Qbit unveils new compression approach

A new kind of compression is about to hit the market that could redefine what telephone companies are able to transmit over their copper phone lines.

Qbit LLC, a Bethesda, Md., start-up, this week went public with technology it has been developing over the past five years that claims to provide compression at ratios of 10-to-1 up to 32-to-1 that is absolutely lossless.

This radical new approach to compression will first be used to more efficiently move two-dimensional images, such as video, medical images, satellite photos, etc. by reducing files sizes by a factor of 10. Later this year, Qbit will introduce a more robust form of its technology that will reduce any data file by a factor of 32.

"It is an amazing feat to create the Qbit transform, because it’s lossless, but to be able to implement the Qbit form in a low-cost PC or digital signal processor, so that it is something that would be economically viable is a whole different challenge, and that’s what they’ve done," says Gerry Kaufhold, principal analyst with InStat, and a longtime watcher of Qbit.

"The potential impact on [telephone companies] is enormous. If you were to take an HDTV MPEG file, which runs at about 20 Mbps-- if you could reduce that to 2 Mb, now all of a sudden a standard 6 Meg ADSL service can deliver multiple HDTV signals into the home."

Although it is a virtually unknown entity, Qbit has powerful backing. It’s three co-founders are Dan Kilbank, president and CEO, who initially developed the technology; John Sculley, the chairman, and former CEO of Apple and Pepsi, now Venture Partner at Rho Capital Management and Dennis Sullivan, best known for his involvement in Stellar One. Qbit’s technology team includes Greg Thagard, who led the development team to create the DVD for Time Warner, and its board includes telecom dealmaker Michael Price, who formerly ran the global telecom and technology practice at Lazard Freres and is now senior managing director at Evercore Partners. Nonetheless, Kilbank expects some skepticism.

"There’s a very big believability factor in the industry," he conceded. "There have been six to eight companies who have come out proclaiming 100 to 1 compression--and they all have turned out to be complete scams, or to have a demo that never goes to a working product."

Qbit has its first working product, called Z Image, the version of its technology aimed at industry niches such as entertainment, energy and healthcare. The company will optimize its core technology to address the specific needs of transmitting medical images or post-production video, for example.

Coming up quickly after that is Z Audio, which can be used for any audio technology, including cellular phones, .WAV files or MP3 players.

"Our audio codec technology, which is about a month behind the Z image, outperforms all of the top 10 industry codecs that are out there today by about 200%," said Kilbank.

Because the Z Audio technology "fits very nicely on a 64 Megabit thumb drive," it can be incorporated into cellular phones, to more efficiently deliver video.

Qbit’s core technology is a set of algorithms that, unlike current compression methods, "account for every pixel, and for every bit that makes up the file type," Kilbank said. "You have a unitary transformation. What comes in, in the mathematical formula, is captured, catalogued, and run through a series of theoretical physics-inspired models and is reformulated into a new digital file."

At the receiving end, the reverse process takes place.

Qbit hopes to interest the telephone companies in using its Z technology to deliver pre-cached content as new services over their existing copper lines. But debuting in mid-2005 is the Q technology, which is content-agnostic and can deliver any data, including real-time video, over copper lines, as well.

"It will be a real boon to the industry to do lossless compression," said analyst Kaufhold. "This could start deploying in mid-2006. You could put this technology into the CO in an ADSL modem at one end of the line and in the consumer modem at the other."

The Q technology can deliver 25 megabits over an 18,000-foot copper loop but can also eliminate the need for distance restrictions on ADSL by creating files as small as 256 kilobits per second that can traverse longer distances, Kilbank points out.

Qbit is adopting a business model that will license its compression technology fairly cheaply in exchange for collecting per-customer royalties on the back end, he said. The company is venture-funded and has had no trouble finding backers.