Editor’s note: “Atlanta Beat’ is a regular feature on Fridays in Local Tech Wire. CoaxMedia, just coming out of stealth mode with its first product, is off to a fast start in its mission to deliver an alternative to high-speed Internet access services offered by the cable TV giants.

Just days after announcing the commercial availability of its product a customer of CoaxMedia says his company has completed the installation of the Atlanta-based company’s technology on two apartment buildings with a combined 674 units.

CoaxMedia uses existing coaxial cable in apartment buildings and hotels to provide each home or room with a high-speed Internet connection. A server needed to run the service sells for about $1,700 and client modem’s run close to $150, according to Dan Seitam, CoaxMedia chief executive and financial officer.

Bob Zinn, president of Fort Lauderdale-based T-1 Broadband, the Internet service provider using CoaxMedia’s technology, says one 350-unit already is lit and the other 324-unti complex is about to go online.

“It’s a little early to say whether or not CoaxMedia has increased our customer base, but they have enabled us to enter into a field that other ISPs have founded to be dead,” Zinn says.

Zinn says normally it would cost T1 Broadband between $120,000 and $180,000 to roll out service to a 300-unit complex, and by using CoaxMedia’s technology his company spent one-third of that to establish service.

And CoaxMedia is also ready to roll out its product to eight properties near San Jose, California in conjunction with ISP Kyber Networks, according to Kyber CEO Kirt Mulji.

The CoaxMedia connection

CoaxMedia’s systems, known as the Series 6000, is a small gateway server that is installed in a building’s telecom closet and is compatible with any type of broadband device. Each Internet users residence or hotel room is equipped with a SandDollar cable modem, and the connection comes over cable lines on a different frequency than what is used for cable television service, or high-speed Internet services offered by cable companies, like Time Warner Cable and Cox Communications.

Patrick Hourigan, vice president of engineering for Time Warner Cable’s Raleigh division, says he is not familiar with the technology used by CoaxMedia and that he is not aware of any similar systems installed in the Research Triangle Park area.

Officials with Atlanta-based Cox Communications, one of the largest cable service providers in the U.S., are hoping that CoaxMedia’s technology is it hit. Cox was CoaxMedia’s original investor syndicate, which also included Canadian cable giant Rogers Communications, Inc.

Seitam declines to reveal the amount of that original cash infusion, which was used for working capital, and he claims Coax carries no debt load.

A January 2000 filing with the Securities and Exchange Commission shows CoaxMedia offered $1 million of debt notes and warrants to private investors, and that the company already had placed $175,000 of the securities with “three accredited investors and two non-accredited investors.” Other than that no financial information is available on the privately held firm.

“We’ve been flying pretty low under the radar,” Sietam says. “We decided early on to make sure our product was solid before making any noise.”

Nick Hamilton-Pearcy, senior technology advisor for Rogers Communications, who led his company’s investment in CoaxMedia, says Rogers views the company as the missing link to entering the apartment and hotel markets in Europe and Asia, where much of the infrastructure in what are referred to as Multi Dwelling Unit, or MDU, has not been built out.

“I do envision their product going into hospitals and universities, and other similar places that need high-speed services but where the existing wiring is not too good,” Hamilton-Pearcy says.

Studies show market on the rise

An October 2001 study conducted by Jupiter Media Metrix and posed on the CoaxMedia Web site finds that 35.1 million U.S. households will subscribe to at least one form of broadband Internet service in 2006 compared to 5.2 million users in 2000.

A similar study released by Parks Associates finds the number of households with broadband connections to reach 30 million by 2004, and that 17 million of those users will establish a home network. That same study shows the home networking market will continue growing from a $600 million industry in 2001 to $5.7 billion in 2005.

And the Cahners In-Stat Group released another study asserting that the home networking market will grow from $1.4 billion in 2001 to $9.2 billion worldwide by 2006.

The difference in those studies seems to indicate that the future of home networking is very much up in the air. Companies like Microsoft and Macintosh already are grabbing market share in their quest to be the leading company providing products for the networked home.

And even though many of those figures look optimistic, the home networking market has taken off as quickly as the industry would like. Some of the market’s biggest supporters, such as Cisco Systems and Nortel Networks to name a few, have delayed the release of home “gateway” appliances such as routers and hubs.

Matt Davis, a networking analyst with the Yankee Group, agrees with the information provided by the studies, saying the MDU market is beginning to pick up steam.

“That area has been progressing along in fits and spurts for three to four years,” Davis says. “Personally, I think there is a lot of potential in that market. The problem the first couple of years is that building owners got greedy and told companies they wanted a cut of the revenues brought in over the cable lines in their buildings. That left a bad taste in the mouths of service providers but there is beginning to be more interest in this area.”

Meanwhile, Seitam says he expects CoaxMedia to become profitable by fourth quarter 2002.

“Previously, people formed business plans targeting this same market on the false assumption that providing high-speed access to large properties that 40 percent to 50 percent of those residents would use that service,” Seitam says. “We’re seeing that in order to survive we need at least an 8 percent to 10 percent take.”

CoaxMedia Web site: www.coaxmedia.com