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CableLabs Puts Final Touch On Cable-Modem-Patent Pool

In a move that made many in the industry utter a
collective, "Finally," Cable
Television Laboratories Inc.
completed its plan last week for a royalty-free
licensing pool for standards-based cable modems.

The Louisville, Colo.-based company signed on four key
vendors, with several others anticipated.

The pool, in the works since the inception of DOCSIS (Data
Over Cable Service/Interoperability Specification), is the last legal piece necessary to
ensure interoperable standards that are available freely.

Richard Green, president and CEO of CableLabs, called the
arrangement "a tremendous step for the cable industry and the DOCSIS process."

He said the move will speed the deployment of interoperable
modems. "While it's taken us many months to get this in place, the timing is critical
now that the industry is ready to begin wide-scale deployment."

The pool is good news for cable operators, because more
vendors will be able to enter the cable-modem market, which operators anticipate will
create a competitive environment that would lead to lower prices.

"This is a great industry achievement -- to see a new
broad-based industry standard become reality less than three years from when the first
modem was deployed in a cable-television system," said Brian Roberts, president of
Comcast Corp., in a prepared statement.

Green said he believes that the industrywide pool is the
first example of a broad-based, royalty-free pool. He added that other companies -- like
Intel Corp., with its universal-serial-bus interface -- have developed royalty-free pools
for intellectual property in a standard protocol, but never before has such a wide pool
been successfully established.

The move marks a sharp departure from the cable environment
as recently as five years ago, when General Instrument Corp. held an intellectual-property
edge on its digital-video-compression technologies, and it charged any interested
second-source vendors a $5 million fee.

Other similar conundrums occurred in the past with former
analog-descrambling techniques developed by what was then called Oak Communications, and
with universal-remote-control codes held and parceled out by Zenith Electronics Corp.

In contrast, a freely available intellectual-property pool
broadens the potential field of cable-modem vendors, because manufacturers can access the
core DOCSIS techniques without having to pay a fee.

The first four participants in the pool -- 3Com Corp., Bay
Networks Inc., Broadcom Corp. and GI -- also helped to draft key parts of the DOCSIS

There's one wild card: Hybrid Networks Inc. has said that
it does not want to contribute its key patents related to asymmetrical cable-modem
techniques to a freely available pool. Hybrid executives were not available to comment on
their current position at press time.

Hybrid, an early pioneer in cable modems with its
then-partner Intel, is suing both Com21 Inc. and Celestica Systems Inc. for patent

Dorothy Raymond, senior vice president and general counsel for CableLabs, said Hybrid has
not yet opted to join the pool. "We hope they do, and if they choose not to, we'll be
terribly disappointed," she added.

Vendors that choose not to participate but that want to build standards-compliant modems
will have to pursue cross-licensing arrangements independent of the industry
intellectual-property pool, Raymond said.

"If manufacturers don't want to participate, to the extent that they're using the
headend PHY [physical] or MAC [media-access control] layer, then they have to go to those
people who own that intellectual property and get their own license," she added.

Terayon Communication Systems has also strongly resisted
any participation in the pool, because its family jewel, synchronous code-division
multiple access, is the crux of its technology offering.

"The only downside of this is for the vendors,"
noted Michael Harris, an analyst with Phoenix-based Kinetic Strategies Inc. "Smaller
start-ups, like Terayon and Com21 [Inc.], need a way to differentiate themselves in the
marketplace, and throwing their key technologies in a pool doesn't help them in that

Harris called the emergence of a finalized
intellectual-property pool a good show of industry momentum.

"Nobody had signed on forever and ever, and there were
concerns that it wouldn't happen at all, but with four vendors behind it, there's value
and momentum," Harris said.

Levent Gun, vice president and general manager of 3Com's
cable-access group, added, "This level of cooperation among vendors bodes well for
systems interoperability and consumer choice on the retail shelf."

Karl May, vice president and general manager of Bay, said
Bay opted to join the pool "because we recognize the need to speed the mass adoption
of cable-modem technology."

The same went for Broadcom, said Henry Nicholas, president
and CEO of the lead cable-modem-silicon vendor.

"This standard will enable the cable-television
industry to be the first provider of ubiquitous, low-cost broadband access to the
consumer," Nicholas said in a prepared statement.

GI, which contributed "substantial intellectual
property" to the pool, believes that the result will be "an interoperable
standard without burdensome royalties ... that will help the market for DOCSIS modems to
grow rapidly," said Tom Lynch, general manager of GI's satellite-data-networks group,
in a prepared statement.