Anaheim, Calif. -- Turnkey data provider High Speed Access
Corp. attracted $20 million from Paul Allen's Vulcan Ventures Inc. last week -- an
immediate validation that topped the waves of news coming from that market segment at the
annual Western Show here.
HSA's $20 million nod came at the same time as details from
@Home Network about its plans to corner the market for small and midsized cable operators,
as well as launch and partnership arrangements from the rest of the turnkey-data pack.
Ron Pitcock, president of HSA, said the deal puts the
company in the pack with @Home and Road Runner. "There are a lot of other assets that
Vulcan Ventures will bring to the party," Pitcock said, adding, "This increased
our ability to bring products to market."
About five key companies are vying to handle the high-speed
arrangements of the nation's second- and third-tier cable operators, which serve a
combined 30 million or so households. They include Convergence.com, HSA, Internet Ventures
Inc. and Online System Services Inc.
But analysts don't expect that many companies to exist in
the long term, especially given @Home's aggressive maneuvers to control the category.
"It's clearly an increasingly crowded space,"
said Michael Harris, an analyst with Phoenix-based Kinetic Strategies Inc., of the second-
and third-tier Internet-service-provider market.
Plus, 1999 will be a critical landgrab year, which could
explain the bursts of news at last week's show.
In the HSA deal, Vulcan agreed to a $20 million pop, with
immediate plans to tap HSA's services for 800,000 homes passed in 43 systems operated by
its Charter Communications Inc. and Marcus Cable properties.
The nod to HSA is part of Allen's "wired-world"
strategy, said William Savoy, president of Vulcan, the company that handles Allen's
technology investments.
Last Monday, Bresnan Communications announced plans to
align with OSS in a multiyear arrangement that includes OSS' "i2u" brand of
local content and community software. Bresnan will launch i2u in Duluth, Minn.; Superior,
Wis.; and Bay City and Midland, Mich.
Bresnan is already using @Home's service in the Michigan
properties, but it will complement that with the i2u local content, Bresnan officials
said.
Lenny Higgins, vice president of telephone and data
services for Bresnan, said in a prepared statement that the MSO is "committed to an
aggressive, long-term strategy to roll out high-speed services." OSS' i2u software
will help Bresnan to do that quickly, he added, "so that we can get into the market
fast and grow with a broad range of online products and services."
Last Tuesday, SoftNet Systems Inc.'s ISP Channel detailed
agreements with more than one-dozen content partners, as part of a plan to broaden its
turnkey offering for cable operators.
At the heart of that plan is local content, which ISP
Channel will offer under the brand name "LOCALE." The service, they said, will
include electronic commerce; advertising management; national and local broadband content;
and local communications tools, including community chat, conferencing and calendars.
ISP Channel's new LOCALE partners include Excite Inc.,
SegaSoft Networks Inc., Inktomi Corp., DoubleClick Inc., CityAuction Inc., AccuWeather
Inc., Prevue Networks Inc., Tribal Voice, Spinner Networks Inc.'s Spinner.com, Zip2 Corp.
and JamTV/Rolling Stone Network.
Meanwhile, Convergence.com hitched itself to the sales
force of C-COR Electronics Inc., reasoning that the established hardware vendor carriers a
powerful "in" with the nation's small and midsized MSOs.
C-COR also invested $5 million for a 6 percent stake in
Convergence.com, said David Woodle, its recently installed president and CEO. Woodle added
that the move reflects a strategic shift for C-COR, as it seeks to reposition itself into
services, as well as hardware sales, over the next few years.
And in addition to its Allen affiliation, HSA teamed up
with Ibeam Corp. to add a satellite component to its turnkey high-speed-data system.
Ibeam's approach is to use satellites to stream media
directly to a server located in the cable operator's headend, thereby solving many of the
problems associated with Webcasting, officials said.
Mike Bowles, president of Ibeam, called the arrangement
"a great deal for HSA's customers, who will ultimately get the highest level of
service and best download times for all forms of streaming media." Ibeam and HSA will
also work together on promotions and marketing, he said.
Plus, IVI detailed a strategic shift in its revenue model.
It will now request "leased-access" channels from MSOs, instead of its original
revenue-sharing approach.
IVI president Don Janke said he has sent letters to five of
its MSO customers requesting a single 6-megahertz channel at a cost "to be determined
by the formula prescribed by Title 6 of the Telecommunications Act of 1996."
"There are times when you simply need to lead a horse
to water," Janke said, adding, "Cable operators have been reluctant to fully
embrace telco-return cable Internet." Because of that, Janke said, he's willing to
"guarantee the cable industry" the payment mandated under leased-access
provisions."
Then came @Home last Tuesday, with swashbuckling moves that
threw an immediate shadow over all of the other related announcements.
@Home is promising small and midsized MSO takers a 55
percent cut of high-speed-data revenues, as well as equity in the separate @Home company
that will handle the services. Their pitch: Signing on costs nothing, save for requisite
costs for plant upgrades.
@Home and @Home Solutions -- the new company at the nucleus
of the high-speed-data provider's strategy -- will divvy up the rest of the venture's
equity between them, at 30 percent and 15 percent, respectively.
Near-term, @Home expects to also sign on at least four
technology partners, which will be key forces in creating palatable pricing for the
cash-poor community of small and midsized MSOs.
Dean Gilbert, chief operating officer of @Home, described
the potential technology partners as "the usual suspects," adding that the deals
will be done by year-end.
Gilbert dismissed any competitive barriers, refusing to
even acknowledge the existing turnkey high-speed-data providers as threats.
"I don't even know their names," he said,
reinforcing the idea that @Home doesn't plan to force consolidation among the turnkey-data
market by buying its way in.
