Feature: [itvt] Interview with Mike Hayashi

[itvt]: What is your background?

HAYASHI: I was born in Germany and grew up in Japan. I went to college at Harvey Mudd College, Claremont, CA. Then I joined Pioneer Communications, a small start-up subsidiary of Pioneer Electronics. We worked with Warner Cable to deploy QUBE. This was back in 1978. Pioneer wanted to join the cable set-top box industry. They were selling QUBE set-top boxes, and also developed the control system associated with talking back to the set-top boxes. I eventually became their marketing manager and was the technical liaison between Warner and Pioneer.

[itvt]: What made QUBE an exciting experiment for you?

HAYASHI: What was exciting--, while there were many announced trials and experiments back then, QUBE was probably the first deployment that was fully two-way. Commercial success issues aside, they went into Columbus, Pittsburgh, Cincinnati, Dallas, Houston, St. Louis, and suburbs of Chicago. So it was a wide deployment.

I think commercially it was very challenging. At that point in time, the number of channels available on cable television was probably less than 50. A lot of the services, particularly the pay-per-view services, were not available on satellite. They had to be local. Also, live interactive production is very expensive.

[itvt]: Did you think it was a success at the time?

HAYASHI: I thought it was a great success. It spawned a lot of new channels, ranging from Nickelodeon to the early MTV trials. Some of the interactive tests that we conducted were of technologies that are still being tested out today-for example, the ability to send credit card information back to the system. We anticipated a lot of current-day ITV technologies and services, but I think the problem was not so much that the consumer technology wasn't ready, but that the support systems were so extensive-and I don't think we quite understood that.

[itvt]: You also worked at Full Service Network (FSN)?

HAYASHI: That's right. I headed the team that actually built it. I don't like to characterize FSN as a replay of QUBE, as it was very different. However, just as with QUBE, there were a lot of new things we had to invent. For example, the IP traffic that FSN managed was just under 4,000 customers-this was probably bigger than all the Internet traffic at the time. Plus, MPEG2 was not yet invented. The means of transporting MPEG video was on ATM-which was quite challenging. The software architecture of the set-top boxes that were available at the time consisted mostly of an embedded OS and embedded applications. The idea of being able to launch a different app to different customers on demand.

[itvt]: …was extremely difficult?

HAYASHI: Exactly. Nevertheless, FSN did debut a lot of the technologies that are in use today. For example, the QAM modulation on cable, the whole DVB digital video broadcast thing from Europe, the digital real-time, two-way specification associated with setting up sessions-all these were new. In fact, the whole architecture that enables application launch through the network. There were a lot of debates at the time, discussions about whether the set-top box should be a network-based computer or a thick client.

[itvt]: Which set-top box was used for the FSN deployment?

HAYASHI: It was an SGI workstation. We basically bolted cable-television tuners onto it. We had a couple of meetings where we had all these boards and we'd look at them and say: "that's pretty big!" The partners, by the way, were Silicon Graphics, Scientific-Atlanta, AT&T/Lucent, Hitachi, and Andersen Consulting (Accenture). US West made an investment in our company, so it was a pretty big effort. Technologically, it was a big success. I think we got a bum rap from the media at the time because it was hard to bridge the technical trial onto a commercial launch. Anytime you do an R&D effort like this, it's quite expensive. During the commercial trial, we also learned a lot-especially in the areas of on-demand movies or on-demand video content.

[itvt]: How did your early work with FSN influence what AOLTW is doing with ITV today?

HAYASHI: Once we developed the technology, the folks in Orlando took over and told us: "This is wonderful, but we want you to go out and figure out a way to make it more deployable." So then we went off and thought very hard as to what were the elements of the system. We thought a lot about cost: what the sweet spots were and what kinds of things we could foresee coming down the pipeline that would drive the cost up. Anyway, this thought process eventually gave us Pegasus-Time Warner Cable's internal interactive digital TV effort. We launched Pegasus 4 or 5 years ago. Today, it is a real-time, two-way system using DAVIC signaling, and MPEG2 transport decoding for the audio and video. It's deployed across our company. We have probably close to 6 million set-top boxes deployed today over 39 different operating cable divisions-from New York City to Palm Desert, California. Our plan was to get the platform out: to start with broadcasting-broadcast digital services-then migrate to on-demand services by deploying video servers into respective division headends and hubs. We're deploying not only movies-on-demand, but aggressively pursuing services such as subscription video-on-demand. We look forward to offering other on-demand services that could eventually lead to consumers being able to watch pretty much anything they want.

[itvt]: The obligatory question, then, is how long is all this going to take?

HAYASHI: Well…How long will it take is an interesting question. I'm hopeful that by the middle of this year, most of our divisions will be up and running with on-demand services of one kind or another. Today, we probably have about 10 divisions up and running.

[itvt]: When HBO began broadcasting in the early days, that created a domino effect. Obviously this is happening now.

HAYASHI: HBO has quite a track record. They also pioneered the concept of multiplexes. Even in the analog world, they were offering 4 HBO's for the price of one, so to speak! HBO on-demand is one of their signature products, so we expected it would be popular. By the way, I think it's interesting that, when people think about on-demand video services, they often think only about movies-on-demand-but there is no reason why it has to be confined to that.

[itvt]: What are the significant developments that have had an effect on the evolution of ITV technology in your opinion?

HAYASHI: Well, a few things. There is now a greater competitive awareness amongst the cable operators. Which is good, because it translates into a more aggressive deployment of newer technologies that could generate more revenues. Also, the digital personal video recorder has been very important. Personally, I think it's the second coming of the remote, so to speak. However, it's a pretty difficult product to explain. The remote, of course, is easy: you pick it up and change the channel. There are no cables and so forth. The important thing about DVR is that you no longer have to watch television live. However, until there is an integrated solution, where you don't have to wire 2 different boxes, the difficulty of setting it up is probably a deterrent to our consumers. We believe that this will soon no longer be the case.

[itvt]: So you would say the DVR is a friend of the cable operator, not an enemy?

HAYASHI: Oh, I don't think it is an enemy. I think it leaves questions with regards to the copyright. If you fast-forward through commercials all the time, who is paying for the program? DVR is something probably very attractive, for example, to the satellite providers. Now they could cache movies and other content to the hard drive. I think, by now people are building 80 Gig and 100 Gig hard drives. That's a lot of content. That's 40 hours worth of stuff. Considering you have 8 hours of viewing time in a day, that's probably enough. But hard drives are not one of the most reliable technologies there is. So we are very interested in a network-delivered DVR service. As a network provider, there should be a method to ensure that this type of service can provided to all owners of upgraded televions. A lot of open-ended issues here, but I think we are still very interested in this technology.

[itvt]: What's your opinion on networked DVR's-a controversial technology, but potentially a very exciting one. Have you thought about what you might do with it?

HAYASHI: Well, we spun off a company-the official name is Myestro. My previous boss is heading up that effort.

[itvt]: When you talk about network DVRs, you're talking about providing functionality through the head-end, not through the boxes themselves, correct?

HAYASHI: That's right. However, we are going to do both.

[itvt]: Have you decided what the business model might be?

HAYASHI: There has been a lot of interesting discussion around that. I don't think everything-for-free is going to work.

[itvt]: Will these head-ends be able to manage millions of boxes that are sending video back and forth to them?

HAYASHI: That's the challenge. When we look at a real-time device or system, it all boils down to whether the network can manage all the sessions at once. I think what Jim Chiddix is trying to accomplish with his Myestro TV project is very technically challenging. I am not aware of a system of this magnitude, from a video and audio standpoint.

[itvt]: What other things happened this year that you thought were particularly significant?

HAYASHI: I think there's a big shift in that now all the operators are saying they will launch OpenCable as part of their own software application platform. OpenCable and OCAP (OpenCable Application Platform) will provide a nationwide footprint, something we do not have today.

[itvt]: ITV seems to be doing particularly well in Europe. Do you have any observations about what they've been doing right? How can we emulate them and what can we do better?

HAYASHI: They don't have any massive deployments of two-way interactive cable-television systems, yet They are primarily satellite-based. Launching interactivity on a broadcast basis with little graphics-oriented apps. is all very well, but you just can't compare them to real-time, two-way service offerings tightly integrated with video. I think to the extent that the Europeans have these interactive apps, they should be commended. We should certainly do that-and do more.

[itvt]: You know, technically speaking, it may not be two-way, but many people-even in the industry-perceive it that way.

HAYASHI: Well, what does make me envious of satellite providers is that they do it once and they have one head-end. Whatever service they deploy shows up on every box at once, as opposed to having hundreds of head-ends to manage with different environments. That's right where the fundamental difference is. It affects everything-from how you bill your customers, to how you link to your community.

There are a number of challenges in North America, especially for cable. One challenge is our current situation with regards to the conditional access duopoly. We need a solution that gives all of us a higher degree of flexibility to take advantage of the innovation which the various companies bring to market. That has to be addressed. The other issue I think we look forward to addressing is that we will have a very large and diverse environment. Managing various applications that will be deployed from these different systems, that would be new and quite challenging. I'll give you an example. If you have an HDTV set-top versus a standard-definition television versus a set-top that has a PVR versus a set-top that has a hard-drive, you have a wide-ranging level of performance. We don't have the luxury of saying "go buy the latest thing." We have to provide services to everybody. To the entire product line, so to speak. It's different from a PC OS that goes from 95 to 98 to 2000 to XP, and every time it happens you go and buy a new one. We can't do that. That's not our intent. Our intent is to serve all of our customers, whatever level of performance their equipment provides. So that will be interesting.

[itvt]: Well, maybe a solution will be to create an installation division that completely focuses on multiple devices and specializes in home-gateway set-ups.

HAYASHI: You mean "gateway" as in one entry point that serves all different devices?

[itvt]: Yes.

HAYASHI: There's been a lot of discussion of that. You have to deal with various constituents in the consumer electronics world. Some companies may not want to build that. Some companies may just want to build a good digital TV set because there's a good market for something like that. It's hard to find something that is one solution that fits all.

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