Evolution Thinks Small
Evolution Broadband LLC is in the midst of some ambitious plans to target small and mid-sized cable operators with all-digital options, trying to present an alternative to the set-top duopoly of Motorola Inc. (NYSE: MOT) and Cisco Systems Inc. (Nasdaq: CSCO).
Those plans include a new CableCARD that Evolution developed with Conax AS , based on Conax's conditional access system. Evolution has also developed a Digital Video Broadcast (DVB) overlay system that incorporates one-way digital terminal adapters (DTAs).
First, the CableCARD: It's undergoing testing at CableLabs , says John Egan Sr., Evolution's chairman and an Antec (now Arris Group Inc. (Nasdaq: ARRS)) founder.
Conax and Evolution are bidding to have the fourth CableCARD to gain qualification. Cisco and Motorola have already achieved that distinction, and CableLabs qualified an NDS Ltd. CableCARD in August 2003.
(That trio has also taken the reins of a downloadable conditional access system (DCAS) project originally helmed by the PolyCipher LLC joint venture -- see Cisco, Moto Take Control of DCAS .)
Evolution plans to offer the security module in tandem with a new breed of MPEG-2/MPEG-4 digital set-tops that use the DVB standard and support the OpenCable Application Platform (OCAP), the middleware component of the tru2way system. (See Revealed: The Tru2way MOU and tru2Way Tallies Two More.)
As envisioned, those boxes will use a Docsis-powered return path and, because they use the separable CableCARD, should steer clear of the Federal Communications Commission (FCC) ban on set-tops with integrated security. (See Countdown to 'Seven-Oh-Seven'.)
Evolution Broadband has high hopes that the first of those advanced service boxes, which will support high-definition video and digital video recording, will be ready to go by the first quarter of 2009. Today, Evolution's DVB box partners include Homecast Co. Ltd. and KAON Media Co. Ltd. , both of South Korea, though the Colorado-based distributor and integrator anticipates adding more box vendors to its digital ecosystem.
"We have ongoing discussions with at least four or five manufacturers of OCAP boxes," says Brent Smith, president of the company's Evolution Digital division. "We won't think we're successful unless we can support multiple partners on this platform."
Although Evolution doesn't have any of those boxes in hand yet, the headend that will support them with more than 250 standard-def and high-def video services is ready to go. Evolution says its packaged headend -- which includes elements such as the multiplexer, emergency alert generator, conditional access system, tru2way carousel, Docsis Set-Top Gateway interface, and the edge QAM -- can be purchased and installed for less than $250,000, equal to about $1,000 per channel. That's less than the price of an equivalent standalone headend from Motorola or Cisco.
Evolution plans to sell the platform to a segment of small- and mid-sized U.S. cable operators that serve a combined 12 million subscribers. Evolution is sourcing its MPEG-4 programming from Avail Media Inc.
One key market for Evolution will be MSOs that are still operating systems with just 550 MHz of bandwidth. Evolution believes it makes more economic sense for operators in that category to cut everything to digital and adopt MPEG-4, rather than upgrade to 860 MHz or 1 GHz.
"The world doesn't want Megahertz; it's interested in megabits," Egan says, noting that a move to all-digital will free up the headroom necessary for smaller operators to compete with DirecTV Group Inc. (NYSE: DTV) and Dish Network LLC (Nasdaq: DISH), which, based on their larger HD lineups alone, are eating the small guys' lunch.
"For the first time, [small operators] will have the advantage over the satellite guys," Egan envisions. "You have plenty of bandwidth with 550 MHz." A fully digital 550 MHz system, with 496 MHz of it dedicated to the downstream, would give the operator downstream digital capacity of about 3.116 Gbit/s.
Under the Avail Media system, standard definition video is encoded at roughly 2 Mbit/s, with high-def coming in at 7.5 Mbit/s. That compression will allow operators to squeeze five HD channels or as many as 18 SDs into each QAM channel. Small operators, he claims, will "run into a wall" if they continue to rely solely on MPEG-2.
But fancy MPEG-4 boxes aren't the only component of Evolution's all-digital offering for cable operators. It's also offering a DVB overlay based on one-way DTAs.
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