Vyyo Gets Foot in Door at Comcast, Charter
Vyyo CEO Wayne Davis, the former chief technology officer at Charter, revealed those details Monday morning during the company's second-quarter conference call. (See Vyyo Q2 Revenues Dip, Losses Narrow .)
Comcast, he said, has conducted lab trials of Vyyo's UltraBand system, an overlay that boosts cable bandwidth to 3 GHz. Charter, meanwhile, has conducted tests of UltraBand, as well as Vyyo's T1-over-HFC product for commercial cable services.
Vyyo did not indicate when those tests might turn into field tests or deployments, but the vendor indicated that lab tests are important first steps with those MSOs and mark a "big event" for the Norcross, Ga., company.
"Cable operators don't have the luxury of wasting time in the lab," said Davis. "They will only bring in those [vendors] that are relevant to their strategies."
Davis also confirmed Vyyo has purchase orders in for 3 GHz "passives" from Cox for systems passing a total of 5.5 million homes combined. Vyyo is also starting to receive requests for "node designs," which represent a step toward deployment of the full UltraBand system, according to Davis. The full overlay also requires active components.
UltraBand aims to double a cable operator's downstream capacity and quadruple upstream bandwidth, but Davis said Vyyo's overlay could help MSOs in the nearer-term by building room to accommodate an expanding menu of high-definition television (HDTV) channels, and to meet HD competition being spurred by DirecTV Group Inc. (NYSE: DTV).
In a sense, Vyyo's bandwidth overlay approach competes with other tactics MSOs can tap to get more out of their available bandwidth, including switched digital video, node splits, and a move to MPEG-4 compression. Vyyo also competes with Scientific Atlanta , C-COR Corp. (Nasdaq: CCBL), and other vendors that offer gear that expands spectrum to 1 GHz.
Operators might also consider a "mid-split," a technique that expands upstream capacity by taking some away from the downstream. But that tactic remains merely an "intellectual discussion," according to Davis.
While there remains a significant timeframe gap between product orders and when Vyyo can recognize those revenues -- currently about three to six months -- the company did offer some detail on revenue expectations on a per-node basis for the UltraBand overlay.
When the necessary active and passive elements are factored in, Davis tags the revenue opportunity at $48,750 per node. He said the average selling price for each passive is $35, while active components sell for about $850 each. He also estimated there are 140,000 nodes in the U.S. alone.
"That's a $6.825 billion opportunity in the Unites States," ThinkEquity LLC analyst Anton Wahlman explained in a research note distributed Monday. "Revenue recognition at Cox has just started, however, and it is minimal and could lag several quarters, in our opinion."
Although there are indications that some large operators are looking to adopt Vyyo's technology, with Vyyo possibly seeing a significant revenue ramp in 2008 and beyond, revenue recognition rules contributed to Wahlman's decision to reduce more optimistic 2007 and 2008 revenue estimates from $24 million and $85 million, respectively, to $13 million and $61 million.
However, Wahlman maintained his 12-month price target of $10. Vyyo shares were trading at $5.99 each, down 59 cents or 8.97 percent, in early afternoon trading Monday.
— Jeff Baumgartner, Site Editor, Cable Digital News