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Cable/Video

Partners Package Instant IPTV

SAN ANTONIO -- Here at the NTCA Annual Meeting and Expo, a scrappy broadband company and a France Telecom subsidiary say they've come up with a way to offer a completely turnkey way for most carriers to provide IPTV service to their customers (see Eagle, GlobeCast Offer IPTV).

Eagle Broadband (Amex: EAG), a company that sells a hodgepodge of access products -- including satellite communications systems and HDTV-ready set-top boxes -- has teamed with GlobeCast, the broadcast services division of France Telecom SA (NYSE: FTE), for a service called IPTV Complete.

The duo say they can save carriers $1 million to $2 million in up-front capex required to install a video headend, secure the necessary content distribution rights, provision circuits, aggregate content, and accomplish other tasks required to offer a viable IPTV service.

Here's how it works: Once an operator signs up for the service, Eagle and GlobeCast swoop in and install a remote headend to receive and process video, as well as all the other components required to put IPTV content on the carrier's existing access network.

Rather than buying the whole enchilada up front, carriers pay a monthly fee in addition to a slice of the revenues it gets from each consumer who signs up for IPTV service. The payoff: A carrier with a video-ready fiber or copper access network can offer a full-blown IPTV service to its customers in as little as 60 to 90 days.

The whole service has several moving parts, but, to simplify, GlobeCast mainly provides the video transport via satellite, while Eagle's specialty is maintaining the content distribution deals it already has with broadcast networks and major studios. Eagle also handles the IP set-top boxes and middleware, depending on what pieces the carrier lacks in its network.

Neither company will comment on the other equipment and software used in the IPTV Complete plan. But reliable sources here tell Light Reading that the service includes equipment and software from SkyStream Networks Inc., a GlobeCast customer, and Minerva Networks Inc., which has previously announced Eagle as a customer of its Video Concentrator 8000 platform.

While no other prefab IPTV service exists for carriers today, carriers do have -- and are making -- other options when attacking the video market, a fact Eagle and GlobeCast will have to overcome via big deals with service providers.

Several of the largest carriers in the U.S. -- Verizon Communications Inc. (NYSE: VZ), BellSouth Corp. (NYSE: BLS), and SBC Communications Inc. (NYSE: SBC) -- have already worked out their video services strategies.

Some smaller carriers, such as CT Communications, have found ways to do it themselves, too, by installing their own gear, slowly learning the ropes, and buying content bundles from consolidators such as the National Cable Television Cooperative Inc. (NCTC).

At Central Texas Communications Inc., about 2,700 residential subscribers buy video services via Multipoint Multichannel Distribution Services (MMDS), a line-of-sight wireless technology. That carrier does a combination of negotiating content rights with some channels directly -- such as ESPN and HBO -- while buying the rest of its channels from a consolidator.

However, not all incumbents have skin in the video game yet. Danny Dandridge, general manager of Palmetto Rural Telephone, cites competition from satellite providers and upfront costs as a barrier to turning on video services in his network. And that type of situation is just the kind that Eagle and GlobeCast are taking aim at.

"This is very scaleable, and it's financially viable because carriers can pay as they go," says Randy Shapiro, Eagle's VP of marketing.

Though Eagle says several carriers are evaluating the service now, it hasn't announced a trial customer yet. Also, carrier pricing -- and what exactly is included in the content bundle -- is still unknown as well.

What is clear is that Eagle needs some new service to help along its protracted restructuring (see Eagle Broadband Raises $8.2M ). For its first quarter, ended November 30, 2004, the company posted a net loss of $4.5 million, which was actually an improvement over its year-ago loss of $8.5 million (see Eagle Broadband Posts Loss).

For its full fiscal year 2004, the company lost $39 million on revenues of $12.5 million, which compares to a loss of $36.5 million on revenues of $11.6 million in fiscal 2003. It also needs a little diversity -- last quarter about 71 percent of its revenues were created from sales of products and services deep in the heart (Clap! Clap! Clap! Clap!) of Texas.

Eagle investors weren't flying high on the news. The stock was down $0.02 (4.26%) to $0.45 in late afternoon trading on Tuesday.

— Phil Harvey, News Editor, Light Reading

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