Cable Operators

Comcast, Motorola JV Gives Cable Op Some More Security

3/13/2005 7:00 PM Eastern

Comcast Corp. extended its multiyear equipment deal with Motorola Inc. last week in a manner that does more than bring additional set-tops to the No. 1 U.S. MSO. The deal also allows Comcast to take a much greater role in the development of signal-security technology.

The pact, valued by both companies at $1 billion, calls for the establishment of two different joint ventures dealing with conditional-access issues.

The first venture will develop a next-generation conditional-access system, using Motorola’s MediaCipher as a base. Both companies will jointly manage the group.

The second will license conditional-access systems and other technologies, including MediaCipher, to U.S. cable companies and other providers. Comcast will manage that business.

Both deals are patterned after Comcast’s GuideWorks combination with Gemstar-TV Guide International Inc. The aim: To give the cable company more control over product development by bringing a vendor’s product in-house.

“This partnership with an industry leader like Motorola will help us to continue to aggressively advance our interactive digital platform and more rapidly develop and deploy video product,” Comcast chief operating officer Steve Burke said in a statement. “This is part of Comcast’s continued focus on the development of industry-wide specifications for key components of set-top boxes — including conditional-access systems, interactive program guides and middleware — that will help add consumer value and reinforce cable’s position as the provider of choice for home entertainment and information.”

The joint ventures are part of a natural evolution, according to Mark Hess, Comcast’s vice president of digital TV. They’ll help Comcast move to an all-digital platform as DTV penetration increases, he said.

Comcast, for example, hopes to expand video on demand to as many homes and TVs as possible, using lower-end digital set-tops.

The conditional-access deals are about making sure “the digital access controller and the network itself development is more robust,” Hess said. “The [conditional-access] technology and architecture has to evolve as well.”

Downloadable CA systems are becoming a more of central focus for MSOs, he said. For one, they’re seen as an easier way to meet the goal of the CableCARD, the removable conditional-access module. A downloadable system would let an MSO remotely upgrade its software should a security problem occur, rather than sending out new CableCARDs, Hess said.

Another goal is to allow conditional-access systems to migrate to other devices. Downloadable CA security could become part of an agreement with consumer-electronics on two-way-capable “plug-and-play” technology, which would allow subscribers to buy two-way TV sets at retail then order cable programming — and have it authorized via download, without the need for a set-top box.

The joint ventures will also make it easier for different box manufacturers to build set-tops to Comcast’s specifications, said Hess. They’ll also allow the MSO to keep a better handle on license fees paid by Comcast and other operators.

Dan Moloney, president of Motorola’s Connected Home Solutions unit, said the set-top portion covers both low- and high-end boxes, as well as future set-top development.

“You’ll see us develop new products under this deal,” he said.

There are provisions allowing Motorola to market other products, including voice-over-Internet protocol gear and wireless telephony services.

Moloney said the CA joint ventures “will accelerate the potential of adopting downloadable security.”

Such systems will be built for future set-tops, not the boxes now in customers’ homes.

Broadband providers will still be able to license MediaCipher directly from Motorola, and some MediaCipher development will continue outside the joint venture — for example, with Motorola’s international clients.

“We do not give up any rights to MediaCipher relative to what we had before,” Moloney said.

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