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January 8 2008: 8:55 PM EST
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Dead aim at the cable industry

The Consumer Electronics Show is a fiesta of ways to deliver video to digital devices. Building B aims to put together a new form of mass-market TV.

By David Kirkpatrick, senior editor

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The company is called Building B, perhaps to increase people's curiosity about its product.
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LAS VEGAS (Fortune) -- When it comes to outsize ambition, you gotta admire the guys at Building B. This until-now secretive startup is making a flat-out assault on the cable TV industry. The company talked a little bit at CES on Monday. Its service, launching later this year, aims to merge full-blown conventional digital television with full-blown Internet video, from YouTube to Comedy Central's online archive of "The Daily Show" - all on ordinary televisions.

CES is awash in evidence of innovation in online video. Given that most people far prefer to watch video on the TV, not the PC, it's just a matter of time before all forms of video get merged. The TV is the place to do it.

This company may have a way. Building B's product consists of software and a box that aim to turn your TV into one digital home for all the video you would ever want to watch, from whatever source.

The company's co-founders, Buno Pati and Phil Wiser, say they will offer a complete alternative to digital television, with the added bonus of full integration with Internet video content. "You won't need cable and satellite when you have this service," says Pati.

Not only that, but Pati says it will cost less than comparable cable or satellite packages. He said that 55 million American homes get their TV today in analog form, either over the air or via cable. Those ordinary American TV-watchers are the initial target customers for Building B's digital service.

Building B plans to give consumers what Om Malik on Newteevee.com last summer called a "God Box" - one that tries to do everything (more or less). This digital video receiver will attach to a conventional broadband Internet connection. It will also connect to an over-the-air wireless digital television receiver that will offer the same TV channels that consumers usually get via cable. It may take a while to add all the more esoteric and low-viewership cable channels, Pati and Wiser say. And of course, their box has to work.

I met the two for breakfast and a demo at one of the casino-hotel monstrosities that line the Las Vegas strip. Though the company's launch has been delayed before, they plan to formally announce it, along with its real name, in February. (Building B is just a placeholder the company adopted temporarily, presumably to increase peoples' curiosity about its up-to-now hyper-secret machinations.) They intend to begin serving customers in the second half of 2008.

Wiser is a longtime media technologist who co-founded Net music pioneer Liquid Audio and later served as CTO for Sony Corp. of America. Pati is a former Harvard professor of computer science who subsequently helped launch eight companies, most of them involving wireless or semiconductor technology.

Instead of trying to sell its product at retail, Pati and Wiser aim to get telephone companies and Internet service providers to distribute the service to their customers. It will enable them to add television to their offerings - to give them, in effect, an instant so-called "triple play," so they can compete directly with cable companies. "We have architected this to be a turnkey solution for broadband service providers," says Pati. The co-founders claim they are getting a remarkable reception from such companies, even some of the biggest ones. They plan to announce some of these deals in February. They flashed a map of the United States that seemed to show that they had such partnerships in almost every region of the country.

The hybrid model - wireless TV with conventional Internet access - is what supposedly will enable Building B to offer more for less. "Our cost of delivery is one hundred times cheaper than if we did it all over the Internet," says Wiser. While they will not yet talk about how the wireless portion of their service will work, what they showed me is impressive.

To build its content business, Building B has to painstakingly build partnerships with cable channels and Internet content providers one by one. However, Wiser says such companies are impressed with how, for instance, a cable channel could present its broadcast content right alongside its own sliced-and-diced Web stuff - two sorts of video they have until now been depositing into completely different environments.

Building B will offer consumers extensive personalization. Its box comes with a remote with different colored buttons for five family members. Press each one and a customized set of favorite content appears. Each person gets a different colored background. Knowing who is watching at all times would also offer advertisers unprecedented targeting capabilities, Wiser and Pati assert.

All this requires heavy software understanding, one reason Building B already has something like 70 employees (it won't give the exact number). Outside investors earlier this year put in $17.5 million.

These guys are trying to do something really hard, and they could easily fail. A long list of companies have attempted to remake the way we view television, almost always to no avail. But from what I saw on Monday, it seems possible that a new form of television will soon join broadcast, cable and satellite. To top of page