Allen’s Still a Broadband Bull

Paul Allen has come to cable shows before, strolling the exhibit floor as the billionaire owner of Charter Communications Inc. and financier of Digeo, a set-top company that’s always seemed ahead of its time to cable’s rank and file.

Last week’s National Show here was a little different. The more-often-than-not reclusive Allen made a surprise appearance as an opening-session panelist, stayed for general questions from the press after the session’s close and sat down the next day with Comcast Corp. CEO Brian Roberts for an interview with Multichannel News.

Times have been tough for many of Allen’s Vulcan Inc. investments — its changes in top personnel, closure of many businesses and shift of focus to fewer core companies have been well-documented. That’s also the case with Charter’s debt problems.

But what came through loud and clear is that Allen remains fundamentally convinced that cable’s platform is the best and only medium for delivering the wide range of content, communications and data applications that consumers want, linked across various electronics devices within and outside the home.

Listening to Roberts, billionaire Allen’s backing of a cable company may be less of a lasting legacy than his single-minded focus on integrating PC technology with the cable platform — a development that would pave the way for a host of new services cable could offer.

“The gestation for some of the Moxi products took awhile, so here at the show, you see the full flower of our investment in those technologies,” Allen said. “All those things have really come together.”

Yet it’s taken several years to crack the cable-equipment market with a new set-top that goes further than any box has gone before.

“You have to have patience,” Allen acknowledged. Digeo just signed deals with Adelphia and Comcast in the past few months.

“I’ve been involved with technology products since before the IBM PC came out,” said Allen. “The chip design [with Moxi] is a couple years worth of work. A lot of these things take time and you don’t want to blow your horn about them until they are ready. That time is now and we’re very excited.

“The main thing you have to realize is that [Moxi] has the heart and brains of PC technology in the box,” he added. “It’s got the same processors, the same chips. It has a USB [universal serial bus] interface. The base unit is extremely powerful, much more powerful than other boxes the industry has had before.

“You start out with that base of capability and on top of that, add a standard operating system, Linux, and all the applications we’ve been deploying. I think the user interface is very unique and very easy to use.”

The new Moxi guide has categories shaped like “cards,” which scroll across the screen like pages in a book. That interface controls linear television, video-on-demand, digital video recording, HDTV content and a host of new applications such as games, music, photos and instant messaging.

“The base functionality is extremely powerful,” Allen said. “But on top of that, you talk about voice recognition, so someone could say: 'Record the season of The Simpsons,’ and it will recognize that.’”


If Allen is excited, then Roberts, as a cable operator, is intrigued and perhaps a tad appreciative.

As Digeo is a private company, much of its development work has been done outside of the public eye, Roberts noted.

“For Paul to come to the convention this year, on the heels of an agreement with Comcast and Charter, and to be able to say: 'Let’s show you where we’re at …’ It’s pretty clear they have among, if not, the best working system today on the show floor. It may have its own set of issues,” Roberts said.

“Hopefully, the price with this new chip becomes much more mass-market. But every idea they’ve talked about, tickers and telephony, VoIP built in — the list is incredibly impressive, all integrated into one whole-house solution.”

For Roberts, the kicker was Allen’s singular focus on cable. “Paul said to me: 'I’m doing all this to help cable. My bet has been cable.’

“Every other person on that show floor is trying to help themselves, which is what you’d expect,” Roberts added. “And that means if they want to work with satellite, they work with satellite. Paul is saying: 'I’ve been doing all this development work, from the beginning, for the cable platform.’ ”


It was only a year ago that Microsoft Corp. chairman Bill Gates was at the National Show, touting his video vision to the home — one which pictured Internet-protocol delivery, rather than the MPEG [Moving Picture Experts Group] technology.

A year later, it’s interesting that Allen — Microsoft’s co-founder with Gates — took the National Show stage with a vision more palatable to cable operators, albeit with a souped-up set-top.

Historically, Digeo’s platform has been a little aggressive for some cable operators, both in cost, features and flexibility. It’s clear the new Allen-Roberts dialogue has caused both sides to compromise.

“One request we made is that we want it to be OCAP [Open Cable Applications Platform]-compliant,” Roberts said of the Moxi box. “We want this to fit within the vision of the rest of the industry and they’ve done that.

“Their points back were that the OCAP specifications don’t envision all the applications we can do in this box. You have to broaden the definition to be a big tent to cover the abilities of this box. And we’re doing that.”

The cable industry’s MPEG-2 and IP silos have been well-known. The Moxi box serves to merge, or crash, those silos together.

“Here is an opportunity for the cable operator to offer the solution for the house to make it all work,” Roberts said. “Potentially, what you’re seeing is an elegant way to put it all together.”


Allen has 20 engineers in Denver working on a next-generation chip that would collapse various functions onto a single four-tuner piece of silicon. It would include a DOCSIS [Data Over Cable Service Interface Specification] 2.0 chip and a multistream CableCARD.

“As we go to multimedia, that helps drive the cost of that solution way down,” Allen said. “And successive versions will support MPEG-4 compression.

“Looking at our needs going forward, MPEG 4 will become more important as we have more HD channels, more HD VOD and things like that and more gets stored on the box as well.”

The goal, the two executives said, is to take a box that costs $500 per unit at present down to $300 in a year or two. “You need to know you’re on a price curve that can take us way down,” Roberts said.

Allen also weighed in on the all-digital transition. Charter is simulcasting an all-digital and an analog/digital hybrid in Long Beach, Calif. Allen calls it “simultrans.”

Allen said he was talking to one of his division managers, who lives in a subdivision full of satellite dishes.

The manager told Allen he’s been unable to persuade his neighbors to switch to cable because of the analog signal quality. After the switch to simultrans in Long Beach, some of those neighbors did switch to cable, because the signal quality was better and cable offered local HD signals, Allen said.

He said Charter is weighing a similar setup in St. Louis. It’s apparent that the all-digital transition strategy could help stem DBS losses — and perhaps win back customers — even before its bandwidth benefits are fully realized.


“We’re looking at accelerating the pace of deployment, in St. Louis and other places,” Allen said. “It lets us do a rolling conversion to all-digital. When we get to the point where we have a large enough digital penetration in a city anyway, then we convert everybody to all digital and recapture the analog spectrum.

“We’ve got the best pipe of any broadband provider,” Allen concluded. “Now, if we can have the best platform in the house, we can really maximize the value of that pipe as a point of presence.

“From my background, getting the right platform and having the platform with a lot of headroom: That’s what made the PC industry have the huge success it’s had. That’s why I think the set-top of the future is so important to get right. Then we can add all these additional functions on top of it.”