Myrio brings DSL to small telcos - Broadband: technology and content in the broadband world

Myrio, an upstart Seattle area company that's developed a system that lets phone companies roll out interactive television and services, has landed $21 million in a second round of funding. The investment comes as several regional Bell operating companies are evaluating the company's technology and as Myrio gets ready to announce a flood of new customers.

Last week, Robert Manne, Myrio's chief executive, presided over the launch of services with Myrio's second customer, CC Communications, located outside Reno, Nev. Formerly known as Churchill Telephone, the company is Myrio's original technology test site.

Meanwhile Manne's staff back in Kirkland, Wash., was finalizing a deal with the company's third customer, which executives declined to identify. Myrio is also in various stages of negotiation with 10 other customers, says Manne.

The company is initially marketing its services to small, independent phone companies.

"We hope to sign up 25 independent phone companies by the end of 2001 and be in a trial with at least one" regional phone company, Manne says. The company may also sell its services to companies operating apartments, retirement homes and university housing, he says.

Myrio has been approached by several multiple-dwelling unit owners about using the service, he says.

The company makes money by charging a one-time set-up fee and then shares in recurring revenue opportunities. Those include per subscriber fees, content fees, advertising sales, and maintenance and upgrade fees. Manne estimates 2001 sales could be around $20 million.

By simply installing a DSL modem in a home, Myrio enables telephone companies to bring high-speed Internet access, cable television, interactive features such as pay-per-view movie rentals and regular phone services to areas that most industry watchers declared would be the last in the nation to see such services. The company is also working to bring online gaming and electronic commerce services to its customers later this year.

Myrio's On Demand Network allows a family to talk on a phone, surf the Internet on a computer or television, and watch a movie on one television, while someone else is watching cable television on another. The family can do all these things on four different devices at the same time.

Jupiter Communications predicts 30 million households will have interactive television or ITV capabilities by 2004, and that audience will generate roughly 810 billion in revenues.

"There are all kinds of people making all kinds of wind about this," says Jerry Keppler, managing director of Alexander-Hutton Venture Partners, the Seattle investment firm that led the 821 million round. "Myrio is the only company with a working solution [for phone companies] that can be delivered today. No one else can do it."

Myrio has based its technology on standard high-speed transition technology that has been adopted by many phone companies, says Ryan Jones, an analyst with The Yankee Group's media and entertainment strategies group in Boston. By creating its technology around such standards, the company's product is less expensive and easier to deploy than competitors who offer services based upon a technology that offers much higher speeds but costs twice as much, Jones says.

In addition, Myrio sells software and has not locked itself into any one particular hardware maker for parts such as set-top boxes or other technologies, he says. This allows the company to be flexible as technologies change.

The company blends technology from partners such as nCube, Stellar One, Sun Microsystems, Microsoft, Fujitsu-Siemens, and content and distribution partners including New Line Cinema and TVN Entertainment.

To rise to the top of an emerging market, "Myrio will have to prove that their solution stands out," says Jones. "How they do that remains to be seen."

Founded in early 2000, Myrio, launched services in July with Livingston Telephone, located a little more than an hour north of Houston.

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