecommunications network. In separate news, InnoMedia and Cirpack, a vendor of next-generation public telephony switches for telecom operators, announced successful completion of interoperability testing between InnoMedia's VoIP CPEs and Cirpack's Class-5 Local Exchange Switch; this architecture enables operators to provide legacy TDM voice services and next-generation IP telephony from the same voice switching platform. ( www.innomedia.com ) ( www.cirpack.com )
Korea Thrunet Co., Ltd. will launch "On-TV", a service allowing their broadband Internet subscribers to view a variety of high-density multimedia content from the Internet on their TV screens rather than PC monitors. The service will start in February 2003. Either wired or wireless devices will connect between the PC and TV. ( www.thrunet.com )
Listen.com announced it is working with leading consumer electronics companies, such as Motorola and Thomson's RCA brand, to bring its RHAPSODY music subscription service to the stereo. The company recently joined the UPnP Forum and intends to make RHAPSODY compatible with all new UPnP-compliant devices coming to market in 2003. The music will be carried from the PC to the stereo over such home networking technologies as Wi-Fi, ethernet and powerline networking. ( www.listen.com ) ( www.motorola.com ) ( www.rca.com ) ( www.upnp.org )
Mediabolic, Inc. and Texas Instruments announced a complete set of silicon and software solutions for building a variety of connected entertainment products for the consumer electronics market, including DVD players, audio/video receivers, televisions, media servers, and other networked devices. Separately, Mediabolic announced that it would incorporate support for UPnP technologies and pursue UPnP compliance testing for its Mediabolic ONE platform - a middleware solution optimized for embedded digital entertainment devices. ( www.mediabolic.com ) ( www.ti.com )
Motorola, Inc., Xtratyme Technologies, Inc. and NCSC (National Cooperative Services Corporation) have announced a cooperative relationship to work together to provide the resources needed to enable communities across the world to build broadband wireless networks where broadband access is currently unavailable. ( www.motorola.com/canopy ) ( www.xtratyme.com ) ( www.ncscmn.org )
Motorola, Avaya and Proxim announced a collaboration to create and deploy converged cellular, wireless LAN and Internet Protocol telephony products including a Wi-Fi/cellular dual-system phone from Motorola, session initiation protocol (SIP)-enabled IP telephony software from Avaya and voice-enabled wireless LAN infrastructure from Proxim. ( www.motorola.com ) ( www.avaya.com ) ( www.proxim.com )
NTL Incorporated announced that its financial recapitalization plan has been successfully completed and it has emerged from Chapter 11 proceedings in the US. ( www.ntl.com )
The Rural Broadband Coalition(RBC) is a newly formed US association of government organizations, telecommunication companies/utilities, for-profit utilities, rural electric cooperatives, municipalities, public utility districts, technology companies and associations, ISPs, and others, dedicated to supporting the deployment of broadband Internet access to rural America. ( www.ruralbroadbandcoalition.net )
Wanadoo, a subsidiary of France Telecom, announced that it had reached 1 million broadband customers in France by the end of 2002 and almost 1.4 million total ADSL and cable subscribers across Europe. Broadband subscribers now represent 16 per cent of the Wanadoo customer base, up from 9 per cent at end December 2001. ( www.wanadoo.com )
Wavexpress, a unit of Wave Systems, has launched a broadband video news service in association with the Associated Press. It allows AP video clips to be available to Wavexpress' TVTonic subscribers. Wavexpress enables secure delivery of games, movies and video to the PC. A basic subscription costs $1.95 a month for TVTonic's five basic channels. ( www.wave.com ) ( www.tvtonic.com )
XtremeSpectrum, a provider of ultra-wideband chipsets, demonstrated their technology at the Consumer Electronics Show, by wirelessly streaming multiple HDTV streams to two separate large screen displays. ( www.xtremespectrum.com )
--Standards, Certifications and Interoperability
CableLabs made several announcements after completion of certification wave 24 ( www.cablelabs.com ):
tComLabs and the EuroDOCSIS Certification Board (ECB) finished certification waves 9 and 9B, announcing that more cable modems and CMTSs were given certification and qualification respectively for EuroDOCSIS 1.0 and 1.1. ( www.tcomlabs.com )
The ITU-T (International Telecommunications Union – Telecommunication Sector) has announced the approval of a standard, now known as Recommendation J.122, defining the second-generation data over cable system, also known as DOCSIS 2.0. ( www.itu.int/home/ )
US: Major consumer electronics and US cable companies reached agreement on digital TV transition issues in a MOU agreed to by 14 consumer electronics companies, representing the majority of HDTV sales in the United States, and seven major cable operators, representing more than 75 percent of all cable subscribers. The joint recommendations include a set of technical standards for cable systems and “cable-ready” DTV products; a proposed regulatory framework for support of digital TV receivers, digital recorders with secure interfaces and other devices on cable systems; a draft security technology license to ensure that high-value content can be transferred securely in the home network by consumers; and “encoding rules” to resolve pending copyright-based concerns about home recording and viewing. The parties also agreed to begin working together immediately on standards for future interactive digital cable TV products. ( www.ce.org ) ( www.ncta.com )
Matsushita Electric Industrial Co. Ltd. (Panasonic) and Sony Corporation announced their agreement to work in partnership on the development of an enhanced Linux platform for digital home electronic devices. They say the operating system will be used in products such as televisions, DVDs and microwave ovens. Will we need Ctrl-Alt-Delete to defrost a bagel? ( www.panasonic.co.jp/global ) ( www.sony.net ) ( www.linuxdevices.com )
After trying to help Dave's brother hook up some simple video equipment, a friend pointed us to this article by Don Norman about "The Perils of Home Theater": ( www.jnd.org/dn.mss/ProblemsOfHomeTheater.html )
Nielsen/NetRatings says US residential broadband users grew 59% in 2002, while dial-up dropped 10% in December. The fastest growing broadband audience was the over-50 age group. See ( www.nielsen-netratings.com/pr/pr_030115.pdf )
At last month's Broadband Plus, Broadcom demonstrated an in-home video distribution network using the 802.11g protocol to distribute digital video running at 2.4 GHz over coaxial cable, while simultaneously running analog video over the same line. Broadcom says this would pave the way for a unified wired and wireless home networking solution standard, dramatically simplifying the networking challenge presented by multiple standards within the home. ( www.broadcom.com )
Note from the Editors: The following is the third in a series of guest articles by experts from across the broadband ecosystem. Nancy Goguen is responsible for Broadband Strategic Marketing at Texas Instruments. She is a frequent industry speaker, and serves on several advisory boards. Previously, she was Vice President, Marketing, Telogy Networks. Before joining Telogy Networks (acquired by TI in 1999), Nancy held several positions at Lucent Technologies including VP, GSM Offer and Business Management, Swindon, England.
Sandy is especially delighted to have Nancy as a contributor, since they share many things in common, including a degree in math and many years at AT&T.
South Korea has been a broadband success story, reaching 67% household broadband penetration in 2002 (more than 10 million broadband connections), outpacing other countries and providing a living laboratory for assessing the factors that lead to a successful broadband ecosystem.
While all the factors at play in South Korea aren’t present in other countries deploying broadband ecosystems, the critical mass of consumers using broadband provides the basis for a large number of experiments with broadband that can provide insights into what to plan for as broadband populations in other countries grow, and ideas on how to spur that growth.
I visited South Korea in November to meet with a number of companies in different parts of the ecosystem who are driving this explosive growth and to experience Korean broadband in person.
Setting the Stage
South Korea has a high population density, with almost half of the population living in the greater Seoul area. Apartment complexes house 47 percent of South Koreans. 93 percent of residences are within 4 kilometers of central offices.
Consumers have a choice of broadband service providers and switch them like Americans switch long distance service providers. One CPE device can work with multiple providers.
With the improvements in productivity, DSL service can be installed within 24 hours of an order, typically in a 15 minute session. A service provider field engineer can install up to 20 customers a day.
Broadband service is priced the same or less than narrowband, with prices ranging from $19 US per month (2 Mbps) to $33 US per month (8 Mbps). South Korea is tied with Japan and Hong Kong for lowest broadband price as a percent of per capita GDP in the world, but South Koreans get the highest speed (3 Mbps) at this price. In 2002, special promotions that lowered the introductory prices were introduced to continue the explosive growth, leading to the 10 million subscriber count.
Three major players provide broadband service: KT, the incumbent telecommunications supplier and the dominant broadband provider which uses ADSL and Ethernet; Hanaro Telecom, the second largest facilities-based broadband provider which uses ADSL and cable modem; and Thrunet, a broadband startup which uses cable modem. These three have over 90 percent of the market. Competition is fierce.
Broadband access is a key driver of KT’s growth, with an estimated 12 percent of KT’s revenue attributed to the Megapass broadband service. KT is profitable in broadband this year.
The Government Role
The government vision is that broadband will become a universal service like telephone service. It invested more than $1.2 billion US to build out a high-speed backbone and is providing more than $1 billion US in soft loans to operators from 1999 to 2005. These soft loans initially supported metropolitan build out and are now supporting deployment in less densely populated areas and rural areas.
It introduced the “Ten Million People Internet Education” program in June 2000. 4.1 million people were provided with basic internet skills in 2000. One program of note targeted housewives not in employment, recognizing that these women have a strong influence on household purchase decisions and are also very interested in the education of their children. The program provided internet education courses at an affordable price to an audience who had previously felt left behind.
The government promoted internet use in education, with 100 percent of primary and secondary schools connected to broadband. It also promoted e-government programs to ensure public services utilization of broadband.
The Evolution of Broadband Services
In the beginning, most people did not have high-speed internet access at home. Between 1998 and 2002, over 25,000 PC Bangs (PC Rooms) emerged, providing the public with early access to high capacity PCs and the benefits of broadband, with many open 24 hours a day. Similar to internet cafes, PC Bangs have been deemed fun and fashionable by young adults, the place to play and enjoy broadband, often with friends. The PC Bangs provide a meeting place, a community for customers with similar interests.
With the growth of PC Bangs, thousands of new users gained access to broadband, providing both a stimulus to residential broadband growth and a market for content developers. Applications like file sharing, email, music and video downloads, chatting and on-line games were made available, with the most popular being on-line games.
On-line games are very popular with South Koreans, especially massively multi-player on-line games. ‘Lineage’ is currently the most popular such game, a creation of NCsoft, the world’s largest independent on-line gaming company. Players gather at PC Bangs to develop strategies and to play other clans (teams). Players at a PC Bang pay an hourly fee ($0.79 US). Or, they can play from home with a monthly subscription fee ($23 US). As the capabilities of the games increase, and the quality of the graphics improves, players want to upgrade the capacity and speed of their broadband connection to ensure the best level of play.
Tied in to on-line games are other internet activities including fan sites for the latest news, virtual products for use in the games for sale on on-line auction sites, contests for game players, and TV shows linked to the games. This is one example of the power of broadband in a community context: providing consumers with shared interests a variety of services that help them do things that matter to them, increasing the value of broadband to them.
Multi-media chatting is another popular application. Consumers can enter animated video or digital camera images into the chat using an image gallery to select from. Nominal fees are charged for the use of the multi-media images.
Streaming services like time-shifted TV that allows viewing of old episodes of soap operas is another popular service. A service registration fee can be charged, with a fee of $0.25 - $0.40 US for each episode; this small charge leads to impulse purchases. Streaming content can be viewed on either the PC or the TV. Through the broadband connection, many of the time-shifted programs are viewed on the PC. If an individual has missed an episode, watching on a PC is a good way to catch up. Group/family viewing is watched on the TV.
Providing episodes from a back catalog allows content providers who own the intellectual property rights to generate a new revenue stream while providing increased satisfaction to their customers. Each of these applications – on-line games and associated services, multi-media chatting, and time-shifted TV – increases the ARPU (revenue per consumer) through the premium charges associated with them.
Real-time stock trading is also a popular service, with 70 percent of transactions now being processed this way. While broadband is not a requirement for stock trading, the user experience can be enhanced with speedier data and with improved graphics. Continuing this direction, on-line purchase of financial services like banking, lending, and insurance is expected to triple in the next 5 years.
Payments for Services
Tied in with these services are micropayment systems, including the purchase of cybermoney by consumers. Prepayment in bulk provides convenience when making a purchase; the amount is debited against the prepay. Cybermoney can be purchased using a variety of payment methods including credit card, mobile phone bill charge, and auto payment using the landline phone bill. The mobile phone bill is the most popular payment method. Having all these alternatives makes it easy for consumers to make purchases.
These value-added services all have charges associated with them and use subscription, pay-per-use, or a combination of the two as the payment model. Many of the providers of these services have seen sustained profitability achieved in short time frames. When services provide clear benefits, and enhance the consumer life style, consumers will pay for them. And, with a critical mass of broadband subscribers, content providers can profitably provide services.
How Broadband Changes Consumer Behavior
Broadband users in South Korea spent an average of 19 hours 20 minutes on-line versus 10 hours and 19 minutes in the U.S. in the same period. South Korea is ranked first in the ratio of streaming media content, with 74 percent of users doing music/video downloads on streaming compared with 29 percent in the U.S. 54 percent of South Korean broadband consumers use networked games, compared with 6 percent in the U.S. Per capita TV viewing in South Korea dropped 8.6 percent in 2001.
South Korea’s information ministry has set forth an Internet initiative to allow users to gain access to the Internet “anywhere, anytime” through mobile handsets, PDAs, and notebook PCs through wireless and fixed-line Internet infrastructure. WLAN service will also be available in public places.
South Korea’s broadband service providers are putting in place the infrastructure for the next wave of services. 2003 will see the introduction of VDSL service (10 Mbps) in South Korea by both KT and Hanaro. This is in line with a government target of 20 Mbps by 2006 and lays the foundation for sophisticated VOD services and the next generation of home networking services. New apartment buildings are being built with Ethernet networking, providing for high capacity home networking solutions.
KT provides “hot spot” WLAN services under the NESPOT brand and offers a combined ADSL/WLAN service called Megapass NESPOT. Wireless access is gaining momentum as PDAs, notebook PCs, and home devices support 802.11.
KT also recently launched the HomeMedia service, which allows consumers to watch broadband content on the TV. Subscribers can watch full frame feature movies using a VOD service. A wireless transceiver in the converter box makes it possible for consumers to get images and sound from desktops.
Hanaro launched Hanafos.com, its content-based web portal including digital movies, in July of 2002. Hanaro announced it is looking to partner to provide a home networking business.
While some factors in South Korea are unique, several keys to success seem to apply globally:
The Consumer Electronics Show is the world's largest consumer technology tradeshow. This year's show had 116,687 attendees from 128 countries and 2,283 exhibitors. And everywhere we turned, we saw the influences of broadband, of home networking and of wireless.
These topics were also at the heart of many of the featured talks from industry notables like Craig Barrett of Intel, Tom Engibous of TI and Kunitake Ando of Sony. Michael Powell, Chairman of the US FCC emphasized broadband's importance in a session with CEA President Gary Shapiro, saying: "I view broadband as a national priority that holds amazing promise to stimulate the economy..."
Every year we marvel at the enormous size and scope of this gigantic event. From the many companies and exhibits we visited, we've chosen to cover three primary areas: networked audio and video entertainment; what Bill Gates thinks is in store for consumers; and the chips upon which all the products depend. The three sections are:
With the proliferation of devices for storing and playing media (think TVs, stereos, PVRs, MP3 players, digital cameras, camcorders, DVD players, PCs) how can you ever find and play what you want, when and where you want it? For example, you've recorded a movie on your living room TiVo, but get sleepy and want to see the end in your bedroom. Or you've "ripped" CDs to your computer's hard drive and want to play them in the dining room. Now imagine this problem magnified as you have multiple connected entertainment and Internet-connected devices that want to exchange content and digitally control each other. Many companies exhibiting at CES have started addressing this type of problem
There are several ways of going at it. Companies can develop middleware to address the general problem and license it to several companies for a variety of devices. Alternatively, individual companies can create their own specific solutions to enable various devices to communicate. At CES we saw several examples of each.
Mediabolic: Managing Media thru Middleware
Mediabolic has taken the first approach and aims to solve a number of generic problems for networked entertainment companies. They have created an embedded software platform, which they license to consumer electronics and PC manufacturers and can be used on top of the operating systems of many devices. The functions provided include media management and players for music, photos, videos, PVRs, DVD-Rs and PCs; communications between devices; data management; creation of consistent user interfaces; and applications that will run across various devices. Their solution has to be powerful, have a small footprint and be customizable for each company.
Mediabolic's M1 software has been licensed by HP and Pioneer. In addition, they have agreements with Denon and Marantz. Jeremy Toeman, VP of Product Management, told us that they also have contracts with four additional companies whose names have not been disclosed. Mediabolic runs on both Windows and Linux, decodes media formats that include Windows Media, Real Media, Quicktime and MPEG-1, MPEG-2 and MPEG-4. It has also implemented UPnP although it is not yet certified.
Mediabolic and TI have also combined their software and semiconductor solutions, producing a complete set of silicon and software solutions for building connected entertainment products for the consumer electronics market, including DVD players, audio/video receivers, televisions, media servers, and other networked devices.
Pioneer: Where Home Entertainment is Going
To understand what real implementations based on Mediabolic look like, we visited Pioneer on the show floor. Their DigitaLibrary products will allow users to distribute music, video, photos and Internet content throughout the home, through wired connections or wirelessly. The DigitaLibrary, to be available in May, consists of a main server unit, the DL-1000, and a "branch" or receiver unit, the DL-100, which goes where content will be received. The DL-1000 has an 80-gigabyte hard drive, an Ethernet jack for wired or wireless connection, and a CD drive for direct transfer of content to the server. The four primary functions of the DigitaLibrary are the Music Jukebox, Photo Albums, Video Clips and Internet Content. Pioneer says the DigitaLibrary can distribute three DVD-quality streams and 21 audio streams simultaneously.
At suggested retail prices of $1000 and $600 for the central and receiver units, we don't expect huge consumer volumes this year. We think Pioneer's entry into the networked entertainment market provides a sign of where home entertainment is headed.
PRISMIQ: CES Award Winner
PRISMIQ (see BBHR 11/24/02 http://www.broadbandhomecentral.com/report/backissues/Report0211_5.html ) has developed a $250 networked set-top box which supports your personal media (such as MP3s and digital photos), chat, and web access, leveraging your existing PC and home networking. It brings multiple media together, but is intended for use at the one spot in the house where the box is installed - probably the family entertainment center. Prismiq won Tech TV's Best of Show in the home automation and networking category, and was one of CNET's "10 Best of CES". ( www.prismiq.com )
Ucentric: Courting the Network Operators
Ucentric demonstrated MPEG2 video delivery to multiple TVs in combination with Ucentric's Multi-TV PVR software, using 802.11g wireless. Their FlexMedia LAN software enables the networking of multiple clients, hard drives and tuners throughout the home. Ucentric is focused on building a reference design as the foundation for a continuum of products ranging from standalone PVRs to Multi-TV PVRs, Media Centers and Media Gateway, offering a complete set of video-enabled solutions for the home. Ucentric has previously announced relationships with Philips and Pace Micro Technology and has network operators as their primary target, rather than end users or CE manufacturers. ( www.ucentric.com )
TiVo: Moving PVRs Forward
TiVo announced their Home Media Option which will be available as a software download for any TiVo Series2 in Spring 2003. It will allow subscribers to stream music and photos stored on the PC to the family TV. In addition, video can be transferred from a TiVo in the bedroom to another TiVo in the living room.
Moving video from one place to another raises many concerns about copyright protection. TiVo has addressed these concerns several ways. First, TiVo's current retail systems record only from analog TV inputs; a digital channel from a cable settop box is transfered to TiVo over an analog connection. Second, the Home Media Option includes a conditional access system: users will be free to share their recordings between TiVo Series2 devices in the home, but cannot send content outside the home. Taken together, these should satisfy the copyright holders, who are much more concerned about digital recording than analog. TiVo hopes that the conditional access approach will alleviate their concerns about the coming generation of recorders designed for digital television.
We had a very helpful follow-on discussion with Ted Malone, Director, Product & Service Marketing at TiVo to understand their approach to sharing media. We asked about TiVo's current proprietary approach to sharing media between devices and rooms in comparison to the middleware approach of a company like Mediabolic. Ted understood our concern about how communications interoperability will occur between multiple vendors and types of devices. He mentioned that TiVo is based on an underlying services protocol called TvBus. If the need for interoperability becomes clear, TiVo may decide to open source the software. Or it might contribute it to an industry consortium focused on interoperability. He pointed us to a description of TiVo's architecture in a presentation by CTO Jim Barton: http://bmrc.berkeley.edu/bibs/instance?prog=1&group=21&inst=627
( www.tivo.com )
While we are still very early in the life cycle of networked entertainment products, what we saw at CES leads us to two conclusions:
Bill Gates' opening talk at CES generally sets the tone for many of the products that Microsoft and others will work toward delivering over the following years. In this year's talk about "smart living in the digital decade", Gates focused on the transition to a more digital world and on devices, connectivity and services for consumers. Many of the devices he talked about were not PCs or smart displays, but included things like watches, exercise bikes, sewing machines and magnets. Although this all sounds a bit "off the wall", we recall how a decade ago "information at your fingertips" sounded far out too -- and yet we all have it today.
Although no big fanfare surrounded it, we thought that the announcement of MSN8's being the first piece of software to receive the "Good Housekeeping Seal of Approval" was an interesting symbol of where Gates wants to go. His target is clearly "the common person". Most devices are fair game -- in the case of the Bernina sewing machine, Win CE.NET for embedded devices is intended to enable a "global sewing circle" in which patterns and stitches can be shared and traded.
Focus on SPOT
Gates started by reminding us how Microsoft had delivered on his talk from last year, including concepts like Freestyle (now Media Center PC) and Mira (Smart Displays). He then introduced the idea of "projecting" information around and beyond the home. The idea is that nuggets of desired information are provided on consumer devices (not PCs). They show the user "collapsible information", which extracts the essence and provides what's relevant to the owner. A technology Microsoft calls SPOT, short for Smart Personal Object Technology, gives devices access to information. The intelligence, connectivity and applications that deliver the information are taking place behind the scenes.
These devices include a watch that tells more than time, and a refrigerator magnet which shows the weather, traffic and sports scores. Microsoft wants these watches to be fashion statments, not nerd toys, and has made the first deals with "in" companies like Fossil. The watches, to be available in 3Q03, will have a small display and the ability to receive short data messages which can identify where the user has traveled, the local time and weather forecast. The watches are based on technology from National Semiconductor which has combined low cost and small size with more capability than had been in the original IBM PC.
To keep things simple, you configure what will be displayed on your devices through a Website (or configuration can be done at the store where you buy the device). The devices get their information through the data broadcasting ability of FM radio stations, which Microsoft has leased to create a delivery network. Note that Microsoft is present in the watch (where SPOT technology will be licensed); the connectivity; and the service.
A potential sticking point of this vision is that the watch will require a subscription to a data service, which some sources said might cost from $5 to $12 a month (although it might be bundled in the price of higher-end watches). People are used to paying for Internet or telephone usage, but not for information on their watches. What information is compelling enough to want, need and pay for? The service pricing and how it gets paid seem to us to be a key issue in the success of this vision.
Gates also briefly showed a prototype of Media2Go, a portable media player (PMP) with a hard drive and color screen for listening to music or watching videos and looking at photos at a relatives house or in a plane or car. The units will be made by such companies as Samsung, iRiver, Sanyo and ViewSonic and should be available for the 2003 hoiday season. They can store copies of broadcast and cable television programs recorded by Microsoft's Windows XP Media Center Edition as well as home movies and video downloaded from the Internet.
Media2Go is based on the next version of the Windows CE.NET operating system. Microsoft is working with Intel Corp., whose early work led to jointly delivering the first "Media2Go" hardware reference design based on Intel XScale technology.
It's natural to focus on the "toys" at CES -- the products which are the result of all the new technologies being developed. But underneath these products are the critical chips that make possible the small form factors, low power consumption, reliable data communication and consumer-priced products.
Many key chip makers come to CES, and we spent much of our time visiting some of them to look under the covers and judge what's coming next.
After Bill Gates' speech, we visited with Megan Kidd, Product Manager in Microsoft's Embedded & Appliance Platforms Group, to see and talk about Smart Displays and SPOT. Megan showed us the demonstrations in a house Microsoft built in the convention center parking lot. We talked about how she uses Smart Displays at home, and we're looking forward to having one to test in our home soon.
The next day, we visited National Semiconductor's suite to look under the covers. National was a key player on Smart Displays and the primary technology company behind SPOT, so we were delighted to discuss both with the people working on these products.
National has been working for many years on portable wireless touchscreen technologies under the trademarked name "WebPAD". They brought all this experience to bear while working with Microsoft as a partner in the Smart Display initiative.
Marion Clary Sr. Marketing Manager, Consumer Access Business Unit, worked on the project and tested a Smart Display at her home. She described how she used one while working with her children in the evening, and told us about the National chips used in the design.
National has created a reference design based on its Geode processor, supporting chips and firmware. They showed us many Smart Displays in a wide variety of form factors based on their design.
National worked with Microsoft to develop the chips underlying SPOT. Joe Montalbo VP, Custom Solutions Division, displayed a chart showing the seven National chips in the SPOT prototype watch Gates was wearing.
National's collaboration with Microsoft has given it a lead in providing chips for Smart Displays and SPOT devices. But we think Microsoft wants to avoid another "Wintel" and that other companies will compete with National on performance, size, power and price.
We've been watching Transmeta for several years. Their Crusoe chips consume much less power than competitive processors. Since they therefore generate less heat, most don't require fans. They're fully compatible with Intel chips and run with all versions of Microsoft Windows. Many vendors are building light-weight portable devices around Crusoe.
At CES, we met at Transmeta's suite with Jon Grodem, Manager Program Marketing. We looked at several devices that intriqued us:
We've long believed in the potential for portable devices, both in the home and on the road. We came away from the Transmeta suite convinced that the competition has just begun to build faster, smaller, lighter, and quieter hand-held devices.
Intersil is the largest vendor of chips based on the IEEE 802.11b standard, claiming a 60% market share. It has been a leader in establishing the 802.11 standards, and also in the Wi-Fi Alliance responsible for marketing "Wi-Fi"-branded products based on 802.11. We've written before about Intersil and their work on reducing costs and developing higher-speed chips.
At CES, we met with Chris Henningsen, VP of Marketing. At the beginning of our discussion, Chris said that Intersil believes that analysts have underestimated the growth potential of wireless technology. Current estimates include chips in access points and network adapters, and built into notebook computers and PDAs. But Intersil thinks they've missed the even larger potential built-in to desktop PCs and other portable devices such as cell phones and DVD players.
We were especially interested in Intersil's views on the evolution to higher-speed 802.11a and 802.11g standards. Readers will remember that 11a is an approved standard running up to 54 Mbps at 5 GHz. 11g is a standard in process, also operating up to 54 Mbps but in the same 2.4 Ghz band as the current 11b. These higher-speed chips are available now and starting to appear in consumer devices.
Everybody agrees that the higher-speed devices will displace 802.11b, but disagree as the whether the market will be dominated by 11a, 11g or some combination of one or both with 11b. Some have speculated that 11a will dominate in the enterprise since it provides more usable channels, while 11g will win in the home since it provides greater range.
In discussions with other vendors, we had been told that the cost difference between 11g and 11b chips would be small enough so that vendors would quickly discontinue 11b products in favor of 11g. Chris told us a different story. He said that the largest cost difference between the chips comes from implementing the OFDM modulation scheme responsible for the high speeds in 11a and 11g. The cost of supporting multiple radios to handle both 2.4 and 5 GHz is comparatively lower.
The near-term BOM for Intersil's mass-market 11b chipset is less than $20. For an 11g/b set, the BOM is less than $30. For an 11a/b/g set, the BOM is less than $35 - about the same as an 11a-only set. There's about a 2.5 to 3X factor from the BOM cost at the chip level to the retail price of devices based on these chips, so 11g will add $25-30 to the cost of devices such as APs and NICs and 11a will add another $13-15.
Intersil believes that stand-alone 802.11a is dead. Enterprises will want to support all three standards and will buy "tri-mode" access points. With 11b devices already in many homes, notebook PC users in enterprises won't want a different NIC for the office and the home, so will want NICs capable of at least .11a and .11b. If there's little or no incremental cost to add .11g (since the chip already includes OFDM modulation for .11a and a 2.4 GHz radio for .11b) they'll buy "tri-mode" NICs.
We found this argument pretty persuasive. 11g will augment 11b in the home, and the chip pricing may well favor a "tri-mode" approach. Whether the consumer market moves to a "dual-mode" 11g/b or a "tri-mode" a/g/b will depend more on how ODMs and OEMs price products than on the cost of the underlying chips.
The future outlook for wireless LAN (WLAN) chips for consumer electronics devices is that they will continue to be cost reduced, through what the industry calls "Up integration". Because much of the functionality in today's chips is software, especially in the MAC layer, the trend is to remove this from the chips and embed it in the application processor. The WLAN chip then provides only the PHY function. Intersil says this can reduce the BOM by 40% and will enable lots of new applications.
( www.intersil.com )
Just as we were convinced that 11a had no place in the home, we heard a countervailing argument from ViXS. We've previously reported on their XCode chip which provides real-time "video QoS" for broadcast video over home networks.
At CES, we met with Sally Daub, ViXS President and CEO. She showed us their demo of the XCode carrying multiple HD video streams over 802.11a wireless. The RF environment was far from ideal, since the CES show floor was filled with lots of potential interference. As the XCode dynamically adjusted the bit rate for the video streams, we didn't see any lost frames or any notable change in the quality of the image. The video images didn't seem to be the kind (like action sports) that would show much effect, so we felt this demo showed only that the technology was working. We'd like to see future demos that stress the real-time compression a lot more.
The most interesting part of our discussion concerned what ViXS calls their "Matrix" 802.11a chip. We had previously reported that ViXS was developing wireless networking based on 802.11a and frankly found it hard to understand why a start-up company would be simultaneously investing in innovative video QoS technology and what seemed to be a highly-competitive wireless networking technology.
Sally explained why ViXS felt it necessary to develop its own implementation of 802.11a. Standard 11a implementations have the speed to carry high-quality video, but would have a problem networking two simultaneous video streams if one were going to a nearby receiver and the other to a distant one. The distant receiver would "hog" the channel by using all of its capacity at a low speed. Neither receiver would get sufficient bandwidth for good-quality video.
ViXS solves this in its Matrix chip by operating simultaneously over two 802.11a channels. That way, one channel could be used for nearby receivers at a higher speed, and the other for more distant receivers at a lower speed. Since the channels are independent, the receivers wouldn't interfere with each other and both would get the best-quality video possible at that distance from the video access point. Matrix also operates at the highest power allowed by the FCC in the 5 GHz band, and aims at the highest receiver sensitivity.
Unlike most 11a participants, ViXS is taking an asymmetric approach, putting added complexity and cost in the access point chip to get the best possible performance for video applications. Matrix is designed to work with all standard 11a chips in client devices, which will ride the cost curve down with volume.
Together, XCode and Matrix provide the basis for what ViXS calls a "residential video area network". A "video master" device like a main set-top box or video gateway would use the Matrix chip along with an XCode chip to provide multiple HD and SD video streams. All client devices would be based on industry-standard chips. We're looking forward to seeing consumer electronics companies take the next step and go forward with the ViXs approach.
( www.vixs.com )
At Cogency's suite, we met with Ron Glibbery President and CEO. Pete Wilson VP Business Development showed us some of the latest devices built with Cogency's HomePlug powerline networking chips. Cogency and ViXS demonstrated full-motion, rate-adaptive Video over Homeplug. We liked the digital audio player with built-in HomePlug - similar to the setup we have in our home with AudioTron (see the article in this report).
We were particularly interested in seeing HomePlug used with Microsoft's XBox Live service. This worked very nicely as an easy way to connect a game machine in a teen's bedroom to a broadband modem elsewhere in the house.
We had thought of Phonex Broadband as exclusively a consumer device maker until we met with Brad Warnock, Director of Marketing, at CES. While we devoted a few minutes to discussing their latest HomePlug products, we spent most of our time learning more about their newly-announced ReadyWire chip for "powerline home communications".
Unlike HomePlug, which is designed for comparatively high-speed computer networking and broadband modem sharing, ReadyWire is optimised for telephone, audio and control applications over powerline. It is based on the TDMA protocol, which is optimised for time-critical communications.
With a BOM under $15, ReadyWire is targeted to enabling low-cost consumer devices over powerline. Examples would include multi-line phones (it can support up to 7 simultaneous full-duplex voice lines); streaming audio to powered speakers (up to 15 simultaneous channels); distribution of V92 dialup modems to remote rooms; and low-speed data networking. Brad said Phonex was in active discussions with many consumer electronics manufacturers.
Chips like this could give "plug and play" a new meaning.
( www.phonex.com )
We took time out from the CES show floor to visit the NextGen Demonstation Home -- a newly-constructed house especially built in the Stardust Hotel parking lot for visitors during CES and the International Builder's Show. At the house we spoke with Paul Barnett, president and co-founder of iShow, which originated the project. The goal for the 3,000-square-foot home was to build in the connectivity for broadband communications and entertainment, and also to showcase new technologies to save builders time and labor. We are delighted to see more people focusing on how technology can be translated into practical consumer applications. ( nextgenhome.ishow.com )
Best Buy and Pulte Homes just announced an agreement to provide Best Buy's Networked Home Solutions in four Pulte Homes communities in the Minneapolis, Minnesota area. We believe that including home networking in model and show homes is an important step toward consumer acceptance of the new technology. Best Buy created Networked Home Solutions because they understood that many new homebuyers are interested in home networking, but lack the knowledge or resources to incorporate the technology into their home. They offer two types of packages: A "Lifestyle Series" which targets specific entertainment enthusiasts (available packages include Music Lover, Movie Buff, Computer Whiz and Ultimate Entertainment Enthusiast) and the "Foundation Series" packages that allow consumers flexibility to create a solution specific to their needs. ( www.bestbuy.com ) ( www.pulte.com )
Broadband wireless access is becoming a viable way to compete against (or complement) DSL and cable broadband. We attended the WCA conference in San Jose to get a better understanding of the key issues and a sense for how real an impact this technology will have.
"Overnight Successes" Take Years
"New technologies" which appear to take off "overnight" have usually struggled for years before coming of age. Everyone's favorite example is the Internet, which "suddenly" blossomed in the late 1990's. Its seeds actually go back to the Arpanet in 1969. But it took the creation of the personal computer, Tim Berners-Lee's "World-Wide Web" project and the development of Mosaic for Windows before the pieces fell into place.
It looks like wireless broadband data is coming of age. Wi-Fi is now a recognized force in the home and office. Our focus in this article goes outside buldings and beyond Wi-Fi (a term now wildly misused to encompass all kinds of wireless broadband movement). We're seeing signs that broadband wireless access to the home is on its way to becoming a viable way to compete against (or complement) DSL and cable infrastructures. Technologies to send broadband data from a central point to the home, thru the air, reliably and cost-effectively, seem to be emerging.
Sprint started offering wireless broadband service several years ago, but the technology required line of sight between a tower and the home, and a professional installer to mount and aim an outdoor antenna. Broadband wireless is offered by many small providers, called WISPs (Wireless ISPs), mostly companies whose names you would not recognize.
Several emerging technologies overcome the line of sight requirement and can be installed by the end user. The remaining impediments appear to be commercializng these technologies, reducing the price of the equipment and finding spectrum for it.
Here are some recent announcements that caught our attention:
The US government seems to be getting more interested in broadband wireless. Senators Allen and Boxer recently introduced legislation, dubbed the Jumpstart Broadband Act, to promote a wireless approach to broadband deployment. It calls for the FCC to allocate not less than 255 megahertz of contiguous spectrum in the 5 gigahertz band for unlicensed use by wireless broadband devices.
The WCA Conference -- A Closer Look
When Kyle Ackerman, CEO of Xtratyme, pointed out that the Wireless Communications Association's conference was taking place in San Jose just after CES, it seemed like a great opportunity to take a closer look at the wireless broadband landscape. We were already in Las Vegas, so it was only an airplane hop away.
Andrew Kreig, WCA President, graciously welcomed our press coverage of the event. We were surprised and pleased to note attendees from around the globe and were told that attendance at the conference had grown. The exhibit area was a busy and active scene. ( www.wcai.com )
First, a Few Terms
Since we have had little prior coverage of wireless broadband access, we'll start by defining a few of the most fundamental terms. The first pair is "LOS" and "NLOS". LOS means "line-of-sight" and indicates that the path between the source and receiver of the broadband signal is free of obstacles. NLOS means "not-LOS" - some use "N" to mean "non" and other to mean "near". In either case it indicates that the technology has some ability to penetrate walls and trees. The ideal would be for a broadband receiver to work as well indoors as a mobile phone.
The second pair - "licensed" and "license-exempt" - relates to the frequencies in which the RF transmission occurs. These are critical distinctions since they relate to what kind of terrain the transmissions can be handled over, whether time money must be spent to obtain government licenses, and how congested the frequencies might be. (For one source of definitions see http://www.odessaoffice.com/wireless/definitions.htm ).
Our Bottom Line
A large number of publications, Web sites and organizations are devoted specifically to understanding and tracking the technologies and companies involved in broadband wireless. As with other elements of our coverage, our goal in attending WCA was to understand the relationship of broadband wireless to other elements of the residential broadband ecosystem and to gauge its impact on the development of compelling consumer applications. We came away with a better understanding of the key issues and questions and a sense for the directions things are heading.
Here are a few of the issues we had in mind when coming to the conference and a first assessment of some of the answers.
Broadband wireless is becoming a viable alternative to delivering residential broadband
For broadband wireless to be a widespread solution, we believe it must meet the following criteria: not require line of sight access, be customer-installable, be reliable in various weather and terrain, and be competitively priced. A new generation of equipment is just coming to market which seems to meet most of these criteria; upcoming full-scale deployments will test this.
Remaining issues include whether successful players can operate in the license-exempt spectrum and how quickly vendors can reduce costs to be competitive with widely-deployed solutions like cable modems.
Broadband wireless has advantages over wireline service
Wireline broadband services -- such as cable modem and DSL -- require the user to be at a fixed location; Wi-Fi could extend the range to within 100 feet or so from the home. Broadband wireless can be used both inside and outside the home -- in locations like a cafe or a moving car -- as long as the location is within the wireless provider's coverage range. Such technologies could potentially obviate the need for hotspots (since all spots in a covered area are "hot"). If pricing and performance were roughly comparable, consumers might well prefer broadband wireless over wireline, just as they increasingly choose mobile phones over fixed line.
Broadband wireless isn't only for small companies and rural areas
Clearwire has already started deploying it to cover the core of the Jacksonville metropolitan area. If current trials by Sprint and Verizon prove successful, large, well-known companies are likely to deploy these technologies in major suburban areas. One of the strong interests in broadband wireless access on the part of these companies is cost-effectively increasing their residential broadband coverage beyond the distance limitations of DSL.
Several companies are contending to provide advanced broadband wireless technology
Some of those currently in trial or deployment include IP Wireless, Navini, Arraycom, NextNet Wireless, Alvarion and BeamReach.
Potential for hotspots
There are many business models for hotspots and many companies entering the business. While we think hotspots play a useful role, we think they'll prove most effective in the consumer market as a feature of an existing service. Our personal judgement is that hotspots will prove difficult to justify as a stand-alone business.
Advanced Radio Cells -- A distinctive approach to reducing costs
The high cost of equipment is a major challenge for wireless providers. Wireline providers leverage the power of standards and volumes -- cable modems have fallen to about $50 wholesale. It's hard for wireless providers to compete using low-volume proprietary technologies.
At WCA, Advanced Radio Cells Inc. (ARCi) announced a novel approach: a wireless technology based on cable's DOCSIS protocols. Their solution set combines a Wireless Modem Termination System (WMTS) and transceiver antenna at the base station, and a transceiver antenna and cable modem at the customer site. They demonstrated a system based on modified Motorola DOCSIS technology - a BSR1000 CMTS and a firmware-modified cable modem. James Wong, ARCi VP Marketing, said the technology provides broadband connectivity at 20 Mbps, with full-duplex, low latency communications over the 5 GHz license-free band. The technology is LOS, requiring the installation of an outdoor antenna. We'll be interested to see the results of field tests now under way -- and which service providers pick up on this solution.
( www.arcells.com )
Broadband Wireless World 2003
We're continuing to learn and assess the rationale for broadband wireless - with the potential both to compete and to complement broadband wireline. We'll be attending and speaking at Broadband Wireless World 2003 -- April 9-10 in San Jose, California. The event is targeted at those who want to learn more about the growth in all forms of broadband wireless. We will be speaking in the track on "applications, entertainment and services".
The show focuses on: Fixed Broadband Wireless Access Technology & Business Models; Advanced Fixed Wireless Solutions for Cellular 3G Networks; Unlicensed Wireless Access Networks; 2nd Generation, Non Line-of-Sight Solutions; Wireless Hot Spot Networks.
Free trade show passes are available if you register early at http://www.shorecliffcommunications.com/bwwf03/default.asp
Problem Solving: Audio Networking
In earlier issues, we've reported on the AudioTron Digital Music Player ( see http://www.broadbandhomecentral.com/report/backissues/Report0204.html#link5) and HomePlug powerline networking (http://www.BBHcentral.com/bbhl/homeplug.html). Now we've combined them to solve a problem in our home.
We had been using the AudioTron in our bedroom, but that limited the places we could listen to our CD tracks. We wanted to move the AudioTron to the audio cabinet in our dining room - it's connected with speaker wiring to all the loudspeakers in the house. But we couldn't connect the AudioTron to our network from the dining room - we don't have a CAT5 outlet there.
It hit us that this was a great use for HomePlug, and we still had a few Ethernet bridge adapters from our earlier tests. So we connected a Phonex NeverWire 14 to an electrical outlet near our main Ethernet switch, and hooked up an ST&T M51 to the AudioTron in the audio cabinet.
We now have more than 1700 audio tracks saved on our PC hard drives. We are streaming music from our PCs over Ethernet and HomePlug to the AudioTron and playing them on all the speakers in the house. It works flawlessly - this is what home networking is for!
This approach would also work for any device that wants to share the network - such as connecting an Xbox to Microsoft's Xbox Live service.
HomePlug Testing: New ST&T Adapters
ST&T xNetworks sent us their latest iPower Point HomePlug adapters - an M53 Ethernet adapter and a U23 USB adapter. Since the earlier ST&T equipment had outperformed other adapters, we were not surprised that the ST&T units continued to perform well. They're also the nicest looking HomePlug units we've seen.
In our tests, the combination of two ST&T Ethernet adapters - the new M53 and an older M51 - got the highest scores in our tests, with a average of 4.33 Mbps across the 14 outlets we tested. The U23 averaged 3.83 Mbps - quite good, but the earlier ST&T USB adapters did better.
A nice feature of the M53 is that it needs no configuration - it has no buttons or setup procedure. Unlike other Ethernet adapters we've tested, it doesn't require a switch to select whether it's connected to a PC or a switch/hub -- it autoconfigures either way. We found it truly "plug and play"!
We've updated our web site with these latest tests. Please see the details of our test procedures and results at http://www.BBHcentral.com/bbhl/homeplug.html .
( www.stt.com.tw )
Range of IEEE 802.15.3 Wireless PANs
Bill Rose's article last month said in part "IEEE 802.15.3 ... is only designed for a range of up to 10 meters".
John Barr - Chairman of 802.15.3 - wrote "Please note that IEEE 802.15.3 is designed for a range of AT LEAST 10 meters, not up to 10 meters. The only limitation is the Part 15 rules which limit the amount of power in a transmitter. We expect good coverage of 802.15.3 up to 50 meters. Not good enough for whole home coverage, but the industry does not expect any wireless solutions with the required data rates to cover the whole home. Small homes yes. Large homes no."
Bill replied that the "chairman of 802.15 has told me that it is 'at least 10 meters'... The IEEE website ... states 'up to 10 meters'." [excerpted]
Many companies have asked to link to our site. We added a page with graphics and URLs for links at http://www.BBHcentral.com/graphics.html .