End Transmission
Datacaster Geocast folds
By Karen Brown
from the March 19, 2001 issue of Broadband Week
Time--and a wary capital investment market--has run out for Geocast Network Systems. The Menlo Park, Calif.-based datacasting firm is going out of business, having suspended operations and begun a search for someone to buy its assets.
But while Geocast may have been a victim of a venture capital-dependent business plan, its demise may not necessarily be a warning sign that the largely prenatal industry will be stillborn.
Geocast is among a handful of companies offering a way to become a data delivery pipe to television stations that have made the FCC-mandated switch to digital broadcasting. Datacasting uses a portion of a station's 6 megahertz digital spectrum allocation to funnel data alongside the video signal. The technology also can be applied to cable television networks and satellite transmission systems.
Geocast officials said while the market and the product was promising, fund-raising was not. "To reach the final stage of execution we needed additional funding," said Geocast chairman and CEO Joseph Horowitz in a statement. "The current market environment was simply not conducive to our efforts in this regard."
With venture capital an endangered species for many content-driven Internet startups, Geocast apparently just ran out of time, according to Gary Schultz, founder and president of Multimedia Research Group, Inc., a digital technology analyst firm.
"Datacasting per se--at least the way Geocast was defining it--really hasn't taken off," he says "That doesn't mean to say it won't take off in the next three to five years, but it hasn't yet."
Add to that the dot-com implosion and stiff competition for broadband content delivery from well-established cable modem, DSL and now satellite platforms.
"As a high-speed Internet service I think they just couldn't compete," Schultz says. "As a concept it is good, and I think terrestrial broadcasters like them. But looking at what they do--in effect, they were creating a market, and that's hard to do."
Geocast's shift away from data delivery to focus on aggregating content also may have spelled trouble, Schultz observes. Repackaging content takes significant time and money, and with the datacasting market in the earliest stages, that meant plenty of expense and no revenue.
But that doesn't mean datacasting itself is in trouble. Rival datacasting provider iBlast, by comparison, is aiming to only provide transmission technology, so it avoids much of the expensive content aggregation costs Geocast racked up, Schultz says.
Matt Jacobson, executive vice president at iBlast, agrees with that assessment. By concentrating on the network delivery systems, he says his company stands a better chance. The company recently started testing its system in Los Angeles, San Diego, San Francisco, Phoenix and Orlando, Fla. The one-way rich media transmissions can deliver big files to computers equipped with a $99 digital TV receiver card and an antenna.
Full service rollout to about 50 percent of the U.S. television household audience is slated for later this year, with full national coverage available by the end of 2002.
Rather than depend on venture capital, iBlast gets direct financial support from its 246 member stations, each of which have taken an equity stake in the company.
"What we're doing is then going to people who are interested in buying--in building networks on top of that spectrum. It is our job to provide the end-to-end solution," Jacobson says. "Unfortunately, Geocast falling away has validated what we have done to a certain extent."
Geocast's demise not only eliminates an iBlast competitor, but it also may provide a technology windfall. Jacobson says his company is in negotiations with Geocast regarding some of its assets. "I think that there was great technology there, there were good people there," he says.
Overall, the datacasting market's potential remains strong, even if it will take a while to build the business, Jacobson says. "We still are definitely bullish on the opportunity in datacasting," he says. "Broadcasting of data to people's homes will be a way that stuff gets into the home and gets into the business enterprise. It's not going to be the only way, but it's a very, very good way to get popular, rich-media files in front of people."
Schultz also sees the potential, pointing out none of the other broadband delivery technologies can claim universal coverage. "That means DSL, cable modem, satellite and even MMDS has a ways to go before they max out," Schultz says. "So I would give it three to five years before the market really defines itself."
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