The cable industry has had many competitors. At the end of the day, though, its stubborn dominance is due to its birthright: The coaxial cable it controls in a vast majority of homes and small businesses in the United States. Of course, the advent of fiber and projects from the telcos, Google and others clearly threatens that crown.
Until now, the serious competition has always come from outside. A new Boston-based startup, however, pits the industry against the very folks who made it what it is. Light Reading and other sites report that Layer3 TV has come out of stealth mode.
This will be a startup worth watching because two of the three top Layer3 executives are important cable vets. Writes Light Reading’s Mari Silbey:
Describing itself as "a next-generation cable provider" combining "the best of television, social media, and digital life," the company is headed up by several notable cable industry veterans, including Jeff Binder as CEO, Dave Fellows as CTO, and Chuck Hasek as head of video technology. Binder previously founded the video-on-demand company Broadbus Technologies, which was sold to Motorola in 2006. Fellows held the title of CTO at both Comcast Corp. (Nasdaq: CMCSA, CMCSK) and ATT Broadband. And Hasek was most recently in place at Time Warner Cable Inc. (NYSE: TWC) as the principal architect of video systems.
Fellows also was CTO of Continental Cablevision, one of the early and most influential MSOs.
Neither the Layer3 website nor Silbey’s story has much detail. The executives obviously have good track records, feel that they have a good idea and know that they have good friends. Silbey reports that the company has raised $21 million in funding. TechCrunch adds that the Series A round was led by North Bridge Venture Partners and Evolution Media Growth Partners.
Variety’s Todd Spangler was able to fill in some detail. He wrote that it appears the key will be live television and VOD and that the new entity isn’t going down the same road as some other initiatives:
The company specifically rejects the “virtual MSO” label, and is apparently cooking up a novel way to distribute video to the home that doesn’t use the Internet. The over-the-top virtual MSO idea, which has been pursued by Intel and others, essentially recreates subscription TV service and delivers it over the Internet. Dish Network is exploring a virtual pay-TV offering, too, and has landed distribution rights from Disney for such a service.
Though based in Boston, Spangler reported that the company has asked for $2.9 million in job tax credits from Colorado and plans to create 321 jobs, with average wages of $92,083, in Denver. That’s not surprising but reinforces the fact that this is a new-age cable project. The Mile High City always has been the center of the industry’s universe.
The cable industry has always had a love-hate relationship with its infrastructure. Its hybrid fiber-coax (HFC) network has enabled it to rise from being an outsider to the top. But, at the same time, fundamental architectural decisions were made before the need for more than a rudimentary upstream path was clear. The change from analog to digital and to IP also has been a difficult issue for operators.
Thus, Layer3 is sort of an opportunity for old cable hands finally to be free of those legacy limitations. It will be interesting to see what they come up with.