BigBand Bets On IPTV, Provincial Cable

BigBand Networks (NASDAQ: BBND), the digital video networking provider, is hoping to grow Asian operations as bookings in its core US market rebounds gradually.

The vast majority of its revenues are derived from four US cable customers: Bright House, Comcast, Verizon and Time Warner Cable, with the latter alone representing over 30% of total income.

Full-year gross revenues have grown considerably over the past five years, from US$35.5 mil. in FYE 04 to US$185.3 mil. in FYE 08. But for 9M 2009, total revenues were US$105.1 mil., down from US$131.2 mil. Y/Y, as US customers downgraded their orders amid turbulent economic times. 

However, bookings in the third quarter and beyond looks to steer the company back on track; moving ahead, operators are expected to increase capital spending on video equipment for 2010.

Asian strongholds
The company, which went public in 2007, has traditionally focused on the cable market, assisting those in the paces of digitization and looking to replace broadcast video with more personalized, unicast services. But in Asia, along with strong customers in the provincial Chinese market, there is an increasing focus to capitalize on IPTV growth in Korea and beyond.

Global revenues outside North America grew to 9% in Q3 09, with Asia only making up ~5% of total income. Of this, Greater China and Korea contribute more or less equally to the company’s P&L. Major deals in the APAC region cover ~25 mil. TV subscribers, with partnerships including Korean and Taiwanese telcos LG Dacom and Chunghwa Telecom, as well as Chinese cable players Beijing Gehua, Jiangsu Cable and Zhongshan Cable.

The explosion in IPTV will bring a “tremendous opportunity” across Asia, typified by Korea. The company is finding joy in a system called vIP Pass, with LG Powercom deploying this in Q2 this year. The application enables operators with both ADSL and HFC networks to deliver a ubiquitous IPTV service via cable or DSL modem. “This is a very economic and timely solution, very scalable,” said senior director of Asia Pacific, Johnny Cheung, who heads up the region. In addition, the company has deployed a platform to deliver IPTV ad solutions for Chunghwa Telecom. Elsewhere in Asia, countries dominated by DTH and IPTV will be areas of focus.

Potential in China
BigBand has 56 customers of its digital head-end solutions in mainland China, but this will change as operators look to use freed-up bandwidth on VAS services, to grow ARPU and user stickiness. “We see the next wave in cable markets, in addition to digital head-end, would be the interactive solutions and HD,” Cheung said.

Key to its competitive edge here is targeting the high-end market. BigBand Networks has made a name for itself in business of Edge QAMS, having breached 600,000 shipments worldwide earlier in the year. It sees huge potential next year in China for the multi-purpose technology – which enables operators to carry VOD and switched digital video (SDV) streams.

SDV technology effectively allows operators to utilize bandwidth more efficiently. “With SDV you can squeeze bandwidth and dynamically allocate resources. If for instance, their capacity can only hold 100 channels, with SDV they can hold 300,” he told Media Research Asia.

The company is running a first-of-its-kind trial in Asia with Jiangsu Cable, offering EPG and STB devices to around 500-1,000 homes. It is testing a client that enables Switch Video Analysis (SVA), which captures viewership data; particularly useful to operators and advertisers keen to go down the path of targeted advertising. Jiangsu is now deploying its router to the provincial capital and nine other cities to deliver DTV, including HDTV and interactive services.