Terayon Move Shifts Focus to DVB

10/08/2000 8:00 PM Eastern

Terayon Corp., best known in the U.S. for its cable modems, is ramping up efforts to become a global satellite-equipment vendor.

Two announcements at last month's International Broadcasting Conference in Amsterdam signaled the shift in the company's strategy.

At IBC, Terayon introduced the "NetStream2000" data-over-satellite router for high-speed Internet access and other data services. Meant for Internet-service providers, corporations, or small-office/home-office (SOHO) customers, Terayon said the NetStream supports reception of satellite transmissions at 53 megabits per second (Mbps) over a standard dish, routing data into a client's local-area network for delivery.

Also at IBC, Terayon said it reached a deal with Skyline PowerSat for broadband Internet-over-satellite service to Greece and Turkey, with later expansion slated for the Balkans and the Middle East.

Terayon will install its WebStream IP-data gateway at Skyline's uplink facility to Eutelsat transponders. Skyline customers with SatStream PC receiver cards and NetStream routers will utilize a wireline return path.

The Terayon satellite system can handle several simultaneous data streams. The local router can be controlled from a remote network-operations center, which makes the Terayon system suited for such business communication tasks as staff development intranets or customer support extranets.

But NetStream only routes Digital Video Broadcast (DVB) signals under the DVB-S IP extensions. The broadband-satellite products from the Santa Clara, Calif.-based company have a limited American market.

Why such a move? Terayon is thinking globally. The company cut its teeth in the American cable-modem business, and modems are still its bread and butter.

That's the case despite a shareholders' lawsuit alleging that Terayon misled investors by improperly claiming certification for one of its Data Over Cable Service Interface Specification (DOCSIS) modems, a charge disputed by both Terayon and Cable Television Laboratories Inc., which oversees that process.

The DVB data-over-satellite business is a fresh revenue channel for Terayon, and overshadows the company's entry into IP video and voice products for cable and DSL services.

For example, at the IBC Terayon and nCUBE Corp. announced a deal to jointly offer "CherryPicker" digital ad-insertion service to cable operators, satellite providers and broadcasters. That move didn't generate the buzz that the DVB data satellite router did.

The reason for the hubbub is that satellite-data transmissions can instantly reach all users within a given footprint, said Terayon vice president for research and development Ron Reiss.

"The goal today is distributing content to servers at the edge of the network," he said. "To do that, terrestrial operators are building out a server network tied to the fiber backbone. Transmitting directly by satellite is much more cost effective."

Terayon entered the satellite-data broadcasting business in a roundabout way, Reiss said.

"We started with a single-user solution with a PCI card in the computer able to receive satellite signals," he said. "When we realized that in many cases we would like to feed not a single PC, but a whole ISP or SOHO or corporation or educational institution, we saw the need to put the capability into a different form factor-a box that receives the satellite signal at one end and at the other end connects to a LAN.

"The major thing here is that we're giving the satellite industry a vehicle for multicasts of data services, streaming video or popular Web sites," he added. "One satellite transponder can cover the whole of Europe at up to 45 megabits per second, and that saves a lot of money over the slower terrestrial networks."

Reiss said there's a solid European and international market for DVB-S satellite data equipment. "We are finding customers in the United States," he added, but would not name names.

EchoStar Communcations Corp.'s Dish Network is the most visible DVB-compliant U.S. satellite broadcaster. But EchoStar has "DishLink," a proprietary system that supports two-way Ku-band services over a wider dish that can see two satellites at once, said EchoStar data networks vice president Jim Stratigos.

This eliminates the need for Terayon's wireline return-path hardware, Stratigos said.

DishLink services are available only to EchoStar's enterprise customers in the U.S., he said. But there are smaller DVB satellite operators in North America that might be interested in the Terayon system, including Canadian and Mexican outfits.

"Data customers have to look at the value proposition for cable, DSL, wireless and satellite and then ask themselves what makes sense long term for the last mile," Stratigos said.

Terayon is carving a niche in the satellite-delivered data market, said The Carmel Group vice president Sean Badding.

"There are lots of revenue opportunities in delivering broadband data content to customers more cheaply and efficiently than others can do it," he said. "Terayon could be in a stronger market position if they win with their satellite products, but success for the company ultimately may depend less on the product suite than on Wall Street."

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