Sunnyvale, Calif.-based startup OnAir Entertainment Inc. has a
slightly different take on the increasingly popular notion of delivering pay TV
services over IP networks. OnAir is targeting wireless operators such as Wi-Fi
hotspot providers, wireless access service providers, and enterprises operating
wireless networks. It has a relatively inexpensive video-over-IP system it
claims can deliver VHS-quality video to a laptop computer via a Wi-Fi network.
The OnAir system, which consists of a Linux-Intel media server and
patent-pending client and service management software, integrates with existing
Wi-Fi infrastructure. A basic system that can deliver four channels of video
content and supports from five to 25 simultaneous users costs less than $5,000.
It can also deliver video to Wi-Fi-enabled PDAs and will eventually be able to
provide service to smart phone users as well, says Raghu Nath, the company’s
vice president of business development.
OnAir demonstrated the technology earlier this year to hundreds of thousands
of mall shoppers in a cross-country tour organized by Intel to promote the
potential of its Centrino Wi-Fi technology. The company is also partnering with
WayPort, which Nath says is the second-largest hotspot operator in the country.
It is currently market trialing the technology in WayPort locations, including
at the Austin, Texas airport, as well as with independent hotspot operators such
as Buck’s, a coffee shop in Woodside, California known as a hang-out for Silicon
Valley entrepreneurs.
The company, founded by a group of Bay area high-tech industry veterans with
media, Internet and security backgrounds (Nath is a co-founder), believes its
technology will find a ready market because Wi-Fi service providers are
beginning to look for value-added services to offer their subscribers.
“In our discussions with operators, they’re telling us they face two kinds of
challenges,” Nath says. “It’s a market that is getting mature. Therefore,
additional revenue streams are becoming more importantespecially since plain
access service is being given away for free at some locations.”
“The other thing they’re looking for is a competitive edge over other
operators. To them, [OnAir] offers an opportunity to charge a premium for an
add-on service.”
OnAir is mainly targeting three distinct segments: Wi-Fi service providers in
airports, hotspot operators or venue owners in cafis and other retail locations,
and hotel and conference center Wi-Fi service providers. It also has a pitch for
enterprise customers such as hospitals, brokerage houses, and other financial
institutions. For each it has a slightly different product offering and a
different business case.
The basic video delivery engine will allow it to narrow-cast different
qualities of video depending on the type of receiving device and the type of
network. For example, the wireless video feed to laptop computers running its
client software is about 720×480 pixels and equivalent to VHS quality. The
system would deliver a much rougher quality of video to a PDA or smart phone.
Where available, it could deliver broadcast-quality signals over a wired
Ethernet network.
Security to protect the intellectual property of content providers is a key
selling point. The technology features several layers of security, including
“military-grade” encryption. Even if somebody broke in to or stole an OnAir
media server, they couldn’t access the content stored on it, Nath says.
The simplest scenario OnAir envisions is a single hotspot or small regional
operator with four or five hotspot locations. A system for a single or first
location costs under $5,000. For each subsequent location, it’s about $2,000.
The additional amount for the first location pays for a management systema
separate server running OnAir’s management softwarethat works over the Internet
and allows an operator to manage several locations from a central console.
“We believe the return on investment will be very fast,” Nath says. “It
should be a six to nine-month payback.” This is based on charging $2 to $4 an
hour or about $30 a month for video service, which he says is in line with what
consumers are willing to pay for residential pay TV and Internet services.
However, this doesn’t take into account costs for content. Nath suggests that
some operators may have access to free content, such as local community
television programming or their own or others’ infomercialsalthough it’s hard
to imagine anyone paying for this kind of content. Local sponsorship of
purchased content is another possibility.
Operators could also source content from satellite and cable providers. These
providers currently have rate cards that include different rates for providing
their standard services in public environmentshospitals, for example, or public
areas in hotels. We’re guessing, however, that satellite and cable providers
don’t have a “Wi-Fi hotspot” category on their rate cards as yet. The concept is
too new.
The third possibility is to buy content from OnAir, which Nath says is in the
process of developing a portfolio of content provider partners. He can’t provide
details yet because the deals have not been announced.
OnAir makes a more compelling case for Wi-Fi pay TV services in airports.
There, as Nath points out, operators have a captive audience of travelers who
spend anywhere from 45 minutes to an hour and a halfor longertwiddling their
thumbs, waiting to fly. The company is proposing that service providers offer
eight channels of video content, including feeds from the major networks. Now
the price to end users begins to seem more reasonable.
Customers would log on through their regular hotspot providera T-mobile or
WayPortand then have the option of buying time on the video service, or if
they’re already a subscriber, logging in using their existing userid and
password.
The case for Wi-Fi video in conference centers is also an interesting one.
Many if not most conference hotels and convention centers already have Wi-Fi
infrastructure in place, Nath points out. Providing live video feeds from
conference sessions over the wireless network could work in several ways.
Suppose you’re a conference goer who gets up a little late after a night of
conventioneering. You could log on to the live video feed from the keynote
session as you eat breakfast and then join the session when you’re ready. Or
you’re attending one session but you’re interested in another in a different
conference track. So you log on to the Wi-Fi video service and use the OnAir
system’s personal video recorder (PVR) functions to record the session you’re
missing so you can watch it later.
Nath also suggests that conference organizers might be able to sell
lower-priced admittance to the conference to people who don’t want to pay the
full price to attend in person. This would allow vendor companies at a
conference, for example, to have personnel attend and be available for meetings
with prospective customers but not actually pay the full shot to sit in on the
conference sessions.
OnAir also has an offering for hotels that would allow them to deliver video
content to guest rooms over a wired Ethernet network.
The company has one other interesting scenario in the transportation
sectorproviding video content to bored commuters on trains or even ferries.
There are both train companies and ferry companies in OnAir’s Bay area home turf
currently offering Wi-Fi service. Is the company talking to any of them, we
wondered?
“We’re not in position to disclose anything yet, but you’re on the right
track,” Nath says. (We don’t think the pun was intended.)
Truck stops are another possibilityalthough it’s clear that OnAir is too
small to be able to pursue every possible market opportunity. It only has about
15 employees. And although Nath says it has sufficient funding at presentall of
it privateit will need more within the next two years to move ahead, he says.
“We haven’t made our plans [for seeking funding] public yet,” Nath says.
“We’re still trying to figure out what our needs are.”
OnAir has some interesting ideas and if its technology works as well as it
claims, it might be able to create a market. But it will be creating a
market. This is virgin territory. Content, as in all IP TV propositions is
keyand could be a deal breaker. It will be interesting to see what kind of
content deals OnAir can strike.
Reprinted from ISP Planet.
