Video services

Sezmi Passes Trial Phase

ANAHEIM, Calif. -- TelcoTV -- Ambitious TV-service startup Sezmi Corp. has completed its first technology trials, a sign that it has managed to get the multiple pieces underpinning its service to at least work together.

So far, Sezmi's service has been viewed by only a few hand-picked consumers (Sezmi employees, for instance). But today's announcement sets the stage for consumer trials that are already getting started. By the middle of 2009, Sezmi hopes to have launched commercially.

Sezmi hasn't officially said where it intends to launch first, but Seattle, site of the technology trials, seems a likely option. "Seattle has been the showcase and sandbox," says Phil Wiser, Sezmi's chairman and president. "It's got hills and water borders, so it's a good platform for testing a development system."

Sezmi offers a TV and broadband service that smacks of IPTV but doesn't use IP. The goal is to let telcos sell the service as an alternative to IPTV. (See Sezmi Aims Beyond IPTV and Sezmi Corp.)

The scheme's ambition, the fact that Sezmi didn't have to build out a network, and the speed with which it has put the pieces together earned the startup a finalist spot in this year's Leading Lights awards. (See Leading Lights Startups Gain Ground.)

Its TV signals originate from a network brain center in Florida that was built by Harris Corp. (NYSE: HRS). From there, mainstream channels are beamed via satellite to the regional markets, where Sezmi leases digital TV spectrum to deliver the signal to homes. Separately, the company uses DSL for delivering lesser-known TV channels.

The startup has lined up three partners to provide the digital TV spectrum in Seattle. Only two are being named so far: Fisher Communications Inc., owner of the Seattle ABC Inc. affiliate and about 20 other stations; and Tribune Broadcasting.

The plan has been to get Tier 2 operators to offer the service, which Sezmi would provide as an end-to-end package including set-top boxes. The big U.S. operators, namely AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ), are already running their own TV platforms, of course -- but they could theoretically use Sezmi to fill coverage gaps.

"They weren't the first ones we went to because they had their own plans, but you see how, in the current economic environment, where capital isn't very easy, they might be interested in this," Sezmi CEO Buno Pati says.

Pati contends the Tier 2 camp's TV ambitions haven't been hurt by the economic crisis, because these operators still worry about customer retention. "They have a limited number of phone lines and they want to protect them. That hasn't changed at all."

In fact, Sezmi sees a scenario where a downturn could help its cause. "For the ones that had been looking at large capital overlays to build out fiber, looking at a variable-cost strategy like Sezmi could be attractive," Wiser says.

— Craig Matsumoto, West Coast Editor, Light Reading

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