Update, Thursday 3 p.m. PST: BitTorrent confirms layoffs, but not everything else.

There are rumors that pink slips have been handed to some of the employees of San Francisco-based BitTorrent. The problems stem from their ill-fated consumer distribution effort, which competed with richer, more deep-pocketed rivals. They were trying to hawk the division to Best Buy for about $15 million, but the deal didn’t work out.

So far it’s all hearsay, but NewTeeVee’s Liz Gannes is trying to get to the facts of the story. If true, then it would be yet another tumultuous twist in the life of this company, which at times has reminded me of a daytime soap. (Not that there’s anything wrong with daytime soaps.) And like daytime soaps, its popularity, especially with file-sharing folks, has remained consistent.

I think BitTorrent can save itself. Such popularity means it can become the infrastructure player that allows for the efficient distribution of big video files. Its BitTorrent Delivery Network Architecture can be put to good use, especially with partners. As noted in a post last year, BitTorrent has been working with a handful of set-top box makers such as Pace Micro, and is trying to embed its technologies into other devices. The funny thing is that even carriers want to work with them. All of this makes this company salvageable.

It’s all a matter of adopting a lower — almost invisible — profile, something startups find hard to do. BitTorrent is clearly dealing with bloated and untenable expectations set by megamillion-dollars in financing — roughly $29 million in two rounds — and the accompanying unrealistic valuations. It should have stayed focused on its core technology.

Open question: How would you fix BitTorrent?

Photo of BitTorrent founder Bram Cohen getting a shave at FoundRead launch event courtesy of Joey Wan via Flickr

If the Internet is a highway, then the companies responsible for maintaining the roads are increasingly at odds with the ones producing a lot of the traffic. Comcast throttling BitTorrent traffic as a way to protect network integrity (or so it says) is one example. Another can be found in the arguments of a British ISP that’s seeking to get the BBC to pay for network upgrades, claiming the broadcaster’s iPlayer is hogging too much bandwidth.

I’m not going to get into the insanity happening in the UK right now, but what is worth talking about is how networks can handle the increasing amount of traffic going through their pipes. The request for funding to build more robust networks made by Simon Gunter, chief of strategy at ISP Tiscali, is akin to asking car companies to pay a tax for building more roads. It’s one way to address the issue, but there are other options, among them better traffic management, which would decrease the distance cars need to travel.

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Updated: BitTorrent Inc. and Comcast announced a new deal today, thanks to a helping hand provided by Comcast CTO and BitTorrent adviser, Tony Werner. It’s actually a bit of a non-deal and a way for Comcast to save face after its P2P traffic management gaffe. Chris Albrecht over on NewTeeVee sees this as a “let’s be friends” move. To me it seems more like the marriage of Michael Jackson to Elvis Presley’s daughter.

The press release basically says nothing and gives me a headache. How about using plain English, saying, “Sorry folks, we traffic managed and were heavy-handed about it, but we have learned our lesson and will be transparent in the future“? And it still fails to answer the question of why Comcast meddled with the traffic to begin with. If it was serious about P2P and leveraging it for smart distribution, it could have been proactive. This release is simply a reaction to what amounts to the company getting its hand caught in the proverbial cookie jar. Continue »

The FCC has scheduled a second set of network management hearings to be held on the Stanford campus on April 17. A do-over of the hearings that were held last month at Harvard, perhaps? That gathering was driven, at least in part, by Comcast throttling BitTorrent traffic. The new hearings are also driven by Comcast, which paid folks to fill the lecture hall where the original hearings were held.

• SAI: BitTorrent CEO: Rethinking Media Store, No Business Impact from Comcast
• CNet: Verizon Touts Smart P2P Technology
• ArsTechnica: $5 a Month for Legal P2P Could Happen Sooner Than you Think
• Broadband Reports: Comcast Sues FCC Over 30% Cap
• Reuters: U.S. Video Games Sales Jump 34% in Feb.
• The Globe and Mail: Quebecor Enters Race for Wireless Spectrum

NewTeeVee’s Liz Gannes catches up with BitTorrent CEO Doug Walker and talks about the company, Comcast, traffic shaping and other sundry topics. Enjoy the video, and read Liz’s post over on NewTeeVee.

BitTorrent, the San Francisco-based company that has long been looking for a new chief executive officer, has finally found one: Douglas Walker, former chief executive of Alias Systems. The company also added Eric Klinker, former chief technology of Internap (INAP), as its new CTO. These moves indicate that the P2P technology company is finally ready to shed its not-so-successful consumer efforts and instead focus on becoming an infrastructure-type player. It will compete with a growing number of similarly focused companies, including some still-in-stealth-mode startups

The company recently launched its BitTorrent Delivery Network Architecture (DNA) offerings. Klinker and his data center hosting credentials are a good indicator that BitTorrent is going to be beefing up its network delivery infrastructure. BitTorrent has been working with a handful of set-top box makers such as Pace Micro, and is trying to embed its technologies into other such IP set-top boxes. I think that after being a bit directionless for a while, BitTorrent is finally finding its bearings — though it is hard not to look at the competitive landscape and wonder if they can make money.