Last week, Sezmi Corporation (formerly known as Building B, Inc.) announced that it is commencing trials in pilot markets in preparation for commercial launch of a new over-the-air subscription TV service. With $17.5 million in venture capital, the Belmont, Calif.-based Sezmi plans to deliver television content, including broadcast and cable network programming, movies and Internet video, in one package, using a seamless user interface.

Aldo Cugnini
Analyst

To do this, Sezmi has developed what they call FlexCast, a video distribution technology that combines terrestrial digital broadcast television with existing broadband infrastructure to deliver video content. The system utilizes available capacity in existing digital television broadcast networks and creates a private, secure content transmission system. Sezmi settop boxes are expected to have a huge DVR capability - perhaps one terabyte of storage or more - as well as smart antenna technology that makes both its private broadcast and existing terrestrial TV broadcasts reliably accessible to subscribers.

Readers may recall that a similar service was attempted and failed not too long ago. Salt Lake City-based USDTV had secured a $26M investment from major broadcasters to start and operate an OTA subscription service, but filed for bankruptcy after failing to generate more than 15,000 subscribers. The service, which went off the air in 2007, had similarly planned to offer "privatecast" programming, by leasing ancillary data space from DTV broadcasters.

So what’s different this time? Sezmi is still planning to use ancillary data space from pooled broadcasters to deliver additional content. However, this will be supplemented by an Internet connection that the company says will "cost effectively route and deliver video content." Add to this gobs of local storage, a tightly-integrated program guide that operates across all the available content, plus an attractive price, and you could have a compelling and successful service - maybe.

In any one market, how much bandwidth could be offered this way? Assuming that each broadcaster wants to keep 10Mb/s for themselves, with an average of about 7 OTA TV stations per market, that means about 50-60 standard-definition programs could be offered at any one time - possibly enough to deliver a critical mass of programming. Together with Internet bandwidth, you could have a video-on-demand experience.

On the other hand, the only truly exclusive part of this is the collection of agreements - and infrastructure - must be developed with broadcasters to use their spectrum. This is, in my estimation, the Achilles’ heel of the whole offering. A few years ago, some broadcasters were only too willing to give up some bandwidth, as they hadn’t gotten so deep into the DTV transition, and they hadn’t played out all of the other potential uses of the spectrum. But today, there is serious attention being paid to mobile TV and other services that could expand the broadcasters’ advertising revenue. It’s not obvious that leasing the spectrum is more profitable to them, especially when it will result in carrying programs with which the broadcasters compete. And broadcasters may be wary about repeating their earlier bad investment in a similar service.

Also, what’s to stop someone from providing a similar service, without the leased ancillary broadcast space? Some people believe that there’s enough bandwidth on the Internet to push HDTV, as reported here last month (Don’t Discount The Web For High Definition Delivery). One could imagine a rival service starting up that leaves out the costly leased spectrum, and simply integrates OTA with Internet delivery. I ’sez,’ "Good luck," but let’s see how many broadcasters bite.

Reply to the author