Broadband Week Direct

Today's report from Web Editor Susan Rush

• VOD takes a bite out of the Big Apple

• Williams exits bankruptcy

• EarthLink launches on AT&T Broadband's network

• Motorola reaches cable-modem milestone

• Study: 3G services accessed via a variety of devices

• Darien Telephone taps Arris

• Suit seeks to block digital TV rule

• Broadband briefs

VOD takes a bite out of the Big Apple

Time Warner Cable is rolling out video-on-demand and subscription VOD to digital customers in New York City with the help of nCUBE Corp.

Over the next two weeks, TWC will begin offering its Movies On Demand (MOD) and SVOD services to about half of its digital customers in Manhattan, Queens and Staten Island. The company plans to expand the offering to its entire digital customer base of 500,000 in these areas by the end of the year.

MOD will deliver newly released movies for $3.95 and older titles for $1.95. A rental period last 24 hours. The service gives the user full VCR functionality, with the ability to pause, fast forward and rewind a movie.

Another option will be SVOD, which will give viewers unlimited access to videos for $6.95 a month. TWC's SVOD service sports content from HBO on Demand, Showtime on Demand, Cinemax on Demand and The Movie Channel on Demand.

TWC is using nCUBE's n4x server to power the systems. Interested customers do not have to purchase new equipment because content will be delivered via the installed base of Pioneer Voyager and Scientific-Atlanta Explorer set-top boxes.

"Movies on Demand and Subscription VOD usher in a new era of cable entertainment in New York City," TWC of New York City's President Barry Rosenblum said in a prepared statement. "The appeal of these services is that they give viewers the freedom to chose what they want, when they want it," he said.

TWC of New York City serves 1.4 million customers in four New York City boroughs as well as Mt. Vernon and Bergen and Hudson counties in New Jersey.

Related story:
TWC, Scripps make VOD pact, 10/15/02

Williams exits bankruptcy

Six months after seeking protection from its creditors, Williams Communications Group Inc. is emerging from bankruptcy as WilTel Communications Group Inc. The reorganized company also will be looking for a new head honcho.

The reorganized company has exited bankruptcy proceedings with a new $375 million credit facility and no other substantial debt obligations other than those related to its headquarters building.

On September 30, the U.S. Bankruptcy Court for the Southern District of New York approved the reorganization plan which will give unsecured creditors a 54 percent equity stake in the company. For its $330 million investment, Leucadia National Corp. will receive a 44 percent stake. Leucadia will pay $150 million to lower bank debt, with the remaining $180 million will be going to Williams' parent Williams Companies.

As is the case in many restructurings, current Williams shareholders will get zip. A securities fraud lawsuit is pending in Tulsa, Okla. In the lawsuit, some shareholders allege that the company's directors and officers "knew or recklessly disregarded" the state of the economic environment when Williams Communications was spun off in April 2001. Parent Williams spun off the unit to unload its debt, according to the suit. As part of the restructuring plan, Williams Communications has set aside 2 percent equity to defend itself against the claims.

In conjunction with the bankruptcy exit, company President, CEO and Director Howard Janzen has resigned from the company. The company did not provide details surrounding his departure, but thanked him for leading the company through the bankruptcy proceedings. A search for Janzen's successor is underway.

Related stories:
Court green lights Williams-SBC agreement, 9/26/02
Williams snags Leucadia investment, 7/29/02
It's Chapter 11 time again, 4/23/02

AT&T Broadband gives EarthLink
the green light in New England

Jeff Baumgartner, CED

AT&T Broadband said it has launched EarthLink in New England, a region that is comprised of cable systems in New Hampshire, Maine and Massachusetts, including the greater Boston area. The MSO will continue to offer its house brand ISP -- AT&T Broadband Internet -- alongside EarthLink in those markets.

The launch, which extends EarthLink’s cable reach by 3 million homes, marks the ISP’s second with AT&T Broadband. The MSO made EarthLink available to its Seattle customers in July. Both launches are tied to a multiple Internet service provider (MISP) deal the two companies signed earlier this year.

AT&T Broadband also has inked a MISP agreement with regional, Massachusetts-based ISP Net1Plus. It was not known by press time Wednesday whether AT&T Broadband has made Net1Plus available to its New England-area systems.

In addition to its agreements with AT&T Broadband, EarthLink also is available across all of Time Warner Cable’s divisions, and is participating in an ongoing Comcast Cable Communications trial in Philadelphia, Pa., and in a Cox Communications’ trial in El Dorado, Ark.

EarthLink said its initial base cable pricing in New England will run $41.95 per month for a 1.5 megabits per second downstream and 256 kilobits per second upstream connection, plus eight e-mail addresses, its new pop-up blocking software and 20 hours of dial-up roaming, among other standard features.

AT&T Broadband launched a faster “UltraLink” service tier to several of its major markets, including Seattle, earlier this year, offering download speeds as high as 3 Mbps for about $83 per month. AT&T Broadband has not yet launched UltraLink to its New England cable modem customers.

EarthLink Vice President of Cable Sales Staci Parker said her company is not yet offering a faster tier in New England or Seattle, but is “exploring higher speed options with AT&T Broadband in those markets.”

EarthLink, which has complemented its flagship narrowband service with high-speed options such as cable, DSL and satellite, has signed up 604,000 broadband subscribers so far. Although EarthLink doesn’t break down that figure by platform, the ISP’s new cable subscribers acquisitions did outpace its DSL and satellite signups for the first time during the second quarter of 2002, Parker said.

The question remains what role EarthLink might play moving forward when AT&T Broadband and Comcast close their pending merger.

Parker said EarthLink is “actively talking to Comcast about entering their footprint as well.” EarthLink is participating in Comcast technical trial in Philadelphia, but is not involved in the MSO’s commercial MISP deployments in Indianapolis, Ind. and Nashville, Tenn.

Related stories:
EarthLink makes deals, 9/26/02
AT&T Broadband launches EarthLink in Seattle, 7/15/02

Motorola reaches cable-modem milestone

Motorola Inc. Broadband Communications Sector has shipped its one-millionth cable modem to the Europe, Middle East and Africa (EMEA) region.

Recent research from Gartner DataQuest predicts that cable modem shipments in the EMEA region will nearly triple to roughly four million units by the end of 2006 compared to 2001. Motorola believes it is well-positioned to continue a leadership role as this region embraces high-speed IP data services.

Motorola's Euro-DOCSIS/DOCSIS SURFboard cable modem is part of the company's suite of IP products, which includes customer premise equipment and infrastructure technology.

On a worldwide basis, Motorola has shipped more than 9 million cable modems to date. The company has been in the cable modem game for about eight years.

Separately, Motorola posted a 14 percent drop in year-over-year third-quarter sales and lowered its fourth-quarter and full-year 2003 outlook.

For the just-ended third quarter, the company recorded sales of $6.4 billion, a 14 percent drop from the $7.4 billion posted in the same period a year ago.

Looking ahead, Motorola said slow demand for broadband equipment, wireless infrastructure and semiconductors has forced the company to lower its fourth quarter and full-year 2003 outlook.

The company expects to post fourth quarter earnings of 10 cents a share on revenue of $7.1 billion. In an earlier forecast, Motorola was calling for earnings of 14 cents a share on revenue of $7.5 billion. The company also cut its full-year revenue estimates by nearly $3 billion. It expects to post full-year 2003 earnings of 40 cents a share on revenue of $26.3 billion, as compared to an earlier forecast calling for earnings of 45 cents on revenue of $29 billion.

Study: 3G services access via a variety of devices

Consumers interested in next-generation wireless services can choose how they get into the high-speed wireless game from a pool of 200 CDMA2000 devices, according to a recent CDMA Development Group study.

The CDMA2000 devices, which are backward compatible with cdmaONE, are available as handsets, personal digital assistants and wireless modems from more than 30 manufacturers. The devices are designed with advanced functionality, including high-resolution color displays, cameras, GPS and voice recognition. They also support a variety of 3G applications -- video, picture transfers and audio streaming.

"CDMA2000 has the largest number of manufacturers and the broadest selection of phones available of any advanced technology," said Peter LaForge, CDG executive director. "With such support, we expect that CDMA2000 will continue to lead in 3G and the delivery of advanced services to the customer," he said.

CDG, which has 113 members, is a nonprofit group formed to support the worldwide development of cdmaONE and CDMA2000.

Darien Telephone taps Arris

Darien Telephone Company has turned to Arris to help simplify the management its high-speed data subscribers.

The deal marks Arris' first customer for the Alopa MetaServ Lite subscriber activation and IP management system. The system is designed to provide subscriber acquisition, service activation and subscriber retention functions for up to 30,000 high-speed data subscribers on a single platform. Darien has 7,000 customers to support.

The provisioning system connects to the Corporate LAN, which enables Darien to provision subscribers and manage the IP network from its corporate office in Duluth, Georgia several miles away from the headend location. For the first time, customer service representatives have the ability to provision and activate subscribers from their current location by launching Microsoft Internet Explorer.

The system also enables remote monitoring, troubleshooting and management of CMTS and cable modems from PC desktops.

Separately, Arris was named Darien's exclusive supplier of voice and data services. The agreement calls for Arris to supply its Cornerstone CMTS 1500 cable modem termination system, Cornerstone Host Digital Terminal and 2-line Voice Port units.

Financial terms of the deals were not revealed.

Related story:
Arris amends credit facility, 10/11/02

Suit seeks to block digital TV rule

Jon Healey

The Consumer Electronics Association has asked a federal appeals court to overturn the Federal Communications Commission mandate that nearly all television sets be equipped with digital tuners by 2007.

The lawsuit, filed without fanfare at the U.S. Court of Appeals for the District of Columbia on Friday, pits some set manufacturers against TV broadcasters, which lobbied for the mandate. But the CEA itself is divided over the issue, with some manufacturers opposing the lawsuit and urging the group to withdraw it.

The FCC ordered manufacturers in August to add digital tuners to their sets starting in 2004. The mandate was part of the FCC's ongoing effort to shift the country from analog to digital broadcasting, which enables better picture and sound quality, more channels and new services.

About 500 TV stations are transmitting in digital, yet relatively few consumers can tune in to their local digital channels. Broadcasters say a tuner mandate is needed to build the audience for digital channels and help them recover their investment. But Gary Shapiro, chief executive of the CEA, said the FCC doesn't have the authority to order such a dramatic change.

"We don't like the government telling us what we must make," said Shapiro, who contends that the mandate might add as much as $200 to the cost of a set. Broadcasters argue the amount might be a few dollars.

The lawsuit is drawing flak from at least two set manufacturers: Zenith Electronics Corp., which collects a licensing fee on digital tuners, and Thomson Multimedia, which makes sets under the RCA brand.

David H. Arland, director of government and public relations for Thomson Multimedia, said his company will go along with a tuner mandate if the FCC clears the way for cable-ready digital TVs. Consumers want TVs that can receive premium and digital cable channels without a converter box, Arland said.

Robert A. Perry, vice president of marketing for Mitsubishi Digital Electronics America, said a tuner mandate wouldn't benefit the 70 percent of viewers who get their channels from cable or satellite.

Broadband briefs:

• ADC extends share of CMTS market

ADC has become the second largest supplier of DOCSIS-qualified cable broadband access platforms, according to recent findings from Gartner Dataquest. ADC won 19 percent of the $181.9 million worldwide CMTS market in the first half of 2002, said Gartner Dataquest.

ADC's Cuda 120000 is a DOCSIS 1.1-qualified carrier-class CMTS platform that provides MSOs with a foundation for advanced services such as tiered data and IP voice.

• Verizon invests $3 million

Verizon Communications has invested $3 million in the Williamsport, Pa. area to increase the capacity and reliability in the company's telecom network.

To date, Verizon has invested $3 billion in its telecom network during the last three years.

• Ecast secures $14 million

Ecast Inc. has secured $14 million in equity funding. The company will use the funds to expand its broadband network, accelerate the deployment of Ecast-powered products and extend its addressable market.

Ecast delivers and manages pay-per-play digital jukeboxes and entertainment consoles.