From the May 9, 2003 print edition
Technology Beat
 

Eagle Broadband spreads wings into new areas

Jennifer Dawson   Houston Business Journal

Eagle Broadband Inc. recently spent close to $1 million on a facility upgrade that will allow the company to begin offering digital television programming directly to subscribers.

Within a month, League City-based Eagle, a supplier of broadband products, expects to be able to provide 220 channels of entertainment as part of its cable-styled television over fiber service. Eagle began offering its direct service at the end of March as part of a conversion from analog to digital service, says H. Dean Cubley, Eagle's chairman and CEO.

Eagle was previously buying programming from Austin-based WS Net, a video aggregator that re-sold content in an analog format to many small cable companies across the country.

WS Net had deals with major broadcast channels to re-sell their programming, while larger cable companies are big enough to have separate deals in place, Cubley says.

Eagle has now signed its own contracts with major studios and channels to carry their content.

"We have some 26 contracts with networks and studios," Cubley says. "That was not a trivial task."

Eagle has about 2,500 subscribers in the Houston area, many of whom reside in a few gated communities on the northwest side of town. The firm also has a few hundred customers in Austin.

The company recently signed a deal with an undisclosed city in Nevada to sell its cable-type service directly to homeowners there. Cities and small cable companies may turn to a company like Eagle because they find it too difficult to secure their own content contracts, Cubley says.

"This is a major undertaking for each city or municipality to do," he says.

Eagle provides a variety of services over its fiber-to-the-home network, such as Internet access, television content and home security. Dozens of companies were providing similar services a couple of years ago, but Cubley says Eagle is one of the few that are still in business, and it's the only company doing this in the Houston area.

"To my knowledge, there are only two to three still doing business in the U.S.," Cubley says. "I believe we are the largest in the U.S. right now."

By converting to a digital Internet protocol, or IP, video format, Eagle subscribers will be able to record, rewind and replay programs. Eagle also is poised to deliver a video-on-demand service, which Cubley says should go online by mid-summer.

"We have contracts with studios right now to provide full video-on-demand over fiber," he says. "We will be adding those video-on-demand servers, and initially moving this out to our own communities in Houston."

Time Warner Cable, the largest local cable provider, offers a video-on-demand service called iCONTROL. The service has been available to Time Warner's digital cable subscribers in the Houston area since last year.

Providing direct digital TV programming is only one of the latest new developments at Eagle, which has been spreading its wings in multiple business directions over the last two years.

Publicly traded Eagle, formerly known as Eagle Wireless International Inc., has acquired 14 companies since 2000. One of those acquisitions brought in Houston-based ClearWorks.net, which in late 2000 said it had 60,000 customers for its fiber-to-the-home services.

At the peak of its buying spree in early 2002, Eagle had 22 offices throughout the United States employing 350 people.

Today the company has 130 employees working in six or seven offices, according to Cubley.

As part of the integration of its acquisition targets, Eagle has eliminated 220 positions since the beginning of last year, representing nearly a 63 percent decrease in its employee base. Cubley says some of those jobs were retained by other firms as Eagle divested some assets.

He says the reductions were necessary to get Eagle's costs under control.

Eagle ultimately intends to invest a total of $2.5 million to upgrade its technology center, which is located in its League City facility. The build-out is not the only new business initiative at the company.

Eagle announced a partnership this week with Dallas-based Media Fusion, a company that says it has developed a way to transmit voice and data over existing utility power lines. The two companies are combining their technologies and signed a joint marketing agreement for a "new class of broadband offerings for homes and businesses."

Cubley says this will help Eagle's fiber-to-the-home offering, which is limited by the high cost associated with the "last mile" connection from Eagle's fiber metropolitan area network out to the home.

In another move, Eagle plans to implement a voice over IP phone service this summer and will stop re-selling phone service from SBC to its customers, which it has done for years.

And finally, another major undertaking at the firm involves phone service, but this version is more up in the air -- literally. Eagle has developed the Orb'Phone Exchange System, which is designed to provide satellite phone service on airplanes.

The phone, which has been in development for eight months, is intended for use in commercial aviation, military communications and homeland security, Cubley says.

Orb'Phones operate using Iridium satellites, so they are more reliable than the phones currently used on planes that need to be over a ground station for them to work well, Cubley says.

"This system will allow the airline to provide cellular-quality audio for well under $2 a minute," he says.

Eagle and Euro-GSM, its worldwide marketing partner on the Orb'Phone system, are close to announcing a deal with an airline carrier, Cubley says.

Shares of Eagle's stock were trading at roughly 22 cents at mid-week over the American Stock Exchange. The firm has a $22.5 million market capitalization.

jdawson@bizjournals.com • 713-960-5935

© 2003 American City Business Journals Inc.