Beijing Digital TransVideo Technology Co.'s set-tops run a proprietary algorithm that compensates for current Internet distribution limitations — namely, variable data speeds, packet loss and inconsistent quality-of-service (QoS). Such variables, present in a wide variety of U.S. broadband connections, tend to degrade reception for IP-based streaming video — a phenomenon sometimes referred to as the "Max Headroom effect."

TransVideo's set-tops will enable Chinese Americans to tune in, or receive on demand, so-called ethnic content — Chinese movies and TV shows programmed and encoded in China — using an H.264 encoder that is delivered over the Internet through the servers of KyLinTV, a New York-based content provider.

Although ethnic content may sound like a niche market, Scot Robertson, director of networked media products at Analog Devices Inc. (Norwood, Mass.), sees TransVideo's IPTV set-top as "a great indicator of the future," in which free-range IP-based video programming arrives from a range of sources, near and far. "It's an IPTV box that doesn't really rely on a single service provider," he said.

In contrast, many IPTV set-top boxes today are designed to connect to a specific broadband network — such as SBC's or Verizon's — where an end-to-end infrastructure is carefully tuned and managed to optimize the QoS. But TransVideo's set-tops are built to connect to virtually any broadband network throughout the United States and thus have "a much tougher job to handle," Robertson said.

Codec support
To do it, the new boxes are equipped with Analog Devices' Blackfin ADSP-BF561digital signal processor and a 360-MHz CPU designed by a Chinese company called Arca. The combination is capable of handling multiple audio and video codecs: In addition to H.264, the box will support MPEG-4, MPEG-2 and Windows Media Video 9, TransVideo said.

By using the Blackfin BF561, the new models will also improve video quality by providing full D1 capability over limited bandwidth — between 1.2 and 1.5 Mbits/second — according to the company. Previous models of the set-top, built around ADI's BF533 and Motorola Inc.'s MCF5249, supported only H.264 and offered bandwidth of 500 to 900 kbits/s. All the TransVideo IPTV set-tops run the Linux operating system.

Headquartered in Beijing, TransVideo is a two-year-old company with 60 employees that specializes in IP video-streaming technology and H.264-based video codec solutions. CEO Yunchuan Wang expressed his company's ambitions to expand in the overseas market. TransVideo International recently opened offices in New York.

KyLinTV, meanwhile, was founded in 2004 by AvantaLion, a U.S. investment company, TransVideo and unnamed private investors who were previously involved in founding TimeWarner and HBO, according to Wang.

TransVideo is thus piggybacking KyLinTV's IP-based video service in an attempt to penetrate the U.S. market with its set-top boxes.

Wang said that although TransVideo has high hopes of expanding its business in China with similar IPTV boxes, the immediate target remains the United States. He cited Chinese government policy and limited network bandwidth there as two factors that hinder TransVideo from officially launching similar IP video services in China.

Wang said that TransVideo's Digital Media Device 2000 and DMD 3000 boxes have been in use in the United States since the summer of 2004. The upgrades, labeled DMD 2000 plus and DMD 3000 plus, are due out this month.

Despite its ethnically focused market, TransVideo plans on selling a lot of boxes. Wang said that while the company expects to sell 10,000 set-tops this year, it hopes to sell 200,000 to 300,000 in the United States in 2006. KyLinTV, according to its Web site, is offering its service with TransVideo's IPTV set-tops at a subscription fee of $15 per month.

TransVideo is also developing a high-definition version of its set-top. The company is still evaluating chips for such a box, said Wang.

ADI, for its part, has been steadily increasing its presence in the IPTV set-top market, particularly in China. Earlier this year, the company announced that ZTE Corp., one of China's top telecommunications equipment providers, had adopted ADI's new network-enabled Blackfin DSP-based platform. The agreement covers broadband and networking devices ranging from IP set-tops to triple-play (voice, video and data) gateways.

In-Stat last week issued a report predicting that China will see 4.5 million subscribers and $231.3 million in set-top box revenue in 2008, getting a boost from the 2008 Olympics.