Cable-TV products advance to digital

March 1, 1997

Cable-TV products advance to digital

ben Harrison

A fiber-optic transmission and element-management systems developer for cable-TV and telephony-system operators, Harmonic Lightwaves, in Sunnyvale, CA, is moving from analog to digital products to meet the expected growth in broadband digital communications needs. The company plans to roll out video- and audio-compression products in the third quarter of this year.

The new digital products are for use primarily by cable-TV operators over hybrid fiber/coaxial-cable networks. They include a quadrature amplitude-modulation modulator, an mpeg-2 program encoder, and a video-transmission platform for a broadband network headend (see Fig. 1, page 18). The products are being demonstrated at the Cable `97 show this month and at Supercomm `97 in June, both in New Orleans.

Tony Ley, Harmonic`s president and chief executive, explains that while the company has been a long-time provider of fiber-optic systems for broadband communications, it has made a commitment to move into the digital cable-TV arena.

Harmonic`s move is the right one, in the view of Lee M. Peters, analyst at Kessler Marketing Intelligence Corp., an international fiber optics market research firm in Newport, RI. "Cable-TV operators are upgrading their bandwidth needs, and multiple system operators [MSOs] are planning to deploy digital capability into their networks. However, MSOs do not have bottomless pockets. They are sensitive to capital needs, and they are feeling the pressures of direct broadcast satellite." Peters also thinks equipment capability is high on the MSOs` priority list. "There is an untried market for digital equipment," he says.

From Harmonic`s perspective, Ley notes that these digital video- and audio-compression products are compatible with international and U.S. domestic standards, including the International Telecommunication Union/Society of Telecommunications Engineers (itu/ste), Digital Video Broadcast (DVB), and Digital Audio-Video Council (davic) standards.

Ley also states that the company has leveraged its technical expertise to address the video- and audio-compression aspects of digital convergence, which will ultimately lead not only to video-on-demand, but also to Internet access and online cable-modem services. Digital technology permits data compression for increased throughput in broadband cable-TV networks. Internet access and video-on- demand services, created by cable modems and digital set-top boxes, require higher throughput for efficient transmission over broadband networks (see Fig. 2).

This strategic move into broadband digital cable-TV communications from its traditional analog base requires the company to expand its organization and upgrade product development. "We have dedicated a 15% budget allocation from 1996 fiscal year revenues to research and development. About one-third of that budget goes to digital systems development," Ley says.

The company pumped about $3 million into research and development last year. This R&D effort is led by Moshe Nazarathy, cofounder of the company and currently senior vice president and general manager of the company`s Israel-based research and development center.

The company`s research laboratories in Israel are being expanded and relocated from Haifa to Caesarea, to facilities more than double the current size. The move is expected to take place in the first quarter of 1997.

In the United States, Harmonic has moved and expanded its California headquarters and increased its staff. According to John Dahlquist, Harmonic`s vice president for marketing, "The company is integrating its design philosophies into the digital product line."

"Although users and industry leaders are already excited by the potential of advanced digital services, only the tip of the iceberg has emerged," says Dahlquist. "By the turn of the century, we envision digital compression technology being deployed to millions of homes, providing subscribers with advanced services, such as Internet access, video services, telecommunications, and videoconferencing.

"Broadband networks are ideally suited to providing advanced data services into the home because of their capacity and overall cost-effectiveness," Dahlquist states.

He further explains that Harmonic has no plans to build digital set-top boxes or cable modems, but will focus on strengthening its headend and management products. He does not see Harmonic joining forces with another vendor to provide an end-to-end solution. "Neither is the company in the consumer electronics business," adds Dahlquist. q

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