From the Wall Street Journal some time back. Thanks goes to mangymutt off of RagingBull for uncovering this one:
October 21, 1999
IBeam's Desnoes Is Betting
Satellites Can Speed the Web
By G. CHRISTIAN HILL
Staff Reporter of THE WALL STREET JOURNAL
Three years ago, Peter Desnoes was enjoying early retirement at his estate, the former Sears mansion on the shores of Lake Geneva, Wis., thanks to media magnate Rupert Murdoch's generous offer for a group of TV stations he managed and partly owned.
"I expected to spend an idyllic life raising three small children and serving on a number of boards," he recalls.
A.G. Duffy
But the Internet, as the cliche goes, has changed everything, including Mr. Desnoes's life. One of the boards he picked was that of iBeam Broadcasting Corp., an obscure start-up based in Sunnyvale in California's Silicon Valley. The company had an audacious plan for turning the Internet into a kind of interactive TV. At last December's board meeting, when Mr. Desnoes recommended a friend to succeed the company's founder as chief executive officer, the other directors unexpectedly asked him to consider competing for the post as well. He won the contest, which he says left him feeling "like a heel."
At age 56, Mr. Desnoes (pronounced "day-no") now finds himself running flat out to implement iBeam's game plan before a dozen competitors, including a couple of Internet giants, commercialize other ways to improve transmission of audio and video over the network. IBeam's scheme is to use satellites to allow media companies, such as British Broadcasting Corp. and Bloomberg LP's Bloomberg Interactive TV, to bypass the congestion and expense of the fiber networks that form the backbone of the global network.
The Internet was never designed to be a mass medium like radio or TV, but instead for "one to one" connectivity. Web sites typically use host computers called servers to send out one stream of digital media to each individual who clicks on, say, a concert or a video clip. Thousands of users meant thousands of streams, inundating both the servers and the Internet's backbone network. That's why recent Internet transmissions of the Woodstock '99 and NetAid concerts either crashed the servers or suffered glitches.
Bypassing the Internet's Core
IBeam is building a $250 million network that bundles media traffic and bypasses the Internet's core by sending it through a satellite link to the Internet service providers at the Internet's periphery. If, say, the BBC wants to provide a video clip, it will be sent over a direct fiber connection to one of iBeam's two national data centers. There it will be beamed up to a satellite transponder that relays the stream simultaneously to about a dozen regional data centers as well as to thousands of inexpensive servers equipped with receivers at thousands of Internet-service providers that have local connections to users. IBeam provides the servers and receivers to the ISPs free of charge.
When demand for an Internet program such as a concert is high, the program, in digital form, is temporarily stored at the local servers. It is stored for longer periods at the regional data centers and indefinitely at the national centers. If interest in an event suddenly flares up again -- for example President Clinton's Monica Lewinsky tapes -- the national centers quickly "repopulate" all the servers with the data via satellite.
Because satellite transmission is an efficient way to move media streams to thousands of locations, Mr. Desnoes asserts that iBeam can cut the prices charged media companies by one-third to one-half, while markedly improving the quality of audio and video.
Investors and customers tend to agree. "We believe in iBeam's business model and its [network] architecture," says Bill Miller, Intel Corp.'s director of content and commerce ventures. Adds Lee Masters, chief executive of Liberty Digital Inc.: "We think iBeam circumvents the bottleneck of the Internet, particularly for widely visited Web sites." Last week, iBeam announced a $42 million third round of financing, including Intel and Microsoft Corp., bringing total financing to $68 million.
IBeam suffered a public-relations setback when its founder and chairman, William Michael Bowles, was arrested two months ago on charges of soliciting sex with a minor over the Internet. Mr. Desnoes says the incident is a "shock," but added that Mr. Bowles wasn't involved in the day-to-day operation of the company and promptly resigned as chairman. He adds that iBeam's marketing ability hasn't been impaired.
A Need to Move Quickly
IBeam has server arrangements so far with about 60 Internet service providers and distribution deals with 30 media concerns. But it has to move fast, because competitors abound. SkyCache Inc., a start-up in Laurel, Md., is also developing a satellite bypass and has more server-location agreements with Internet-service providers, although it trails iBeam in deals with media companies. Other approaches are further along: MCI WorldCom Inc.'s UUNet unit has slashed the cost of streaming media by charging content providers for a single media stream to a special network of routers, which then distribute the stream to ISPs that are UUNet customers. Akamai Technologies, Cambridge, Mass., has placed more than one thousand servers at about 40 data centers of Internet carriers to speed up any kind of Internet data. UUNet and Akamai in turn have direct competitors, including streaming-media pioneers Broadcast.com, now a unit of Yahoo! Inc., and RealNetworks Inc.
These companies are expected to eventually consolidate or partner together, driven in part by an expected crash in the cost of fiber transmission. For example, industry sources say SkyCache and Akamai will soon announce a joint distribution agreement. But Mr. Desnoes says he never expected iBeam to retain its cost advantage forever. He says iBeam will survive because of the higher quality of its transmission service and a unique ability to provide media companies and ISPs with services based on its local servers, such as targeted ad insertions or pay-per-view offerings.
Mr. Desnoes says iBeam will help fulfill the Internet's long-term future, which is to be "an interactive alternative to radio and TV." |
