Bringing Pay TV to the PC
Internet Startup's 11 Channels Will Include Cable Networks
By Matt Stump -- Multichannel News, 4/2/2006 8:00:00 PM
A new Internet-TV company plans to launch a subscription service later this year that will deliver cable networks and video-on-demand programming to PCs in 50 million U.S. homes.
Privately held VDC Corp., based in Northbrook, Ill., plans to offer 16 to 20 cable networks for a $11.95 monthly fee to consumers, plus on-demand fare.
The service, which will officially launch at next week's National Show in Atlanta, would require the consumer to have a broadband Internet connection in order to receive the programming.
In effect, VDC could become a competitor to cable, telephone or satellite TV services, serving up scheduled programming on the Web using Internet protocol communications. And a cable or telephone company's network for delivery.
“We've developed the largest IP-based multichannel live television broadcasting system,” said VDC chairman Robert Heymann Jr., a former NBC executive who has spent much of his work life buying and selling TV and radio stations.
While Heymann plans to use the last mile broadband connections built by cable and telephone companies to deliver the some of the same programming those companies provide to the TV set, he doesn't necessarily view his service as a substitute for cable. “We serve as a complementary service to cable,” he said.
The company has not disclosed whether any of the big names in network programming, such as ESPN or Discovery Channel, will be on its service. A beta version of the service on the company's Web site included the The Pentagon Channel, MavTV and ShopNBC channels, plus automobile and extreme sports programming.
VDC, which stands for Virtual Digital Cable, is building a national cable headend in Northbrook, Ill., said Scott Wolf, chief technical and science officer, where it will take in program feeds from programming networks. It plans to co-locate one to two racks of servers in its own peering centers in Chicago, Dallas, Los Angeles, San Jose, Calif., and Ashburn, Va.
The company has agreements to exchange traffic with backbone providers UUNet, AT&T Inc. and Level 3 Communications, as well as several unnamed cable operators, Wolf said. Content will be delivered to subscriber homes at 1.5 Megabits per second, quickly enough for standard-definition pictures.
In those peering agreements, VDC is paying AT&T and cable companies fees for guaranteed bandwidth, Wolf said. Like AT&T's Internet protocol TV service, VDC will deliver one channel at one time to any consumer who subscribers to the service via its Web site (www.vdc.com).
ENDING THE JITTERS
VDC hopes to improve on the existing quality of TV coming from the Internet.
Current Internet video is plagued by jitter and slow bit rates, Wolf said. No broadband service provider or programmer controls what Web-based video flows over its entire network between the server and the home screen, unless a service provider, like Comcast Corp., is hosting content within its network.
“It isn't a quality TV experience,” Wolf said, of most Internet video projects to date. Using Windows Media 9 technology, Wolf believes he can deliver, nationwide, TV-quality video at 30 bits per frame to computers, using the guaranteed bandwidth VDC's has licensed in its peering agreements.
Heymann said VDC's network allows programmers to reach new viewers on a national level — especially those who've been shut out of cable carriage. At the same time, he said, “we are a closed system. We provide a safe way for providers to rebroadcast content” without it being pirated.
BROKEN DAM
Heymann said he's talking to ABC, CBS, NBC and Fox about getting video on demand content, noting that ABC is selling Lost and other primetime shows on iTunes for $1.99. CBS is selling Survivor episodes for $1.99 on its web site as well as on Comcast's on-demand service.
Heymann declined to discuss what VDC will charge for on-demand programming, but said “the cheaper, the better,” indicating he would look to make programming available at prices lower than what VOD services or iTunes charges.
Many cable network-operator contracts prohibit networks from running their linear service on the Internet, Heymann acknowledged.
But he believes times are changing. “The cable networks have gotten a lot more powerful,” he said. “The telcos have blazed the trail for us,” he added, and the amount of video on the Internet is expanding exponentially. “This is a tide they can't stop.”
Heymann also isn't concerned about cable operators duplicating his service. Time Warner Cable is experimenting with allowing its broadband subscribers to view their cable TV lineups on their computers in San Diego.
Heymann is undeterred. “We will be first to market,” said Heymann, who is estimating he'll have 100,000 subscribers by year's end. “And this is an innovative service. Someone may try and do this but we're already there.”
| Multichannel Services on the Web | |||
|---|---|---|---|
| Name | No. of Channels | Examples | Fee |
| VDC | 16 to 20 | MavTV, ShopNBC | $11.95/mo. |
| In2TV (AOL) | 6 | DramaRama, Toontopia | Free |
| YouTube | 21 | Pets & Animals, Odd & Outrageous | Free |
| Source: Multichannel News research, VDC |
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