Terayon Growth Parallels Industry - Company Business and Marketing

Terayon Communication Systems Inc. could serve as the poster child of the "New World of converged telecommunications."

Founded in the mid-'90s to push its Synchronous-Code Divisional Multiple Access (S-CDMA) transmission scheme for cable modems, it has drifted with industry currents and transformed itself into a multi-purpose vendor of voice, video and data technologies.

For instance, when the cable industry didn't buy S-CDMA, the Silicon Valley company acquiesced and pursued DOCSIS approval for a more conventional modem. Nevertheless, it didn't give up on S-CDMA and is joined with chipmaker Broadcom Corp. in developing next-generation DOCSIS cable modem specs that incorporate that method.

At the same time, following industry consolidation, Terayon started acquiring companies that would help expand its focus beyond chips and cable modems. It moved into digital video compression by purchasing Imedia Corp., and, most recently added satellite and digital subscriber line (DSL) pieces to its mosaic through ComBox Ltd. and Tyco Electronics Corp.'s Raychem Access Networks Electronics (ANE). In addition to its satellite technologies, ComBox helps Terayon expand its presence in the European market with its digital video broadcast (DVB) technology.

Good Fit

"The other thing we're building is what some people refer to as `the mother of all headends,'" said Terayon's CEO/founder, Zaki Rakib. "We call it the enriched convergence platform."

It's "really a video and data and voice platform. It is the platform that will be leveraged for both the cable world and DSL, wireless and satellite," Rakib explained.

Terayon's disparate pieces fit together well in Rakib's scheme. For instance Imedia's statistical multiplexing capabilities are "even more powerful in the context of DSL because then you need all the compression techniques and the re-multiplexing techniques given that the DSL pipe is much thinner than the cable pipe," he said. "We will leverage that."

Then there's SCDMA, which, Rakib said, will be part of its DVB efforts in Europe.

"We will be able to incorporate our SCDMA chipset into the ComBox boxes and equipment so that we basically have an advanced physical layer solution based on DVB," Rakib said.

That edge, Rakib said, extends even to ComBox's silicon.

"ComBox has taken a similar approach to Terayon in terms of some of the vertical integration," Rakib admitted. "They implemented the MAC (media access control) on an ASIC, a chip. By taking those silicon blocks, we can begin to integrate them with our PHY (physical layer) and especially next-generation PHY that we're building and have a very complete solution that addresses DOCSIS and DVB."

Into the fray

By a blending of what was and what is into what will be, Rakib makes clear the direction he is taking Terayon: into the converged media arena ruled by companies like Cisco Systems Inc., Northern Telecom Inc. (Nortel) and Lucent Technologies Inc. It's an area where no industry will grab sole attention from the vendor.

"Cisco, our competitor, is selling wireless, is selling DSL, is selling cable, and there's no reason why we can't leverage our expertise in all areas," Rakib insisted.

His strategy, he admitted, depends on a continued shift in the way the broadband telecommunications industry both looks and acts.

"You will see some cable operators trying to address a bigger market by using an alternative access technology to address sub scribers of a different cable operator -- maybe in the same country," he said.

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