Cisco Signs Comcast Deal

Television Digest with Consumer Electronics, July 24, 2000

Seeking to extend its reach in TV market, Cisco Systems announced separate deals to invest $100 million in Liberate Technologies and provide Comcast with routers and other key equipment for IP telephony, video-on-demand (VoD), high-speed Internet access, other new broadband cable services. Cisco said deals reflect its desire to increase and formalize its presence as MSOs switch to open technical standards and expand into interactive TV and nonvideo services. "This is a little more far- reaching than UBRs [Universal Broadband Routers]," said John Mattson, acting marketing dir. for Cisco's cable business unit, referring to Comcast deal. Terms weren't disclosed.

Under binding 3-year agreement with Comcast, Cisco will be preferred supplier of UBR7200 series Universal Broadband Routers to MSO, allowing Comcast to provide fast cable- modem service to more cable subscribers and eventually offer high- speed access to multiple ISPs. Comcast has pledged to carry rival ISPs on its high-speed lines when its exclusive contract with its incumbent provider, Excite@Home, expires. Cisco already is working with Charter and other MSOs to allow open access.

Besides providing broadband routers to Comcast, Cisco will be MSO's primary supplier of dial-access servers, wide-area network (WAN) switches and core routing equipment. Comcast said that will allow it to develop such new cable services as IP telephony, streaming media, unified messaging, VoD.

Cisco also announced it would invest $100 million in Liberate, one of leading developers of interactive TV software. Companies said they would integrate Cisco's technology into Liberate's client and server software and work together to deliver interactive services over IP-based networks both inside and outside cable industry, using open technical standards. Cisco will get nearly 3.9% stake in Liberate, making it 3rd largest backer of software developer behind Oracle and America Online.

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Free cable access to Internet will be offered by WorldGate for one year to 4th grade students in 11 schools in Conn., Ill., La. and Ohio in fall, House Telecom Subcommittee Chmn. Tauzin (R- La.) announced. Program, called WISH TV, will help bridge digital divide, he said. Other participants included FCC Chmn. Kennard and ranking Subcommittee Democrat Markey (Mass.). WISH TV will enable children to get Internet access over standard TV, using wireless keyboard and cable converter and cable connection (free for students). Motorola said it would donate 1,500 SURFview cable converter boxes to students. Scientific-Atlanta also will donate set- top boxes to 4 schools in Newtown, Conn., it said. WorldGate is considering offering WISH TV in China, India, Mexico and Singapore, Chmn. Hal Krisbergh said.

MPAA and RIAA filed suit in U.S. Dist. Court in Manhattan against Scour.com July 20, accusing Web site of theft of copyrighted movies and music and trafficking in stolen works. "This lawsuit is about stealing," MPAA Pres. Jack Valenti said. "It isn't a debate about the value of technology -- we all know that it's valuable... What we can't allow to happen is for people to take this great new technology and use it to steal." Kevin Bain, counsel for MPAA and RIAA, said: "The issues are very similar to those in the Napster case." Scour offers video content that Valenti said was of good quality while Napster doesn't. "Scour is Napster with movies," he said. Scour complaint doesn't specify amount of damages RIAA and MPAA are seeking. (Details in Warren's Washington Internet Daily. For free trial subscription call 202-872-9202, ext. 203)

House Judiciary Committee Chmn. Hyde (R-Ill.) sent letter to FCC Chmn. Kennard requesting formal review of cable industry rate increases. Hyde, whose suburban Chicago constituents recently were hit with 9.5% increase in basic cable service rates by AT&T Broadband, urged FCC to undertake "study of the state of competition in the cable industry" and determine whether AT&T's increases were justified. In separate letter, Hyde asked AT&T to provide explanations for recent rate increases across nation, broken down by community. FCC spokeswoman said agency was reviewing Hyde's letter and "considering his request." NCTA spokesman said cable rate boosts now are averaging 5% around country and have been falling for 2 years. He also said MSOs have been hurt by "double-digit increases in programming and labor costs."

USTA Pres. Roy Neel renewed his year-old call for FCC to "open up a convergence docket" on competing services offered by phone companies, cable operators, DBS providers and wireless companies, in wake of recent ruling by 9th U.S. Appeals Court, San Francisco, that cable- delivered Internet access is telecom service. Speaking to reporters July 20, Neel urged Commission to go beyond its planned cable open access proceeding and "deal with convergence in a real and effective way." While expressing doubts that FCC would conduct such "a broad- reaching docket," he argued that it should examine its widely differing regulatory regimes for phone companies and cable operators offering similar data and voice services.