CE manufacturers wrestle with cable operators

Though cable television companies were not among the exhibitors at CES 2005 in Las Vegas last week, television equipment manufacturers have been working hard to work with — or bypass completely — the cable industry's control over the way most Americans watch TV, reported the New York Times.

All the approaches address the central fact that consumers of most current versions of digital cable service — the kind with the most channels and advanced features — must now use a set-top box provided by the cable system, usually for a monthly rental fee. Those cable company boxes make it hard for most outside consumer electronics devices to truly control the signals they are receiving.

Moreover, the Times reported, cable companies are increasingly muscling in on the electronics makers’ business by enhancing their set-top boxes with digital video recording abilities and other new features.

That cable trend has been a particular threat to TiVo, which virtually invented the digital video recorder business in the late 1990s, but has struggled lately — in large part because it is difficult for TiVo’s machines to change channels on a digital cable system.

TiVo used last week’s show to announce several moves to bypass cable systems, by using the Internet and personal computers as media for television delivery and viewing. Offering service through one of the primary cable platforms is not the best way to grow business at this time, because the economics are not very attractive, said Michael Ramsey, TiVo’s chief executive. Instead, he said TiVo has decided to “embrace the PC.”

Other manufacturers, like Panasonic and Hewlett-Packard, have supported CableCard, the industry compromise that was brokered by the FCC. But CableCard does not yet allow users to tap into the most advanced services, like video-on-demand programming – one of cable's main selling points.

A few manufacturers, though, have found ways to work more closely with the cable industry. Samsung, for example, announced deals that will allow it to build televisions that can use advanced services from the Time Warner and Charter Communications cable systems without need of separate set-top boxes. But for now, those Samsung sets will not work with other cable systems — including those of the biggest cable company, Comcast.

Others are trying to find ways to bypass the cable companies entirely. The biggest proponents of this approach are the big telephone companies, like SBC Communications, which are using their high-speed DSL lines to offer video services, using hardware from companies like 2Wire, which like SBC was a CES exhibitor.

Meanwhile, Microsoft, which has been trying to muscle into the consumer electronics business, is playing all sides, the Times said. It has software that is being used in cable boxes now under tests by Comcast. It is supporting Internet television offerings by SBC and BellSouth. And it announced last week a deal to make music videos from MTV available to users of its Windows Media Center PC’s.

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