Broadband Content

Executives for those carriers suggest, beginning in earnest this month, the year-long trials will test technologies. Of equal importance, the trials will forge partnerships and new business models and revenue-sharing schemes among a range of industries, so both network and business infrastructures will emerge in support of broadband content.

In the old media world, production companies, studios, networks, local affiliates, advertisers, theater chains and videotape outlets cooperate and compete in film and television media, says Tony Bawcutt, senior business development manager for the streaming media division of Microsoft Corp. (www.microsoft.com). The company, through its JumpStart project, is launching broadband content trials this winter with Covad, Rhythms, Jato Communications Corp. (www.jato.net), NorthPoint Communications Inc. (www.northpointcom.com), and Time Warner-owned Road Runner (www.roadrunner.com)

Similarly, each segment of the new broadband media market has something the others need: content providers have content; hosting companies have infrastructure to host that content in World Wide Web-accessible form; content distribution companies have infrastructure to put copies of content in easy geographic reach of end users around the world; broadband local access providers have big enough last-mile connections to deliver robust media to customers; multimedia software providers have the tools to execute media presentation on end-user devices; and advertisers have money to effectively subsidize customer consumption of all the high-quality media goodies.

Consequently, the past five months have seen all those parties talking, and digital subscriber line access providers--armed with multimegabit pipes to consumers and small businesses--say they're eager to cooperate.

"Because 100 percent of our users are broadband, we hope Covad can become a lab where all content providers can test how their content is used, how people behave," says Abhi Ingle, group broadband product manager for Covad, which launches trials with distributors iBeam Broadcasting Corp. (www.ibeam.com) and INTERVU Inc. (www.intervu.net) and with streaming media software and portal provider Real Networks Inc. (www.realnetworks.com). "ISPs, who will resell this service, now get less than a dollar a month in nonaccess revenues, and we think we can greatly expand the range of nonaccess, added-value revenues they can garner," he says.

Since last fall, DSL carriers including Covad, NorthPoint, Rhythms, DSL.net Inc. (www.dsl.net), Network Access Services Inc. (www.nas-corp.com) and others have announced partnerships with content delivery providers including Akamai Technologies Inc. (www.akamai.com), Digital Island Inc./Sandpiper Networks Inc. (www.digitalisland.net), iBeam and INTERVU, whose networks of geographically dispersed content caching centers are being collocated with the DSL carriers' metropolitan PoPs for the trials.

In turn, Akamai and the other delivery providers have struck bargains with Hollywood studios, TV and radio networks, sports franchises, publishers and other content owners, as well as with large web hosting companies, such as Digex Inc. (www.digex.com) and GlobalCenter Inc. (www.globalcenter.com), some of which are owned by Internet back-bone carriers.

Determined to leverage its own media streaming software format and Internet content to develop a "Windows Media Broadband" logo across the web, Microsoft has marshaled its considerable industry-shepherding clout to bring players together and to promise a minimum 300kbps throughput for CD-quality audio and better-than-VCR-quality video in all its JumpStart trials.

Simultaneously, new portals are emerging to capture various broadband content categories. "Aggregators like Intertainer Inc. (www.intertainer.com) are going after an HBO-like, first-run movie identity they will brand, and we'll see music aggregators, sports aggregators and the like," says Microsoft's Bawcutt. "It would be difficult for every local access provider to create a different brand."

Indeed, rather than hosting or aggregating content themselves, DSL carriers believe they will bring to the party the ability to connect to a range of content delivery providers, using emerging application-aware routing technologies designed to route users to optimal providers, depending upon the content sought.

"We know where the user is headed, so where we have a deal with a content provider, we can redirect the user to the highest quality source--Akamai, where that makes sense, iBeam where that makes sense," says Covad's Ingle. While iBeam's satellite distribution service might be most optimal for real-time stock quotes or live concert content, the store-and-forward delivery systems of Akamai or Digital Island might be best for nonreal-time content, he notes. "We'll optimize our network for a whole range of content, whether live or streaming or client/server application."

DSL providers also may look to compete in multichannel broadcast TV. In December, Hartwell, Ga.-based carrier Hart Telephone Co. successfully tested the Traverser Digital Video and Data Delivery System from mPhase Technologies Inc. (www.mphasetv.net). Hart now is confident it can deliver voice, Internet access and up to 400 channels of digital TV over standard copper phone lines.

However, national players such as Rhythms are focused on truly interactive broadband for both businesses and consumers. "The DSL players have an architecture suited to supporting a full range of e-commerce and entertainment--a full integration of media and data in a bidirectional way," says Robert Kelley, Rhythms' director of innovations. Rhythms has a consumer JumpStart trial under way with Microsoft Network (MSN) consumers in Boston and is developing with Microsoft a small-business portal. "Distance learning, video training--you'll see all kinds of business and professional-oriented media archiving companies," Kelly says.

Builders of broadband media distribution infrastructure also are looking to support business applications and services. The emergence of content portals aimed at small businesses--the prime target of DSL carriers--has already begun. For example, Go2Net Inc. (www.go2net.com), which manages free web hosting for 800,000 businesses, has partnered with Allegiance Telecom to develop a private-label Allegiance Small Business Center portal that will leverage Go2Net's fleet of vertical-industry portals targeting business services, personal finance, search and games (see "Winstar, Allegiance Make ASP Moves,"February 2000, X-CHANGE).

For games, Go2Net has formed a partnership with Hasbro Inc., and on a broader front, Go2Net last October formed a $426 million Broadband Partners joint venture with Microsoft co-founder Paul Allen's Vulcan Ventures, Allen's 6.5-million-subscriber Charter Communications Inc. (www.chartercom.com) cable operation, broadband carrier RCN Corp. (www.rcn.com) and broad-band ISP High Speed Access Corp. (www.hsacorp.net). "With Broadband Partners, we're not just repurposing narrowband content, but rather building it from scratch," says Go2Net spokesman Mark Peterson. "Allegiance shares our vision of small business being an area of incredible need and growth, and we believe we're in a first-mover position to attack compelling opportunities in multimedia and unique content."

According to those conducting trials, everyone will have to be patient for results, in great part because all the players want their cut of the pie. "There are so many issues around digital rights management to work through," Bawcutt says. "We're also working through various advertiser-support, pay-per-view and other business models. Is it pay per week or per day or one-time use? A major objective of the trials is to gather data on all that."

Chart:The Broadband
Service Circle

Indeed, matters surrounding which service partners pay whom remain entirely in play. Content distributors may charge content owners and advertisers and, in turn, pay DSL carriers for access to broadband offramps, or revenue splits might be devised. Alternatively, content owners might encode, host, aggregate and distribute their own content.

In December, for example, NBC Internet Inc. (www.snap.com), a subsidiary of NBC Television Network, and other partners invested $70.5 million in DSL provider Telocity (www.telocity.com). The parties will co-brand a national high-speed, multimedia content Internet service that leverages NBC's existing broad-band showcase portal (http://speed.snap.com).

All that adds up to requirements for more complex back-office systems, and although DSL equipment is now relatively mature and standardized, application-aware routing systems are only now entering the field. Further, web-based media encoding, delivery and media player system format wars may also ensue, "so there's some need for standards there," says Covad's Ingle. "This year's trials will be controlled, technical trials, and results will be commercially negligible until early next year, because there are still moving parts, and it would be death to introduce a service that stinks."

Rhythms also will not try to bottle the broadband media lightning before its time, says Kelley. "The early phase of the trial will be just pulling the pieces together, and toward the end of that phase we'll explore who the target is, what the market segmentation is, and other business issues," he says. "We'll keep to our core competencies and work with partners to jointly deliver a solution to each
market segment. The long-term challenges will be the business model challenges."

Even if commercial results stand a year or more away, a perception of eat or be eaten has already jelled around the need to optimize networks for broadband content. "With the web now, you can't imagine an application that doesn't involve graphics, and with e-commerce, it could be a 10- minute video, instead of a two-page brochure," Kelley says. "That requires an order of magnitude increase in bandwidth, and that's part of what we bring to the table."

One point of agreement: Where centralized content requires passage over a great number of less-predictable network connections, the alternative of storing content side by side with local DSL equipment means that "every user has equal access," says Microsoft's Bawcutt. "We believe that, in pushing content to the edge of the service provider network, the delivery quality can become totally deterministic and guaranteed over the broadband last mile."

Turning that bandwidth into valued services will become the key to service provider survival, according to the study, "Netpressure.com--Bandwidth Demand in the Content Economy," released in December by London-based industry analyst The Phillips Group-InfoTech. (www.phillips-infotech.com). "It is no longer possible to be simply a carrier of minutes or bandwidth," David Prior, senior consultant for The Phillips Group, says of the study's results. "Future value lies in content, not who is carrying it."