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Big investors shine on iBeam

The satellite Internet broadcaster says it has received $42 million in funding from Microsoft, Covad Communications, Intel, and several other investors.

    Satellite Internet broadcaster iBeam Broadcasting today said it has received $42 million in funding from Microsoft, Covad Communications, Intel, and several other investors.

    Sunnyvale, California-based iBeam, which uses satellite broadcasting to bring streaming media to Internet users, said it plans to use the funds collected in its third round of financing to help expand its network to deliver audio and video Internet streaming on a greater scale.

    iBeam is part of a new crop of companies hoping to provide networks that try to bypass increasingly congested Internet pipes using content caching servers, satellite feeds, traffic-routing software, and other technologies. SkyCache and Edgix are among those that have entered this segment, with others, such as SoftNet Systems, making similar strategic plans.

    Analysts said that satellite broadcasters are likely to face increasing competition from terrestrial-based streaming players like Enron Communications.

    "These [land-based] players are building very robust networks independent of the Internet to do pretty much what iBeam is trying to do," said Joseph Laszlo, an access analyst at Jupiter Communications.

    Financial terms were not disclosed.

    Other investors in this round of funding include Accel Partners, CrossPoint Venture Partners, Liberty Digital, Media Technology Ventures, and Stanford University. Intel, which has made previous investments in the company, pumped in more funding this time around.

    "Covad's investment is a powerful validation of iBeam's model, but I would hope to see that followed up by a deepening business relationship," Laszlo said.

    iBeam said its network is designed to deliver high-quality streaming media to hundreds of thousands of simultaneous Internet users. The company said it uses a highly distributed network of servers connected by satellite that circumvent the often overloaded Internet.

    "iBeam's innovative 'edge of network' delivery solution plays a critical role in overcoming the cost and network congestion barriers needed to spark mass consumer broadband usage," Will Poole, general manager at Microsoft's streaming media division, said in a statement.

    Microsoft is closely watching what impact this technology could have on its Windows Media Player and to Media Player content providers.

    Chipmaker Intel has recently redoubled its efforts to help further develop the Internet, investing in new technologies or acquiring companies to help its push into Web technologies. Just last week, the company bought privately held IPivot, an e-commerce equipment maker, in a deal worth $500 million.

    "Intel's increased investment in iBeam is our way of reaffirming our commitment to the development of the Internet and to the technologies that hold the potential to accelerate the development and implementation of rich multimedia applications for consumers," Ron Whittier, Intel's senior vice president of content services, said in a statement.