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Datacast Players Say They're Here to Stay

Proponents of datacasting initiatives by local television stations are looking to emerge from the shadows in 2001, providing cable operators with potential competitors in the dormant broadband-over-broadcast TV sector.

Though Geocast Network Systems has gone out of business and the major TV networks seem preoccupied with high-definition television, iBlast Inc. and Dotcast Inc. are moving ahead with plans to launch datacasting services in 2001.

Throw in SpectraRep — which is focusing on the enterprise space — and datacasting advocates say their business is alive and well.

Dotcast may be the most interesting of the nascent datacasters. Armed with money from The Walt Disney Co., GE Equity and Intel Capital, Dotcast has been quietly assembling station partners, content, technology and financial partners to launch its service. For instance, it signed a deal for streaming-media services with SkyStream Networks, a company partially funded by AOL Time Warner Inc.

Both iBlast and Dotcast aim to use the local digital spectrum allocated to broadcasters by the Federal Communications Commission to provide a mix of free and paid content to consumers. That could include games, films, movie trailers, TV shows or music and software downloads that consumers could view on their PCs or TVs.

By using over-the-air spectrum, the companies say they can deliver content more quickly, without the Internet congestion hurdles faced by cable-modem and digital subscriber line providers.

Although analysts are bullish on the concept of datacasting, they're realistic about the hurdles that broadcasters face.

"We've been bullish on multiple content inroads into the home," said The Yankee Group analyst Ryan Jones. "Certainly, there is a place for datacasting," which is suited for content-rich and error-sensitive programming, he added.

Aside from technology and business model issues, the biggest problem broadcasters may face is consumer education.

"It is
rocket science," Jones emphasized, turning around an overused metaphor.

Cable operators deploy cable-modem service to consumers who can at least grasp the concept of a new service and a new piece of home equipment delivered by their cable operator, Jones said. But consumers have never paid broadcasters directly for content and have never needed equipment to receive service, aside from a standard TV.

"This stuff is totally foreign," Jones said.

DOTCAST: WE'RE FUNDED!

The networks "are scrambling like crazy to take care of HDTV" before the FCC's 2002 deadline, Jones added, leaving individual TV stations to lead the datacasting charge.

Dotcast has "raised more than $90 million in one of the worst capital markets, and that said something," said chairman and chief executive officer David Atkinson.

The former AT&T Communications Services executive and investment banker founded the Web-over-TV service NetChannel, then sold it to America Online Inc. several years ago, before joining Dotcast.

Dotcast has agreements to deliver datacasting service with more than 220 stations, including more than 100 Public Broadcasting Service members. Atkinson declined to disclose the other stations that have signed with Dotcast.

Dotcast has also talked with music, gaming, movie and TV-show content providers about delivering programming to consumers, Atkinson said.

From two to four TV stations will deliver Dotcast content in any given market. Each broadcast-TV station is required by the FCC to begin transmitting a digital signal by 2002. Dotcast plans to use portions of both the analog and digital signal for datacasting.

Each TV-station signal could deliver up to 10 megabits per second, he said. With several stations in a market, Dotcast would have more than enough capacity to deliver content-rich movies, for example, Atkinson said.

Dotcast envisions consumers paying for the content in a variety of ways including pay-per-play, pay-per-view and through a monthly subscription.

"This content can be on-demand," he said.

The stations in any given market would pool their bandwidth and share in Dotcast revenues, regardless of the type of content sent from their transmitter, Atkinson said.

Consumers could receive and view the content on either their PC or TV. Dotcast would lease or sell a hard-drive type device with 50 to 100 gigabit capacity that would serve as a peripheral device for the TV or PC, he said.

The PC device would employ a universal serial bus port to connect to the computer. The TV device would plug into a consumer's home-entertainment setup, just like a DVD player, he said.

The Dotbox will eventually be built into PCs and TVs, he said.

In bypassing the Internet, Dotcast can download or "stream" live content "for pennies per household passed," Atkinson said. And by offering a stand-alone device that is likely to be leased to consumers for a low-cost monthly fee, Dotcast avoids opening up a consumer's PC to install a tuner card.

"We're not about to approach this by selling cards," Atkinson said.

Dotcast has tested the technology on a Scottsdale, Ariz., TV station it owns, and plans further market tests later this year. It also plans to build a network operations center in Seattle. PBS will supply the satellite uplink to send content to individual TV stations.

Dotcast plans to handle digital-rights management, subscriber management, billing, marketing and communications for the service, all areas where broadcasters have little historical expertise, Atkinson said. It also will target consumers who might be interested in receiving financial news at work, but whose buildings aren't wired for cable.

IBLAST: SOME FOR FREE

To date, iBlast has signed up 22 station groups covering 246 stations in 154 markets for its datacasting service, including cable-related groups Cox Enterprises, E.W. Scripps Co., The Washington Post Co., and Tribune Broadcasting.

It has tested its service in five markets — Los Angeles, San Jose, San Diego, Phoenix and Orlando — and plans further beta testing this year.

The company plans to deliver a mix of free and premium content to PCs, according to chairman and CEO Michael Lambert, a former Fox Broadcasting executive.

The company plans to amalgamate content at its Los Angeles network-operations center. After its encoded and appropriate metadata is attached, the IP based content is sent via Galaxy 10 to individual TV stations. iBlast will handle encryption and security issues for content providers.

The content is stored locally at an iBlast server — with 1 terabyte of storage capacity — at each TV station, Lambert said. The iBlast NOC controls the distribution of content by each local TV station through its over-the-air signal to consumers' homes.

Consumers can receive the content by using an antenna and tuner or a PCI card. The tuner cards currently cost $100, but Lambert hopes they drop to $50 to $75. Broadcom and Philips, among others, are making the chips for those tuner cards. Lambert said "the Broadcom chips are performing quite well."

The antennas cost $8, he said.

The broadcast spectrum "is not a shared network," Lambert emphasized. "We can actually send movies significantly faster than real time."

The market for iBlast is homes that can receive a good TV signal — about 90 percent of U.S. homes, according to Lambert. Although any wireless technology can suffer from transmission problems, Lambert said iBlast's basic transmission "has error correction functions on it.

"We have various schemes to correct it. We carousel data, for instance."

In the five test markets, iBlast will download 80 hours of video, 1,000 songs and even one public-domain game. A handful of PCs in each city are receiving content, , he said.

Each TV station in each city can send 15 live 500 kilobit streams simultaneously, according to Lambert.

SET-TOP DOWNLOADS?

Although iBlast is concentrating on the PC, it's keeping an eye on movie studios' interest in finding ways of using the Internet to deliver films directly to consumers.

A plan to deliver theatricals via in-home storage "we find very interesting," Lambert said. That's led Lambert to explore downloading iBlast to set-top box devices.

Lambert foresees a free base level of service that would include movie trailers, news, weather and local content. Paid services available in addition to that could include music and pay-per-view movies.

For observers of the datacasting space, the great unknown is where the networks stand on this issue. As network affiliates, iBlast's station partners have broken ranks with ABC, NBC, CBS and Fox with respect to datacasting.

Local affiliates have watched the networks reduce their compensation. They also see network news talent show up on such cable networks as CNBC and MSNBC, Lambert said.

"Local broadcasters don't participate at all" in that, he said. When digital spectrum was allocated and datacasting became an alternative for spectrum use, local affiliates said, "We can do this on our own."

On the other hand, the Disney and GE investment in Dotcast could be a signal that sister companies ABC and NBC will be in the Dotcast camp. And Atkinson is tight-lipped about confirming ABC or NBC participation.