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Imagine Nets Fresh Funding

Jeff Baumgartner
10/30/2007

Imagine Communications , a startup that specializes in conserving precious cable bandwidth, has banked a $15 million series B round, putting its total funding north of $24 million.

The latest round, announced today, was led by Court Square Ventures LLC , with participation from previous investors including Carmel Ventures and Columbia Capital . (See Imagine Raises $15M.)

San Diego-based Imagine said it will use the fresh infusion to accelerate growth and commercial deployments "in digital video markets," which, in particular, means cable MSOs and perhaps telco TV service providers.

Founded in 2005, Imagine is developing a variable bit rate (VBR) platform that it claims will boost an operator's bandwidth efficiency by 50 percent for video-on-demand (VOD) and switched digital video (SDV) applications.

Imagine believes its ICE Video Platform can create room for 15 standard-definition streams per QAM channel, versus about 10 streams using fixed, constant bit rate (CBR) technology. The system, Imagine says, can also squeeze in three high-definition (HD) streams (rather than two with CBR) into one channel.

Imagine expects to make its commercial debut later this year, putting it in competition with the likes of BigBand Networks Inc. (Nasdaq: BBND) and RGB Networks Inc. , which have also introduced VBR-based digital video systems. (See RGB Takes Aim at Imagine.)

In addition to fighting for market share, Imagine and BigBand are already clashing in the courts. In June, BigBand hit Imagine with a lawsuit alleging that the younger firm, which has poached a number of ex-BigBand execs, is infringing on three patents linked to advanced video processing. (See BigBand Throws the Book at Imagine.)

Imagine soon followed with a counterclaim of its own.

As for actual deployments, Imagine isn't talking so far. Earlier this year, company execs said the startup was in lab trials with two "major" U.S. MSOs but didn't name names. (See Imagine Imagines Success.)

Sources familiar with the company's market say Imagine is making some progress at Comcast Corp. (Nasdaq: CMCSA, CMCSK), which, like other cable operators, is mulling techniques for fitting more HD channels into the available spectrum. Comcast is testing SDV in Denver and New Jersey but has said little about further plans for the technology. (See Comcast Puts SDV Vendors to the Test.)

Speaking at The Cable Center in Denver earlier this month, Comcast chief technology officer Tony Werner said the MSO is testing an "improved" compression scheme that will boost bandwidth efficiency by 50 percent without affecting video quality; moreover, the technology will work with Comcast's massive base of MPEG-2 set-tops. He did not disclose possible vendor partners, but Imagine is considered a leading candidate. (See Comcast Ready to Reclaim Bandwidth.)

— Jeff Baumgartner, Site Editor, Cable Digital News

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