Coming Soon: The $50 Digital Set-Top

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The cable industry could see a $50 digital set-top roll off assembly lines in late 2005, which will aid operators in their transition to an “all-digital” world.

At a Cable & Telecommunications Association for Marketing Summit panel session here last week devoted to future set-top box issues, Comcast Corp. executive vice president and chief technology officer David Fellows discussed the all-digital transition and the latest thinking on the low-cost set-top for all-digital systems.

He pointed out that all-digital does not mean the complete absence of analog. “There will be analog channels present,” he said, like off-air channels and must-carry stations. “But all those services will be available in a digital format,” he said, allowing cable operators to proceed with the transition to all-digital set-tops.

EVOLVING ECONOMICS

Fellows also spoke to the reasons behind the rise in the box’s cost.

“The $35 box became the $50 box when we added [Data Over Cable Service Interface Specification] as a signaling mechanism,” Fellows said. “The $50 box has two-way DOCSIS signaling, plus a second tuner for MPEG [Moving Picture Experts Group] or eventually DOCSIS IP [Internet-protocol] delivery.

“The $50 box also has the capability of handling advanced codecs, like MPEG 4 or Windows Media 9, and the set-top has a conditional-access mechanism that makes it compatible with CableCARD and the retail environment. So those three things got added in, and $15 got added into the price.”

Fellows said semiconductor companies are already working on chipsets for the $50 box. “We’ll have the $50 box in about a year and a half. In the middle of next year, chips show up, and at the end of next year, the product begins to show up. It will start off as an under $100 box, and then with volume, in ’06 and ’07, it comes down into the $50 range.”

Fellows said that his worst-case scenario on replacing all set-tops for Comcast would be $2 billion spent on 40 million units. But the more CableCARD set-tops are sold at retail, the lower Comcast’s number if it chooses to place a digital box in every home.

A digital-simulcast network would allow Comcast to increase its spectrum efficiencies, provide for packaging flexibility and allow ITV services like video-on-demand to reach all homes, hastening IP convergence.

“We can create custom lineups, lineups for weekend and ordering through on-screen interfaces,” Fellows said.

Cable operators can begin the transition through digital simulcasting, which keeps the current analog lineup relatively intact, he said. Charter is on that path in Long Beach, Calif.

The technologists on the panel also talked about the OpenCable Applications Platform, next-generation architecture and the first few weeks of CableCARD implementation.

“OCAP is a software layer that allows us to sell incremental revenue packages across a multitude of devices,” said Cox Communications Inc. vice president of multimedia technology John Hildebrand. Cox sees OCAP as an important step in the evolution of cable video service.

Cable companies aren’t the only firms looking forward to OCAP. Paul Liao, chief technology officer at Matsushita Electric Corp. of America, called OCAP “very, very important to the consumer-electronics industry.”

“It’s important to have a common software platform,” he said, since many cable systems have a different application running electronic program guides, VOD or other services. “OCAP is going to drive interactive two-way services,” he said.

Fellows said work on the next-generation architecture will be handed over to Cable Television Laboratories Inc. in the next few months.

Hildebrand said the next-generation effort “will give MSOs freedom of choice. It’s a technology that leverages DOCSIS.”

Running video over DOCSIS will use 20% to 25% less bandwidth, he said.

CABLECARD COUNTS

Panelists said CableCARDS are slowly making their way into the field. Fellows said Comcast had six successful installations as of July 19.

Some of the early fears have been borne out in anecdotal stories, Fellows said, noting that cable and the CE industry face a common danger: slick salesmen in retail outlets.

One CableCARD consumer didn’t like the fact there was no interactive guide and no access to HBO On Demand, facts which should have been covered at the point of sale. “That TV was returned,” he said. Fellows said he heard from another MSO about a consumer buying a CableCARD TV set, thinking his cable service would be free.

Hildebrand said Cox has seen similar numbers. “We have a handful of subscribers who have bought new TVs.”

But Liao called on cable operators to pick up the pace. “Deployment is just getting started, but we’d really like to see the cable industry promote CableCARD much more strongly. There are substantial numbers of numbers of subscribers who would like to get simple one-way services,” he said.

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