WASHINGTON, D.C.
The cable industry says it’s taking the initiative to get cable set-top boxes (STBs) onto retail shelves, where consumers would have a choice of models and features. Cable operators would love to relieve themselves of the expensive ownership of the tens of millions of boxes, which viewers now lease. Manufacturers would love to make boxes that provide Internet gateways, video-on-demand (VOD), home networking and interactive digital television, and retailers would love to sell them.
But like other multimedia dreams, problems - more in the boardrooms than in the labs - remain.
The National Cable and Telecommunications Association’s latest "initiative" says that operators will encourage their suppliers to make available at the same boxes that the operators lease to viewers, and to offer warranties. The operators would support the use of the boxes and provide "virtual portability" with a buy-back plan for viewers who move to an area with a non-compatible system.
Consumer Electronics Association says the proposal is anti-competitive and would only further entrench set-top box leaders Scientific-Atlanta and Motorola and their licensees. The NCTA counters that the consumer electronics manufacturers want a piece of the revenue streams promised by digital interactive television and stand to unfairly profit from cable’s massive investment in digital technology.
All sides envision a new world of services that gives digital TV the push it needs to reach broader markets. Retailers, manufacturers, and cable MSOs would all reap the rewards.
But long-vaunted "Open Cable" specs, designed to promote wide-open competition, are not yet released. The portable box, compatible with cable systems across town and across the country, is still unavailable. And all sides fear that the government, wanting a box with increased portability by 2005, could intervene if the private parties don’t resolve the issue.
SET-TOP STAND-OFF
Portability is just one problem. A major step toward total portability will be point-of-access deployment (POD) modules, small removable cards that users who move to a market with a rival platform may simply exchange. The cable industry says the technology and licenses are ready and waiting for manufacturers and retailers to act.
Copyright protection - with cable claiming it’s caught in the middle between home viewers and content providers, both of whom cable needs to survive - is another issue needed further resolution.
But a greater disagreement may be over the control over the gateway to new interactive services, from VOD to Web browsing, even home security and box-to-box gaming.
"Who is going to profit from the network infrastructure, the people who built it, or the people who want to hook in?" asked NCTA spokesman Marc Smith. "It doesn’t seem fair to us for [a manufacturer] to come in and tap our network to offer VOD and then make the money off VOD using our investment. That’s the bigger-picture business issue that we have to resolve."
But the manufacturers and retailers say that cable’s strategy has been to deny competition by restricting all that technology to the privileged licensed few, and that even Open Cable specs, anticipated from industry consortium CableLabs, will not guarantee a competitive marketplace.
"There’s no way for a manufacturer to know that the product they build will work with each cable system," said Jeff Joseph of the CEA. "We won’t know what else is possible, we won’t know what other technology could be incorporated in these boxes, what other functionality, until there’s really competition and there’s incentive to move forward."
Nor is Joseph impressed with cable’s idea for a buy-back program.
"Anyone who’s ever had an extraneous charge on their cable bill and then called their cable company to try to get it taken off, I’m sure would look forward to negotiating with them to buy back their cable box," said Joseph.
THE IRRESISTIBLE NETWORKED HOME
Forget about just channel surfing. Future boxes could be the nexus of the home, linking not just DVDs and personal video recorders but also home lights, climate control, even the security system and sprinklers. Hear a suspicious noise outside? Just hit the remote to turn on the porch light and activate the security camera, which you can then watch in the corner of your digital TV screen - all without missing a minute of Jerry Springer.
At least, that’s the dream.
Already planned at Pioneer, the nation’s third-largest set-top box producer, is its Voyager 4000 series thick-client box and its Pioneer Connect unified user interface, which would control all those home functions.
More glorious functions will require boxes with faster processors, deeper memories, and numerous interfaces, but manufacturers say they’re ready when the MSOs and consumers are.
"Certainly a business model has to be developed," said Dan Ward of Pioneer. "The structure has been built. Two-way interconnectivity is there. But we have yet to see the ‘killer app.’ When the higher-end boxes come out - the thick-client boxes - I think that will change everything."
MAYBE NEXT YEAR
Once the consumers comprehend the power of the boxes, they’ll want them at their local retailer, the thinking goes. New interactive offerings are announced almost daily, and Cahner’s In-Stat Group recently predicted the market for boxes that access the Internet to grow from 6.9 million units in 2000 to more than 74 million in 2005.
But still, the only way to get a set-top box is to lease it from your cable company.
Motorola has shown off its DCP-501 and DCP-503, and told the FCC in August that they expect these single- and triple-DVD boxes to be on the shelves in time for Christmas, at about $850 and $950. But that date has been pushed back to 2002, and the buy-back program is the only promise for portability between systems.
Major retailers wouldn’t say whether they plan on ordering any.
"I think they would order boxes if they were absolutely sure that there’s a market there and that they could make a profit," said NCTA spokesman Davis Beckwith, speaking of the retailers. "They want a piece of the [interactive and subscription] action and we haven’t been willing to enter into that sort of arrangement."
"The products that they are saying they’re offering, they aren’t competitive, they aren’t portable, and they don’t meet the guidelines that were established by Congress," said Circuit City spokesman Bill Cimino. "What we need to see is that the MSOs complete and support the Open Cable applications platform which would then enable you to have the ability to have the portable devices. That was something they were supposed to have done by last year. That would be a very good step forward for them."
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