Building B Rebrands, Makes Spectrum Pitch to Stations

‘Sezmi’ Service Will Link Broadcast, Broadband Delivery in Consumer Device

By Glen Dickson -- Broadcasting & Cable, 5/1/2008 7:57:00 AM

Building B, a venture-backed startup that aims to market a single set-top device that marries broadcast and broadband video for display on living-room TVs, rebranded itself as Sezmi Corp. and announced that it will partner with broadcast stations to deliver part of its service using their digital spectrum.

The Belmont, Calif.-based company -- which received $17.5 million in funding from venture-capital firms Morgenthaler Ventures, Omni Capital and Index Ventures last August -- began hinting at its plans for a new subscription digital-video service back in 2006 but refused to provide any technical or operational details.

Cofounders Buno Pati, a former Harvard engineering professor who went on to become a Silicon Valley entrepreneur and is Sezmi’s CEO, and Phil Wiser, former chief technology officer for Sony Corp. of America and Sezmi’s chairman and president, simply said they aimed to use wireless technology, not fixed-line connections, to deliver broadcast video, movies and Internet video to a next-generation set-top.

Sezmi has now disclosed that it created a digital-video-recorder set-top box with 1 terabyte of storage that will link to a smart digital-TV antenna, and that it plans to partner with local broadcast stations and use their digital spectrum to deliver not only broadcast channels, but also 25-40 basic- and premium-cable networks to the box, in a “wireless cable” service reminiscent of failed DTV multichannel service USDTV.

The Sezmi set-top will also have a broadband connection that will be used to deliver less-popular and on-demand content in a hybrid transmission system Sezmi calls FlexCast.

The broadband connection makes sense, as Sezmi is mainly pitching itself as a way for telcos to provide a competitive video service to cable and satellite operators. Wiser said the broadband connection can also be used to “push” content, such as personalized ads, to the box, which can be mixed with content delivered over-the-air, as well as to deliver popular Internet video like YouTube to the TV.

But significant questions remain about Sezmi, which said it is starting trials in three local markets and plans for a commercial launch with broadband-service providers and national retailers later this year.

While the company flashed the brands of local stations in Seattle and Las Vegas during its demo, it won’t say which markets it is testing in, nor any deals it may have with broadcast stations for spectrum. Sezmi also won’t disclose the names of its programming partners, although it displayed the brands of most cable networks in its demo, nor the telcos it will be teaming with to market the service. It also won’t divulge planned pricing, although Pati said it will be significantly cheaper than existing cable video packages.

The only deal Sezmi formally disclosed is a contract with Harris, announced at the 2008 NAB Show, to build a network-operations center for the new service at Harris headquarters in Melbourne, Fla. Pati said Sezmi also contracted with Taiwanese conglomerate Tatung to build its set-top boxes.

A major stumbling block for Sezmi could be securing enough broadcast spectrum to provide a viable service. Most major broadcasters are already eating up most of their 19.4-megabit-per-second DTV pipe with HD programming, with available space going to secondary multicast weather or news channels. Local stations have also been seriously considering using part of their spectrum to deliver new video services to mobile and portable devices.

Sezmi plans to partner with 2-4 stations in a market, said Pati, who noted that it doesn’t have to partner with major network affiliates but may instead seek spectrum deals with noncommercial or independent stations. But even if Sezmi is lucky enough to partner with four stations that are only providing standard-definition digital feeds and, thus, have lots of megabits to offer, the math doesn’t look good for delivering lots of HD channels.

For example, if Sezmi were fortunate enough to get 15 mbps from each station -- which is probably wildly optimistic, as it would mean that the local station would be using less than 4 mbps for its active video signal -- that would still only give it a total payload of 60 mbps in a market. Even when using advanced MPEG-4 compression at very low data rates, which Sezmi said it is, that amount of bandwidth probably can’t support more than 10 HD channels, if that.

“We’re not going to deliver all of the cable networks in hi-def,” conceded Wiser, who said it will still be possible to deliver a lot of HD content in non-real-time fashion to the Sezmi DVR.

One broadcast engineer who was familiar with Sezmi noted that it isn’t the first startup to pitch stations on a new way to monetize their spectrum. Besides USDTV -- which failed despite the financial support of major station groups -- datacasting concerns iBlast and Geocast both wooed broadcasters almost one decade ago with the possibility of using DTV signals to feed Internet content to PCs. Most recently, Moviebeam, a push movie-delivery service that actually used the analog spectrum of PBS stations to deliver HD movies to a proprietary set-top box, shuttered last December.

“This is just the latest incarnation of the idea of pushing content into a box using a number of aggregated stations,” the source said. “In the current world, the question is can you compete with an MVPD [multichannel-video-programming distributor] of today?”