Digital Hype in Full Swing at Atlantic Show

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Baltimore -- The sky's the limit for advanced services over
digital set-tops, vendors and consumer-electronics executives told cable operators at the
Atlantic Cable Show here earlier this month.

The key, they said, was to get the set-tops into the homes.

At a panel on digital convergence, Steve Necessary, vice
president of marketing for Scientific Atlanta Inc., said advances in technology and
decreases in hardware costs will help to drive the rollout of new digital services. He
added that it now makes economic sense for cable operators to provide multiple services,
in addition to traditional video packages.

"It's not a $35-per-month opportunity
anymore," Necessary said. Instead, by adding new services, the potential is
"more like $80, or even $200, per month."

Arpad Toth, chief technology officer at Circuit City Stores
Inc., predicted that cable's business will grow "exponentially" over the next 10
years. Toth added that operators will not want to own digital boxes in the future, because
it won't be long before the average life span of a set-top is less than one year.

Circuit City has long-term plans to offer set-tops at
retail. It already has experience selling Digital Satellite System hardware at its
national chain, and it has just begun marketing cable modems at a number of its New
England stores.

Toth advised operators to "let the manufacturing
industry sort out how they offer a $50 set-top box" to the consumer through the
retail channel.

Necessary said S-A would endorse retail distribution and
"anything that can broaden the market for our products." But he stressed that
timing will play a big role in the success of a retail rollout for digital boxes.

Product portability is crucial to a retail launch,
Necessary said, and technical standards are just one issue. Because our society is so
mobile, he added, consumers will have realistic concerns about whether different operators
across the country will offer similar services through the same set-tops in the event that
the consumer moves.

While the panelists agreed that advances in home networking
could eliminate the need for digital boxes in the home, Necessary said a complete
conversion to home networking faces some hurdles: Different industries may debate how to
deliver digital signals throughout a home -- whether through cable, phone lines or
electrical wires.

In the meantime, cable operators across the country have
already seen some early success with digital set-top deployment.

Joe Rooney, executive director of marketing for Cox
Communications Inc. of San Juan Capistrano, Calif., told Atlantic Show attendees that the
company's "Cox Digital TV" product is available in 20 local retail
locations. Retailers are commissioned to sell both Cox@Home
high-speed cable-modem service and Cox Digital TV.

"If you're not at retail yet," Rooney told
other operators launching digital services, "you have to think about it."

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