Not all people were created equal, which is why someone invented the concept of personalization - adapting content, ads and products to the idiosyncratic tastes of a given individual. Personalization also incurs heavy service charges. While the talk used to be about how Internet sites easily segmented content, in the cellular information age, the discussion has moved on to complaining about the cost of these services.
Every time the end-user, i.e. cellular telephone owners, download information from the network, they use a channel devotes solely to him. Imagine Peter Jennings or Dan Rather calling each ABC or CBS viewer to individually read the evening news, and you’ll grasp the apparent waste of system resources. We write “apparent” because there are procedures that require two-way communication between the customer and the network, sending and receiving text messages and pictures between subscribers, downloading ringtones and - lest we forget - voice conversations.
The world of information services is accompanies by direct communications between users (SMS) and direct communications with the network (such as SMS messages from a registered information services). Opening a designated call channel for each user of these information services requires infrastructures to support the transmission of terrifying quantities of information, and the service provider must therefore invest immense sums to establish them. Since the service providers are not philanthropic organizations, the cost is transferred to the user.
However, some users can be considered as a “single group” for many kinds of content, and messages can be sent in a quick and uniform manner. Already, even before the video cellular era, some telecom providers prefer contacting their subscribers via SMS, since the vast number of messages forces them to reduce delivery time.
“Ultimately, we’re all couch potatoes,” claims Kfar Sava-based Bamboo MediaCasting president and CEO Guy Morag. “We all get the newspaper at the same time in the morning, sit down and read the news. A great part of cellular content will operate according to this model, but unlike the newspaper and television, the cellular operators’ infrastructure was designed to transmit information among subscribers, and when they try to disseminate common content to a large number of subscribers, the network is slowed down.”
Morag also claims the television, radio and newspaper business model, i.e. a fixed price for the viewing, listening or reading rights, rather than a user fee, is applicable for cellular content services. Sending content using the network-customer model is called “unicasting”, whereas sending content over the air to be received by multiple subscribers is called “multicasting”. The first model is rather like a newspaper subscription system, and the second is like satellite television broadcasting, which airs content that can only be received by subscribers with the right digital decoders.
Multimedia content is divided into two categories: live streaming content, such as breaking news reports; and taped streaming content, such as ads for movies, short clips, etc. As far as the customer is concerned, the viewing time might vary, but for the network, viewing time is generally the same. It is the moment the content is sent to its customers and stored in their devices’ memories for the subscribers to check at their convenience. The breakdown of messages by cells would enable, for example, sending a replay of the winning home run to all the cellular telephones of the fans at Yankee Stadium.
There is as yet no standard for multicasting, but Bamboo MultiCasting has already taken care to deploy a representative to the appropriate committee. The company’s product can be applied to GPRS and later-generation networks.
“The technological challenge is great. On one hand, it’s necessary to deliver uniform content to a great many devices, while confirming that the content has reached every subscriber on the other. There is also the issue of broadcasting encrypted content, so it cannot be seen by ineligible viewers, while simultaneously providing decryption for subscribers’ devices.”
Bamboo MediaCasting CTO Ram Arye and Asher Polani founded the company in June 2000. Polani earlier founded Baobab Technologies and held senior posts at SunGard Business Integration. Morag worked for EFI (Nasdaq: EFII) before being appointed Bamboo MediaCasting CEO following the company’s $2.5 million seed round in November 2000. Aurum-SBC ventures, Link Technologies of Japan and Veritas Venture Partners participated in the seed round. Partner Future Communications 2000 Ltd. (PFC), a fully-owned subsidiary of Partner Communications (Nasdaq: PTNRLSE:PCCD) later invested $750,000, while the company’s existing added $250,000.
Bamboo MediaCasting raised $7.5 million in its latest round in August 2002. The round was led by Italian Alice Ventures, with US-Israeli fund Apropos IT Ventures and Japanese Mobile Internet Capital (MIC) participating. Owned by Sony, NEC, Royal Philips Electronics, NTT-Docomo and KDDI, this was MIC’s first investment in an Israeli company.
Bamboo MediaCasting’s system comprises three software-based components. The first is installed in the provider’s computer and interfaces with other systems, such as billing. The second is installed in the controller supervising end stations. The third sits in the end-user’s device, and is downloaded when the device is registered.
Bamboo MediaCasting will launch the first mass trial of its technology in the coming months, covering hundreds of thousands of subscribers in Israel and Switzerland. The Fifth European Framework Programme for R&D allocated a €3.5 million grant to a consortium including SwissCom (NYSE:SCM; XETRA:SCMZ), Orange (LSE: OGE), Deutsche Welle, and the University of St. Gallen, using the company’s technology. Partner will test the system in Israel and SwissCom in Switzerland. Deutsche Welle is providing the content and the University of St. Gallen prepared the business model.
Why didn’t anyone think of it before? “Somebody fell asleep on duty,” says Morag. “Everyone was thinking about voice services, which has no need to send uniform information to a large number of devices. Lately, we’ve seen interest in multicasting.”
Not everyone was dozing. Israeli start-up Celltick Software Technologies has a similar product, but Morag claims is sends content via narrowband derived from existing standards. Another Israeli start-up, Celvibe, also developed systems for transmitting cellular video content before ceasing activity last November. Celvibe’s system focused on converting content to a format suitable for transmission, rather than on content dissemination. Emblaze Systems (LSE: BLZ) also develops conversion, rather than dissemination, systems.
In addition to cellular operators, the companies most likely to become relevant to Bamboo MediaCasting’s exit strategy are communications infrastructure companies such as Ericsson (Nasdaq:ERICY), Motorola (NYSE:MOT) and Nokia (NYSE:NOK). While they might see diminishing revenue from sales of base stations, despite cellular operators’ rising network traffic, at a time when the operators are trying to cut costs as much as possible, there is a market for products born of improvisation.
Bamboo MediaCasting will complete the commercial version of its product by the first quarter of 2004, although the company plans to test the technology earlier, mainly with European cellular providers. The company hopes to begin sales in mid-2004. Meanwhile, it is looking for a chairman, if anyone out there is interested.
Name: Bamboo MediaCasting
Founders: Ram Arye and Asher Polani
Product: Content encryption system for cellular network multicasting
Financing rounds: $11 million
Ownership: Veritas Venture Partners, Alice Ventures, Aurum-SBC Ventures, Link Technologies, Partner Communications and Apropos IT Ventures
Employees: 20 in Kfar Sava
Published by Globes [online] - www.globes.co.il - on January 8, 2003