BROADBAND COMES HOME

Welcome to Poppy Meadows, Calif., where streaming video and high-speed data are waved in front of potential homeowners the way granite counters and crown moldings are used to entice buyers to more traditional developments. Competisys, the provider behind this Silicon Valley petri dish, wants to migrate its play into other neighborhoods

Folks in Poppy Meadows, located in American Canyon on the fringes of California's Silicon Valley, are presented with all the usual choices when buying a home: appliance colors, electrical fixtures, floor coverings. They also get some rather unusual options: IP-streamed video, IP telephony and high-speed data in every room of the house.

Poppy Meadows is not an upscale community — although the $319,000 to $370,000 home prices might make some in Middle America blanch — so such advanced offerings have started turning some heads.

“There's no scientific proof for this, but people are willing to pay a few thousand [dollars] more for a house because they feel it's ready for the future and ready for what they need now,” said Shinta Susanty, Poppy Meadows' community sales manager.

Competisys, a new type of utility that bundles IP streaming video entertainment, voice and high-speed data, is Poppy Meadows' primary telecommunications supplier. Homeowners can go the normal route for telephone, data and TV, but Poppy Meadows encourages them to listen to Competisys' pitch — starting with a sample home demonstration.

Every home in Poppy Meadows is fed by fiber and has two coaxial cables and two Category 5 cables bundled together. Every room in the house — even the garage — is wired as part of the standard plan. Thus, each room can have a telephone and television hook-up, and computers can be networked throughout the house.

“We put in the structured wiring and the fiber optics to the house,” Susanty said. “After the people move in, Competisys sells the services.”

Competisys' biggest enticement is its video service, which supplants standard cable TV with streaming IP content. For now that includes only standard MPEG programming that goes against the grain of some very vocal entertainment industry types who have screeched about the potential dangers of digital video piracy.

But piracy is not an issue for Competisys because the company encrypts the signal, said William Prentice, Competisys' founder, chairman and CEO. Prentice insists that subscribers cannot copy content. “You're not going to be able to work with that digital copy at all. We're not going to be the route by which people steal.”

As for the video content itself, Competisys has no trouble acquiring it. “The libraries are there; the firms are there that can pull the various products together for us,” Prentice said. He compared Competisys to a typical cable TV system in the way it acquires and distributes video.

Sales people at Poppy Meadows have to try a little harder when it comes to explaining why people want the rest of the Competisys' service portfolio — IP voice and high-speed data — because, unlike television, those benefits aren't necessarily visible. Thus, Schuler Homes, Poppy Meadows' parent company, has set up a space in the sample home to lay it all out. “Once people see it, they're like, ‘I want it, I want it, I want it. I have to have it,’” Susanty said.

It's not just that the development is ahead of its time, which it is, but that it will continue to stay ahead, Prentice said. “We deploy a data-centric network that can deliver all three of the major services — video, voice and data — using technology that provides us with a legacy-free environment and dramatically lower operating costs,” Prentice said. In addition, Competisys uses a new method of scaling its network that enables it to start with small numbers of customers, he said.

Prentice bristled at the idea that Poppy Meadows is a bit much.

“It's not overkill when you look at the kinds of services that have been milling around waiting for something that would allow them to get out to customers — interactive TV, high definition TV. How long has that been around, waiting for a network?” he asked. “Our biggest, earliest application will be video-on-demand and other kinds of entertainment-on-demand. This kind of bandwidth will accommodate those types of streaming media.”

Competisys, which has a joint venture planned with another developer in Houston and is working in other Schuler developments, mixes its vendors. Extreme Networks is in the core, Minerva Networks owns the headend, Syndeo provides Class 5 voice-over-IP switching and World Wide Packets delivers the signals. End users get Motorola Streamaster set-tops to authorize and authenticate account information.

The network delivers gigabit Ethernet by segregating its video traffic into a separate virtual LAN and pushing video content in IP multicast streams directly to the home. Customers get a package of high-speed data, basic cable TV lineup and a phone line for $110 a month. That price should stay stable — or even come down — because equipment costs are dropping at a tremendous rate, said Lance Shoemaker, Competisys' vice president of network solutions.

Shoemaker is toying with some future applications to take advantage of the huge bandwidth. High on his wish list is broadcast-quality videoconferencing. “That's going to replace telephony as we know it in the on-net environment, where my customers sitting in their homes can actually set up broadcast-quality videoconferencing with their neighbors down the street or with their grandmother who also happens to live in a Competisys-powered neighborhood in Texas,” he said.

Steve Hawley, president of Advanced Media Strategies, sees Competisys' offering as a way for other utilities and rural telephone companies to fight back against encroaching cable and satellite competitors. “They can unseat the incumbent analog cable provider,” Hawley said. “The digital facilities that [telephone companies] have are better by definition than what the cable industry has because they can provision digital services that are two-way.” And, of course, developers are eager participants.

The first, most enticing feature is IP video. Minerva is staking its future on a shift from traditional radio frequency video delivery to IP, which costs less than ATM, according to Patrick Sweeney, Minerva's marketing vice president. “We're significantly cheaper, actually, than starting with a baseline cable network and trying to build a digital network there,” he said.

Competisys' fiber-to-the-home network gives Minerva a massive pipeline — more than enough to make the model work. “They have unlimited capacity for all practical purposes. We can't chew it up,” said Sweeney, noting that video is the most bandwidth-consumptive portion of the network.

The major drawback is that the model thrives in greenfield environments. Existing homeowners must do extensive in-home rewiring to get the same benefits and, at that point, people could simply opt for DirecTV or Echostar, said Greg Ireland, digital and interactive television analyst for IDC.

“The compelling nature of having your TV and your high-speed Internet access bundled from your telco is a bit diminished because you can get that from [direct broadcast satellite],” he said.

Still, there's potential in offering broadband to the home — especially with multiple-dwelling units and outside the television-saturated U.S.

But Competisys has another card in its deck: becoming an overbuilder. Its central office, while built to feed a specific new community, could deliver content to existing homes in other neighborhoods. While these new homes would not get the full new-build advantages, “there's no difference in equipment and the electronics and the optics getting into the home,” Prentice said.

“The problem is the efficiencies you might find inside the home when you get there,” he said. “We have some solutions now that we're going to be experimenting with over the next year on an overbuild basis that allow us to get the price-per-home down to almost the level that we have on the new builds. That will open up that entire set of customers to us.”

Until then, customers looking for those kinds of features will have to shop the real estate sections carefully.