Goliff Aspires to Be 3G Goliath With Patent-pending Firm

Read between the video lines, and William Goliff’s vision becomes clear.

Goliff, who hopes to soon become a client of the University of Arkansas’ Genesis Technology Incubator, is developing a subscriber-based business called VBI Broadcasting. Initially, the firm may use the existing spectrum between the pictures on analog television sets — or, the vertical blinking intervals — to broadcast 10 channels of video and six channels of music.

This would make VBI the second potentially multibillion dollar broadcasting business to be housed at Genesis. Bob Friedman, now the incubator’s director, started Virtual Satellite Corp. this winter with the help of 10 local venture capitalists who pooled $3 million in funding.

Currently, the analog VBI spectrum is sparingly used because it creates interference for regular channels. But by stringing a number of weak VBIs together — similar to the way Friedman plans to optimize satellite signals —the VBI spectrum becomes more useful.

The real potential for VBI, however, is as a third-generation (3G) technology that would offer global 100 megabit-per-second, two-way mobile Internet access over the digital spectrum. (Eight megabits equals one megabyte, the standard measure for Internet connectivity).

The Federal Communications Commission has set 2006 as the deadline for broadcasters to convert from analog to digital systems (although it may be pushed back to 2008). Analog’s VBI band has a data rate of only about 150 kilobits per second. But digital channels will translate at 20 megabits of data per second.

It only takes about 4.5 megabits of digital spectrum to broadcast, for instance, a large-scale production like ABC’s Monday Night Football. Goliff and his partner, Erin Sibley, hope to develop and market the remaining 15.6 megabits.

Goliff said the idea is to provide popular content for local communities. Applications could include customized stock quotes, short-run movies and other local programming.

“The intent is to have a two-way mobile service that operates at 100 megabits per second, whether being received by a portable or fixed device,” Goliff said. “That would, for instance, allow someone to download a movie very quickly that could be watched at a mobile site. This technology would allow that to happen 100 times faster than it could be done today.

“And it’s 300 times faster than a direct PC, which operates at 400 kilobits per second.”

Goliff, 62, retired Dec. 1 from Boeing Satellite Systems, which had just acquired Hughes Electronics’ space and communications subsidiary. VBI Broadcasting will be headquartered in Los Angeles, where Sibley still works for Hughes. But a fair amount of the development work could be done at Genesis.

About seven patents related to the technology and its business models are pending or already secured by Hughes. Both Goliff and Sibley’s names are on the documents. They will negotiate to lease the particular business patents from the publicly traded monolith.

Target Markets

The analog VBI capacity is already used for applications such as closed captioning. Goliff said his 16-channel venture has a potential revenue of $40 million per month in the United States or $200 million per month internationally. That’s providing that VBI could sign up at least 10 broadcasters in every major world market.

According to a study by Hughes, the potential revenue for the mobile Internet application that would provide global high-data-rate connectivity could be as much as $2 billion per month. That includes heavy penetration into foreign markets like China, where cellular telephones and palm computers are an adolescent craze.

Thomas LaFrance is chief scientist at Boeing Satellite in El Segundo, Calif., and has a Ph.D. in physics. He said Goliff’s work in Hughes’ entrepreneurial division could pay off for the VBI venture.

“I have worked with Bill Goliff in the aerospace industry for at least 16 years, and he is fantastically reliable,” LaFrance said. “He did a lot of work in the business strategy side of Hughes, which took him to Indonesia, Russia, China and places like that.

“He’s a go-getter with a lot of experience and knowledge in this area.”

Friedman, the Genesis director, said he also believes Goliff’s patent is a good basis for a business if it’s applied to a nationwide communications network.

Company Structure

Sibley declined comment on the potential business strategy, other than to say details are still being worked out and that Hughes has not yet formally agreed to support VBI Broadcasting. He emphasized that the venture will take several years to develop.

“I’d rather side on being very cautious and careful, rather than speculating on the future business,” Sibley said.

But Goliff said VBI already has one national broadcaster lined up that is “ready to go.” He wouldn’t identify the firm, but described it as “just below PBS,” and capable of tying down additional broadcasters needed to take the product national. He said “a well-known national music supplier” is also very interested in signing a deal, and Disney Entertainment Co. has expressed interest.

Goliff said the reason he and Sibley are pursuing VBI is because they want a technology venture that could turn cash positive quickly. When asked why Hughes isn’t pursuing the venture itself, Goliff said the company is too busy with fixed-profit projects that let them focus on product quality.

“Hughes’ focus is more on making an excellent product,” Goliff said. “They have military contracts where money is no object, and their job is to make the technology the best in the world. In this particular case, [Hughes’ apathy] probably has to do with the complication of the business plan and not the technology.”

VBI has not yet incorporated. But On2 Technologies Inc. of New York, a video compression firm that’s traded on the pink sheets, has offered to serve as VBI’s shell.

Wavo the Past

VBI’s been done before. San Diego-based Wavo Corp., which is also traded over-the-counter, got clobbered over the last few years trying to market VBI programming in an advertiser-based format. The company, which in its most recent quarter saw revenues of only $4 million, was delisted by Nasdaq in December.

At one point, Wavo had 400,000 customers, and the firm is still broadcasting VBI-band signals from Mt. Wilson in Los Angeles. But it’s shifted its emphasis to other Internet-related strategies.

“This has to be subscriber-based and not ad-based,” Goliff said. “That was the problem.”

Wavo has, however, offered to build VBI receivers for Goliff’s firm. The hardware would include an additional tuner and receiver, probably in the form of a plug-in card, for TVs and wireless devices to break out the VBI signal. The receivers could sell for $100 each, or $25 to $50 if another firm does the development and production.

NTT Docomo, the Japanese data delivery firm, is already using low-grade digital VBI for two-way wireless banking in Japan. The firm is eyeing the United States for a venture, but its service includes transaction charges and other fees that may take time to sell here.

“What we’re talking about with VBI is a 100 percent mobile product that in 90 days will turn a profit and have one hell of a lot of subscribers,” Goliff said.