Com21 Enters DOCSIS-Headend Market

Breaking away from longtime partner Cisco Systems Inc.,
Com21 Inc. is set to unwrap its own standards-based cable-modem-termination system this

Com21 will introduce the "DOXcontroller" CMTS,
designed to comply with the first two generations of Data Over Cable Service Interface
Specification protocols for interoperability among cable modems and headends of different
vendors. The company plans to demonstrate the device at the upcoming Western Show.

DOXcontroller was designed to meet the DOCSIS 1.0 standard
and the upcoming advanced DOCSIS 1.1, which describes advanced features such as
quality-of-service requirements necessary to support Internet-protocol cable telephony.

Mehdi Asgharzadeh, general manager of Com21's
broadband-infrastructure business unit, said the product targets MSOs that are planning to
deploy networks supporting high-speed-data and voice services -- a market where Com21
believes vendors have hit a "performance wall" with their current-generation

"This market is driven for voice applications, mainly
by AT&T [Corp.]," he said. "But there are other customers out there talking
about tiered services with guaranteed quality of service, and in a DOCSIS universe, that
requires 1.1 capability. There's no CMTS out there that does all of the
performance-intensive functionalities that QOS-based services require."

The Milpitas, Calif.-based company -- which claimed about
268,000 cable modems deployed worldwide as of Sept. 30 -- has worked with Cisco for some
time to develop modems that were interoperable with Cisco's widely deployed DOCSIS
1.0-qualified CMTS. Com21 has also used Cisco's "Universal Broadband
Router" in systems that it deployed for its own customers.

Com21 vice president of marketing Buck Gee said that
although Com21 and Cisco had a relationship aimed at developing strategic products for
both companies, Com21 made it clear that it wanted to eventually provide customers with
its own integrated, standards-based CMTS.

"We decided that in order to provide continued
leadership in the area we've focused on -- integrated voice and data -- it became
apparent [that] to provide leading-edge technology on one side, you had to have
leading-edge technology on the other side," Gee said. "And it became more
difficult to work with Cisco on that part of the partnership. So we decided to build the
CMTS to take more leadership on the voice side."

Gee said Com21 has essentially been in the headend business
for three years already by building cable-modem systems for its own customers that used
Cisco's DOCSIS 1.0-qualified CMTS, as well as its own proprietary products.

"We've got the experience of understanding where
a lot of the bottlenecks are and where delays are in a system that provides voice,"
Gee said.

Com21 now faces the challenge of getting the DOXcontroller
qualified as DOCSIS-interoperable by Cable Television Laboratories Inc. -- an achievement
it has been unable to achieve so far with its DOCSIS-compatible cable modems.

The company's inability to win DOCSIS certification
for its modems has caused its stock to get pounded on several occasions. Com21 now has
five different versions of its cable modems undergoing certification testing at CableLabs,
with results expected to be released before the Western Show.

Gee said that just as with modems, cable operators have
been willing to field-test or conduct trial deployments of noncertified product. That fact
is reflected by the large number of DOCSIS 1.1-compliant modems currently being tested at
CableLabs, which officially does not begin actual 1.1 certifications until the second
quarter of next year.

"In the early part of next year, people are going to
be trying these new technologies because they want the product as soon as possible,"
Gee said. "They're encouraging us and encouraging CableLabs to move as quickly
as possible to provide 1.1-enabled services."

Besides Cisco, Com21 will be competing with
DOCSIS-qualified headend equipment from Motorola Inc. and Arris Interactive LLC for cable
deals, as well as with 3Com Corp., which has not yet won DOCSIS qualification for its

Separately, Com21 last week announced its first order from
Canadian MSO Le Groupe Vidéotron Ltée -- which has 1.5 million subscribers in Quebec
province -- for "DOXport 1010" model DOCSIS modems.