The Wireless Instant Replay
By Gerry Blackwell

Spectator sport has become such an electronic pastime that even crowds attending live events can't live without their JumboTrons, thumping recorded music and pixel boards for out-of-town scores anymore. Heck, the players can't live without them.

Now a Denver area firm is offering big league sports franchises a Wi-Fi-based service that will give their ticket holders a cyber-sports experience combining the best of all worlds -- the excitement of live coverage, the close-ups and replays of TV on demand, and the interactivity and instant data of the Internet.

Air-Grid Networks of Littleton, Colo., has been pilot testing and demonstrating its wirelessly delivered interactive media services at NBA basketball games MLB Baseball games. It is currently in negotiations with basketball, football and baseball franchises and expects to close deals with its first commercial customers within the next three months -- in time to have at least one Major League Baseball team up and running by the July All-star break.

"We've been demonstrating to the host teams that we can definitely [provide the service] reliably," says Air-Grid CEO Jeff Buckwalter. "And we've had overwhelmingly positive feedback from end customers."

Ticket holders who pay an anticipated $15 to $20 for the service will get the use of a sophisticated digital tablet (sans keyboard) equipped with an 802.11a network card. The wireless network will deliver a variety of services, the most important being digital video replays on the tablets' 10-inch LCD screen. Buckwalter describes the video quality as "close to broadcast."

"It'll be digitized at about 600 kilobits per second -- so it's going to be smooth-playing and pretty high resolution."

Users will be able to choose from four different camera angles -- from a combination of broadcast network and team camera positions. They'll also have the option of viewing in slow motion.

Air-Grid will process video clips in near-real time as the game goes on, pushing out announcements over the wireless network that will scroll across customers' tablets to let them know a new replay is available. The firm generates 10 to 12 replays per quarter of a basketball game, Buckwalter says.

The replays are just the beginning. The service will also offer radio and TV broadcasts of other games going on at the same time, up-to-the-minute statistics on teams and players, high-speed access to the public Internet and archival media such as highlights from previous games, interviews with players -- even instructional videos for kids on how to play the game.

"If the franchise has got it there, we can make it available," Buckwalter says.

The other key service, which Air-Grid has not been able to test yet, is online ordering of refreshments. Tablet users will be able to select beer and hotdogs from a menu, pay for them with a credit card -- and the concession will deliver it to their seats.

Buckwalter and his partners conceived of the idea for Air-Grid and formed the company a little over a year ago. The first year was spent doing research and development on the technology needed, and research on whether the market actually needed the technology.

The company had to build the software that drives the service, both the client interface and back-end software for managing the delivery of the different media over a wireless LAN. It has applied for patents on the media management and routing software. The service is built on the Microsoft .NET server platform.

Air-Grid is building its wireless LANs with Cisco Systems <QUOTE NASDAQ:CSCO> 802.11a access points. It's using expensive tablets from Toronto-based Electrovaya, but the company's patented battery technology means they can run up to seven hours -- significantly longer than products from mainstream tablet vendors.

"We think they're the only option for us right now," Buckwalter says. "With most of the others, we'd have to switch batteries sometime during game. Some are good for five hours [under normal use] but that's not enough when you're streaming high-bit-rate video over wireless, both of which [i.e. video and wireless] are power hogs."

He and his partners also took "quite a bit of time" to satisfy themselves that there really was a market for the service they were proposing to offer. "That consisted of doing some market research prior to the trials and meeting with a number of major league teams to find out about their interest in deploying something like this," Buckwalter explains.

The response was good enough that Air-Grid began a series of test/demonstrations in January 2003, the first at an Indiana Pacers-Golden State Warriors NBA game in Indianapolis where about 75 ticket holders tried out the service for free.

The initial pitch to the franchises is not that they can make a whole bunch of money out of offering the service to the crowds in the bleachers -- although Air-Grid obviously believes it and the teams can eventually make money doing this. The up-front benefit for the teams is that they can offer the service as a premium to top-paying corporate box customers.

"The big concerns that most franchises have is keeping that premium seating sold," explains Buckwalter. "That's where their real margins are, but because of the higher price, [those seats] are harder to sell. And given that it's not necessarily always better seating, it's more difficult to differentiate it. What we're doing is giving them a way to achieve that differentiation in a very compelling manner."

The sports teams are apparently taking a wait-and-see attitude on the viability of the rental service. Air-Grid will always retain ownership of the back-end infrastructure. In fact, it will move some of it from venue to venue rather than leaving it in place permanently, Buckwalter explains.

Initially at least it will also carry leases on the portable tablets -- which even using lease financing represent the biggest capital expenditure involved in getting the business off the ground. "The thing is, the more successful we are, the more [of the tablets] we'll need," Buckwalter says. He figures he'll need about 200 per franchise to start.

Eventually the company hopes to shift the financial burden of the tablets to the teams, but Buckwalter is being realistic about how soon he can do that. "I don't think they'll take that leap just on the concept," he says. "Until the service proves itself commercially -- and that will have to be over a season or so -- we'll continue to carry the leases."

Air-Grid and the franchise will share revenues from the for-fee service. The teams, naturally, will get a bigger share when they take some of the financial risk.

Commercial success will clearly hinge on how readily fans in the bleachers take to the service, and how much they'll be willing to pay. Buckwalter admits that market trials in which a service is given away free don't provide absolutely reliable data on how customers will behave when they have to pay. They may say they're willing to pay between $15 and $20 or even more. "But what they say and what they do can be two different things," he says.

We can see one other potential glitch. Tablets could get banged up or go missing in the exuberance and chaos of a big game. (Don't even think about exporting the idea to English or South American soccer franchises where fans routinely erupt in mini-riots.)

Air-Grid will be protected by having the customer's credit card number to cover the costs of loss or damage, Buckwalter points out. But will customers balk at putting themselves at that kind of financial risk? The Electrovaya units retail for nearly $3,000.

The company will also need more angel financing to push it over the top as it kicks into gear with commercial service later this year, and eventually it will need venture capital financing, Buckwalter concedes.

In the meantime, though, this is, if nothing else, a very cool concept. Even if the fans won't pay for it, the players and coaches will probably lap it up.


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