Expansion to Internet TVs

MoCA to be Fixture in Pay TV Services Through Mid-2012, Entropic Says

October 29, 2010 by Mark Seavy|Top News

Multimedia over Coax Alliance (MoCA) technology will be wed to pay TV operators through the first half 2012, before expanding to include Internet-capable high-end HDTVs and a “very robust” dongle market for delivering streaming services, Entropic CEO Patrick Henry said a in conference call.

U.S. cable operators will fully shift to MoCA-equipped set-top boxes by mid-2011. Time Warner Cable, which has been testing MoCA 1.1 in the Charlotte, N.C., market, will roll it out nationally by year-end, Henry said. And Comcast has deployed MoCA in about 20 markets and will extend it nationally by mid-2011. DirecTV is using MoCA with its HD and DVR/satellite receivers. EchoStar, the main hardware supplier for Dish Network, continues to use HomePlug 1.0 despite its being among the founders of the MoCA Alliance. Dish uses an analog remodulation technology for delivering multi-room DVR.

MoCA 1.1-equipped set-top boxes are installed in about five million U.S. households led by those served by Verizon FiOS, which has Cisco products with more than 3 million customers, industry officials said. The footprint is expected to grow in 2011 as MoCA 2.0, which allows for channel bonding to boost maximum transfer speeds to 400 Mbps, starts getting designed into STBs and begins “volume” deployment the following year, Henry said. MoCA is expected to be in about 59 million pay TV homes by 2014, analysts said. There are currently about 100 million pay TV service homes in the U.S., analysts said. Comcast itself has about 10 million advanced services subscribers that average about 2.5 STBs per household, Comcast officials have said.

MoCA dongles, like those being sold through retail by Actiontec, Netgear, D-Link and others will likely be a main delivery mechanism for the technology for the next several years, Henry said. Wistron NeWeb Corp., which makes the DirecTV Ethernet-to-Coax (DECA) MoCA 1.1 bridge, accounted for 22 percent of Entropic’s $60.1 million in Q3 revenues, up from 18 percent last year, the company said. The MoCA dongles will serve as a set-back box for TVs that would connect to Ethernet and Coax to deliver streaming services. Entropic conducted a test with video service provider Boxee using MoCA and 85 percent of Boxee users reported the technology gave a “better experience” than Wi-Fi, Henry said. Boxee officials weren’t available for comment. DirecTV also is expected to use the MoCA dongle with the Ethernet connector on its HD satellite receivers to launch an upgraded version of DirecTV Cinema pay-per-view as a streaming service, Henry said. DirecTV Cinema Plus is currently being packaged as an upgrade to the PPV with a free HD or HD/DVR satellite receiver starting at a $29 monthly fee and access to more than 4,000 titles.

"It’s going to be a while before every device has some MoCA” capability built in, but in dongles, MoCA will be increasingly be available “over the next few years,” Henry said. With MoCA dongles available, “we don’t see integration” with STBs as a “near term opportunity and it will continue to be a dongle-type of market."

Entropic has been shipping its new EN2510 MoCA 1.1 chip this year as an upgrade from EN2210 that boosts clock speed to 166 MHz from 150 MHz. Entropic will move manufacturing to a 40-nanometer process from 65 nanometers with the introduction of MoCA 2.0 chips, analysts said. MoCA accounted for more than 66 percent of Entropic’s Q3 revenue, with satellite-related ICs, like the channel stacking switch (CSS) chips being used by DirecTV, representing 25 to 30 percent, company officials said. The CSS chips allow multiple video streams to be delivered into a home over one wire. Sales to Motorola were 19 percent of Entropic’s Q3 revenue, while Cisco, which is a major supplier to Verizon, was 10 percent, company officials said. Cisco was up from a less than 10 percent customer a year earlier, while Actiontec dropped below 10 percent from 18 percent, the company said. Comcast is starting its transition to MoCA in U.S. regions where Motorola STBs are deployed, Henry said.

Entropic’s share of the MoCA chip market is expected to be more than 90 percent by year-end, better than the 80-85 percent it forecast earlier as Broadcom introduced its products, Chief Financial Officer David Lyle said. Its share of the business will likely drop to 65 to 75 percent in 2011 as more competitors emerge, he said.

Fueled by MoCA chip sales, Entropic swung to a $11.2 million Q3 profit from a $1.2 million loss a year earlier as revenue soared to $61.3 million from $30.9 million. During the quarter, Entropic agreed to supply CSS chips to Brazil’s Embratel for its satellite service. It also has begun supplying BTS ICs to Bell Canada, which sources satellite receivers from EchoStar. Entropic also will provide its EN4020 multi-mode hybrid silicon TVs for Robust Electronics’ line of Minerva TVs that will ship in Europe late this year. The TVs are compatible with Europe’s digital video broadcast terrestrial (DVB-T), digital video broadcast cable (DVB-C) or analog standards. Entropic ended Q3 with $53.6 million in cash and cash equivalents, up from $35.2 million a year ago. It also raised $99.1 million earlier this month in net proceeds from a follow-on stock offering of 10.75 million shares.