It's true that few, if any, TV stations have not made any money off their hefty investments in digital broadcasting, but as they count down the final days to the analog cut-off next February the opportunities for doing so seem to be multiplying.

The lastest possibility is Sezmi, a well-financed startup out of Belmont, Calif., that wants to lease some of broadcasters' digital spectrum in each market to launch a nationwide, multichannel TV service in competition with cable and satellite.

Broadcasters have seen this before. Another startup, USDTV, tried so-called wireless cable by broadcasting cable programming over broadcast spectrum. But it managed to sign up only 15,000 subs before going off the air in early 2007.

But the Sezmi technology is far more sophisticated than what USDTV had available when it was putting together its service in the dark ages of 2003 and 2004.

The big difference is the set-top box. It will contain one terabyte of storage, enough to hold hundreds of hours of programming and greatly leverage whatever digital spectrum Sezmi can cobble together in each market.

The Sezmi service is also not relying solely on over-the-air distribution. Its set-top can not only tune broadcast signals, but also connect to the Internet. Through custom interfaces, Sezmi subscribers will be able to tap into the blizzard of video now available on the Web along with streamed linear networks.

Finally, it features a slick user interface and a "smart" antenna that looks like a bookshelf stereo speaker and that Sezmi believes will overcome any inherent weaknesses in the broadcast digital signal.

Sezmi is still not ready to talk about its deals with broadcasters or with the telecom companies that will market the service, but in this interview with TVNewsday Editor Harry A. Jessell, Sezmi Senior Vice President David Allred shares a few additional details about how it will work and how it makes sense for broadcasters and consumers.

How much total spectrum are you going to need in each market to make this go?

We expect to partner with two to four broadcasters in each market. Generally speaking, our partners typically have between 5 and 15 megabits of bandwidth available for us. How many broadcast partners we actually have will depend on how those partnerships come together in terms of what the number is and what the spectrum budget looks like. We'll need less than 40 megabits per market.

How do you intend to get 35-40 cable channels of cable in so little bandwidth?

There are a number of things that we employ in our overall content distribution that helps to drive that efficiency.

The first thing is that we are encoding the content in MPEG-4 and so that generates a significant reduction in the size of the content files and in the bandwidth that's required. An HD signal requires 5-6 megabits per second; SD requires 1.5-2.

The second thing we do is benefit from the storage in the set-top box. It allows us to push content out on a 24/7 basis and store it for viewing on demand in the set-top. At times, like in the middle of the night, when the programming is not particularly interesting or relevant, we're using the bandwidth to push out the most popular shows for storage.

Then, for the niche content that only a handful of viewers are interested in, we utilize a secure IP broadband connection.

It's really about finding the most efficient way to get content to consumers. By deploying or utilizing those different methodologies, broadcast and broadband, we can distribute all the content that makes up our service.

So, you're going to take these cable channels, remove the repeats and the paid programming and offer the shows on a VOD basis?

Yes. There are times when that bandwidth is essentially not utilized all that efficiently and the content is, quite frankly, filler. Much of the cable content is sent out multiple times in any given week. We don't necessarily need to distribute it the second, third and forth time that it appears on the channel.

Will consumers have access to the linear cable channels they are used to over the IP connection? Or, is IP just for the niche channels?

Consumers will have access to linear cable channels. Sezmi's FlexCast technology selects the most efficient delivery mechanism, which could be either broadcast or broadband. The content delivered via broadcast or broadband will vary based on several factors — consumer demand and spectrum and broadband capacity in each market at any given time. The content delivery mechanism will be invisible to the consumer.

Just to be clear: the broadcast channels will be available in their entirety, in real-time.

All of the broadcast content is being distributed by broadcasters across their own digital spectrum. We are simply receiving and enabling consumers to receive it on our smart reception system. So, all of that content is available real-time in a consumer's home.

No slicing and dicing of that the broadcast channel. Is that correct?

Yes. That's correct.

This super-duper set-top box you're going to put in subscriber homes will have one terabyte of storage. How many hours of programming can that hold?

Every home will wind up with a mix of standard-definition content and high-definition content. But, to give you a couple of numbers that will put it in perspective, the disc will hold approximately 1,300 hours of standard-definition MPEG-4 content. If you fill the disc entirely with HD content, the number, I believe, would be about 450 hours.

What kinds of deals are you making with broadcasters for their digital spectrum?

Basically, we are leasing bandwidth from them, but there are some other miscellaneous elements to the partnerships.

We also have a number of capabilities in the box that will help them build their local franchises or build their brands.

We enable them to present both their traditional TV content as well as their Internet content in a branded portal-like interface on the TV. We also enable them to do more targeted advertising and tap into a variety of other add-ons — tools, techniques and data.

One of the key things is access — or visibility — right down to the level of the individual viewer's home. That's critical. This is the very first time that advertisers, broadcasters and other content providers will be able to determine who's actually watching TV in a home.

So, we really are stepping into a world where we're bringing Internet-like targeting, interactivity and measurability to television. That creates tremendous value for the broadcasters beyond even the lease fees.

There's a lot of talk in broadcast circles about the digital cliff, the point at which you can't receive the digital signals anymore. Can you confidently say that your smart antenna will replace rabbit ears in most places?

Oh absolutely. We have essentially capitalized on all the advancements in the world of mobile handsets, WiMax and Wi-Fi. We've applied those same techniques and advancements to television reception. This smart reception system is the most advanced television receiver in the marketplace today.

It automatically tunes and optimizes the signal and the viewer does not need to touch it or mess with it in any way shape or form.

We don't call this just an antenna. It's a closed loop system where we're receiving a signal, connecting it to the settop box, analyzing or assessing the quality of the video and then providing information back to that reception system. That closed loop feedback process is one of the key elements that provides a significant improvement in reception quality and stability.

You've have talked about offering your service at half the price of cable. What's that mean? Are we talking $20, $30, $40 a month?

The price ultimately will be set by our partners, the telecommunications service providers who will roll this out as part of their triple play offering. We will be the video option that they bring to market on a co-branded basis so ultimately the price will be set by them.

But, generally speaking, we have planned this so it will be about half the price of most cable and satellite services. If you look at most digital tiers or digital cable or satellite offerings, you'll find they are charging something the $70 range for the types of content and services that we're providing.

There are 110 million TV homes. How many of those are you going to be able to reach through these telecom marketing partners of yours?

We have partnerships in place or that are in late-stage contractual discussions that will enable us to get to a 110 million homes in the 2010 time frame.

The areas that they cover — the DMAs and the homes that they serve — will basically cover all major markets across the U.S.

Through telephone companies?

Not all of them are traditional land-line telephone companies. We can also distribute our service through 4G wireless networks as well and as Wi-Max and LTE [long-term evolution] wireless communications companies.

And you're going to have enough of these partnerships in place to cover the entire country by 2010?

I won't speak specifically to which partnerships we have in place today, but, yes, I am telling you that we will have the partnerships in place to give us that level of coverage.

You've announced that you've raised $17.5 million in capital. How long is that going to last?

We will need to raise additional capital. We have sufficient capital to get us through the completion of both our product development and partnering process and get us into our initial pilot markets.

What's the latest on trials and commercial rollout?

We're actually working through some of our technical trials right now and will plan some limited commercial trials in the third quarter. Our target is to launch the service commercially prior to the end of the year in select pilot markets. It won't be a national roll-out before the end of the year by any means.

What are your penetration goals? How many of subscribers do you have to pick up over. let's say, three years, five years, to make this thing a viable enterprise?

Well, we have very, very modest requirements. We are not releasing any specific sales or volume penetration targets at this point.