NDTC Chief Priddy Sees Set-Top-Box Progress


Laurie Schwartz Priddy took on a big job last month in
replacing longtime cable executive David Beddow as president of the National Digital
Television Center, now a part of AT&T Broadband & Internet Services (formerly
Tele-Communications Inc.). Besides a mandate to boost existing businesses such as Headend
in the Sky, Priddy has the major task of shepherding the development and deployment of
advanced digital set-top boxes for the nation's largest MSO. Soon after taking her
new position, Priddy -- most recently head of the OpenCable project at Cable Television
Laboratories Inc. -- talked with
Multichannel News senior broadband editor Bill
Menezes about the challenges of her new job and what lies ahead in the coming year.

MCN: Let's start with your move from CableLabs to
the NDTC. That's a pretty big change, with a lot of attendant functions that go with
running this place. What are some of the challenges in coming over here?

LSP: First of all, I'm really excited to be here.
CableLabs was, I will say, my favorite job to date. I really enjoyed working there, and I
learned a lot about the industry in a pretty short amount of time. But coming back to a
company where you're talking about real bottom-line issues is exciting. And to get
into something like the [General Instrument Corp.] DCT-5000 [set-top box] development,
which I was watching from the outside, and to come in and get to work on that directly is
really exciting.

The other aspect, HITS, I think that there a lot of great
opportunities there. They've got a great facility. I think that they've built a
great asset for AT&T. And we can turn that into a greater asset for the industry, I

And then, all of the work we've done in Peter
Douglas' group on HDTV [high-definition television] and on production and
origination, I think a lot of that's really exciting. For me, it's all positive,
with a lot of great upsides.

MCN: What are some of the things that might be done to turn
HITS into a greater asset for the industry?

LSP: I've spent some time talking to [senior vice
president of HITS] Rich Fickle, who's been responsible for this for quite a few years
now. I share his vision, which is to make HITS more available to companies that are not
currently affiliates. We've had some early discussions already with some people who
are interested in using HITS as a service.

Industrywide, I think that if we could reach consensus on
how to make it an even better product, this would be a good thing. That means looking at
issues such as packaging quality and lineup. And I think that those are all things that
we're willing to look at and consider to make it more appealing to the industry in

MCN: Can you tell me some of the companies that you've
been talking to about this?

LSP: I don't think so. Right now, it's really
early on.

MCN: You mentioned that you enjoyed coming over to a
company with real bottom-line issues. What do you see as some of the key areas that
you'll be dealing with in that respect?

LSP: It depends which aspect you're looking at.
HITS is operating very well, so you could look at that as an end-to-end business. [Then
there's] something like the DCT-5000 development, where I have more experience from
what I did at Bell Atlantic [Corp.], where you're looking at creating a platform and
a vehicle for developing new services, but one that needs to be economical at the same
time. I think that there's going to be a constant challenge to work those issues.

MCN: You'll be spearheading the DCT-5000 effort here,
as David Beddow was. Are things on schedule in terms of testing and development?

LSP: Now that I get to look under the hood, it's
an extremely complex platform, primarily for two reasons. One, it provides so many
features and capabilities, so I think that it's going to be a very powerful platform
when deployed. But it also brings together some interesting partners, as everyone knows.
And seeing how they have to play together has been interesting.

GI's making, I think, excellent progress on the
hardware platform, for which they're primarily responsible, and everything that
I've heard says that they're on track to deliver the hardware. The piece that I
need to get more insight into is the software and how we pull all of those pieces together
to deliver the platform on time.

So my job over the next month is to meet with each of the
vendors and to collectively meet with the program team to understand if there are issues
there. It's a little early to comment, but from everything that I can see right now,
we are on track to deliver a very interesting platform.

MCN: On the software side, what's your take on the
working relationships there?

LSP: I think that there's been a lot of good
communication between the partners that are working on the platform. The content providers
and software developers are working through a lot of issues at this point. But
there's no question that when you take people like Sun [Microsystems Inc.] and
Microsoft [Corp.] and put them on the same platform, there are some underlying dynamics
there. You have natural competitors working together to create a platform. So it always
makes it fun.

MCN: They've been, at least as far as the DCT-5000,
been working together for a while. Has it been productive?

LSP: I think that the working teams have been very
productive, and that's the important thing. The software manufacturers to date have
done a surprisingly good job at meeting their schedules. Their hard part is coming up:
Once they get the final ship of the hardware platform, that's when we have to start
putting it all together. You know, software generally never meets a target. Everything
that I've seen so far says that they've done a great job.

MCN: You mentioned the complexity and capabilities of the
DCT-5000. What capabilities will actually be enabled in the initial shipments of the box
to AT&T Broadband customers?

LSP: We're working on defining what will be in the
first customer ship. It actually will be a very large set, if not the complete set that
was planned, which, I think, is impressive.

MCN: What are some of the things that are being considered
as part of that set?

LSP: They're still on track with the DOCSIS [Data
Over Cable Service Interface Specification] cable modem in the device. There are a whole
host of services, depending on who actually signs up to provide the content. You have your
narrowband interactive services, which include things like impulse pay-per-view, which I
know people are anxious to get out there. We have been looking at some
"in-the-box" services, like gaming. So it really is as full-featured as we were
told. This means that it's going to be complex in making it all work together.
It's going to be a challenge.

MCN: What other types of feedback have subscribers been
giving about features that they'd like to see when this capability is available?

LSP: That's something that I haven't had a
chance to really get into. I know that there are people over at corporate who are looking
at that, and I have seen a matrix of services where they've done a lot of research
and focus groups. So one of my goals is to spend more time with them, getting their input
into the platform so that we prioritize services for the first customer ship and get the
right product out there.

MCN: Is it likely that Microsoft's Windows CE will
predominate as far as the operating system that you're going to use?

LSP: We've been working with both Sony
[Corp.'s Aperios] operating system, as well as WinCE. I think that it's probably
too early to tell if there will be a predominant operating system.

MCN: What have testing and development results been like?

LSP: It's too early for me to say. I don't
know yet.

MCN: Let's talk about the integration of the
company's cable-engineering and technical functions under AT&T Broadband
executive vice president of engineering Tony Werner that accompanied your move here. What
were some of the specific rationales for doing the integration?

LSP: The facility that we have here at the NDTC has
done an incredible job of carrying the water on all fronts. It has traditionally been
responsible for not only defining the platform, but the services and operational issues,
as well. If there's a benefit to bringing us into corporate, I think it's that
we can share that load and get input not only from the technologists that are here, but
also from the actual operations teams and the marketing groups. I do believe that was
happening in the past. I think that this is just a way to maybe define an even clearer
process to support corporate buy-in to the final product.

MCN: Was there a sense that more could be done, or are
there specific achievements or positives that they expect to emanate from this
organization change?

LSP: I think that it's just a sense that if we do
get pulled together, it means that it's easier to resolve some issues if we're
all in a corporate structure. It means that you don't have to get all the way up to
[Liberty Media chairman John] Malone, or perhaps [AT&T Broadband president] Leo [J.
Hindery Jr.], to resolve some of that. I think that's a benefit to those gentlemen,
who have plenty of things to work on, as well as to the people who are solving the
problems, so that they may even get faster decisions. That's not from my experience,
not having been here, but more from a traditional organizational theory, if nothing else.

And I also think that Tony's team brings a lot to the
party. They have a lot of experience about what it takes to deploy these devices. And if
we can get more of that into the planning, then I think that's also a really good

MCN: What do you perceive is AT&T's vision for
this facility and the functions performed here?

LSP: We have a meeting with [AT&T Corp. chairman C.
Michael] Armstrong, and I'm sure that we'll learn a little bit more there. I
actually haven't had a lot insight to what AT&T's vision is.

I have met with some of the AT&T Labs folks, and I
think that they are in synch with a lot of the things that we do here, and that's
good. I look forward to getting their input, though. They have a huge staff of people with
technical experience that could be beneficial not only to things like the DCT-5000, but to
working on things like HITS quality if we maybe wanted to address issues there. [They
could also help on] HDTV, certainly. So other than that, I think that it's a little
premature to say where AT&T views us.

MCN: Regarding HDTV, what are some of the technical or
organizational challenges that AT&T still has to overcome in that area?

LSP: I can talk about it a little bit from my
experience at CableLabs, and then I can tell you what I do know about AT&T. On an
industry basis, I think that we made a lot of progress last year to work with the
broadcasters and understand what the issues are, and to work on the other side with
consumer-electronics manufacturers to make sure that we have a good consumer-friendly
solution in the home. I feel very good that by the end of last year, everyone was on the
same page.

There are still some differences, and people can argue
technicalities about things like compression and actual resolution. But as an industry, I
think that there's been a lot of support to carry broadcasters' signals in the
format that they're transmitted in.

Now, what I do know has been going on at AT&T, and some
work that Peter Douglas has been very active in, is understanding what the actual consumer
sets will be able to display and what the optimal carriage is for cable, and then trying
to bring those two together and demonstrate to the broadcasters that there may be some
options besides full-resolution, full-bandwidth -- that the consumer won't be able to
tell the difference.

What I've learned in the last week-and-a-half is that
there have been a lot of active discussions and demonstrations to the broadcasters. And I
think that we might see some changes there that will allow us to provide a high-quality
picture that is indistinguishable on a consumer-quality set, but that is much more
efficient for the cable networks.

MCN: And the broadcasters seem to have been amenable to
seeing what cable says it can produce?

LSP: I think that they've been willing to look
and, in fact, that they are perhaps encouraged that there's a compromise.

MCN: What's your sense about the demand by cable
customers to actually receive HDTV signals in the near future? Is there an imperative
beyond any government timetables to carry digital-broadcasting signals on the systems?

LSP: I think that if there's any imperative,
it's probably when we see some of our cable programmers start broadcasting digital
signals. I think that we're anxious to be there. For instance, when HBO [Home Box
Office] gets started, things like that are very interesting to us, in addition to
broadcaster content. And I think that you'll see more demand for some of that content
than for retransmission of existing content.

MCN: I get the sense that programmers are running behind in
producing that kind of content. Does that go back to the idea that there's not big
demand yet for features and picture quality beyond a certain level?

LSP: Personally, and I'm speaking from my
viewpoint, it's the content that matters. [Technical] quality is great, but a lot of
the programming doesn't necessarily benefit from the extremely high quality that you
get from something like HDTV. It may benefit from the digital that we're getting
right now to customers, but there's certainly new content that could be created that
would really benefit from HDTV, and I think that's where the focus should be.

MCN: What kinds of things would the company like to see in
the shorter term along those lines?

LSP: I think that some of the films could be
interesting. And when you see people like HBO, that could be an area of content. Also
sports. But again, I'm really speaking more for me than I am for the company, in this

MCN: Are there any other pressing technical issues that you
see that need to be addressed by your area in the first months or year that you're in
this role?

LSP: Well, I don't lose my link to the OpenCable
process, and we do have a lot of technical issues that we are addressing there. We are
still in the throes of resolving copy protection, and I think that one benefit of me
moving here is that I can continue to move that process forward and make sure that
AT&T continues to support OpenCable as much as it has in the past.

David Beddow was extremely supportive and influential in
the OpenCable process, and I look forward to continuing to work with CableLabs on that.
It's going to be important -- we have a July 2000 date for the point-of-deployment
security module, and I need to work very closely with our supplier, GI, to make sure that
we meet that date.

MCN: What do you need to do on the POD issue?

LSP: We will follow the OpenCable specification and
meet that date. It's a very aggressive date, but we also understand the implications
of not meeting that date. We are having discussions with consumer-electronics
manufacturers and retailers, and I think that it's great to finally be able to talk
to them, and to talk not only about the broad OpenCable issues, but about specific
business and technical issues that are important to AT&T. So I think that's also
a high priority in the next couple of months.

MCN: How have the consumer-electronics manufacturers been
responding? Do they think that the deadline is aggressive?

LSP: They have their half, which is to provide the
product at retail, and I think that they think it's an aggressive date. There are
some that are more actively involved than others. And I believe that if they want to have
a product in that time frame -- and I'll say that time frame being July through
Christmas 2000 -- there will be a definition of an OpenCable product that they can supply.
I think that they're encouraged: It's their opportunity to participate in cable,
and we have had unprecedented support and cooperation on this project.

MCN: Do you sense that there's an urgency to get a lot
of third-party retail deployments for cable modems? How important is it for AT&T to
have that retail presence?

LSP: I think that it's important to have both
channels. I just had lunch with [AT&T Broadband senior vice president of advanced
product deployment] Susan Marshall today, and she's working furiously to get those
cable modems deployed. And if we have to do it through the leased mechanism, that's
an acceptable approach. I think that we also want to pursue the retail avenue as quickly
as possible. So we've got both bases covered. The more that get certified, the
better. But I think that we definitely have a plan so that we can reach the numbers that
we want to reach, one way or another.

MCN: So it doesn't depend on a greater
consumer-electronics presence?

LSP: I don't think that we're going to wait
for that. But we're encouraged by the two [manufacturers] that have been certified,
and we are anxious to see some more.

MCN: Is it AT&T's plan to have variety of
DOCSIS-modem brands available to its customers, or does that start to get a little
confusing to mainstream consumers?

LSP: I think that when you're talking about cable
modems, given the fact that it's primarily a transport product, the confusion should
be minimal, because basically, each one will do the same. I think that when you talk about
OpenCable retail devices like set-tops and digital TVs, that's where we're
working very closely with the consumer-electronics manufacturers to figure out how best to
provide retail devices that are actually offering services directly linked to our
headends. It's a slightly different problem and a more complex problem. But when it
comes to cable modems, more is probably better, I imagine.

MCN: Coming into this job, what are some of the first
things that came into your mind as far as what you'd like to accomplish and the most
pressing needs?

LSP: The top priority to me is the DCT-5000: getting
that product out into the field with the right set of services deployed, and working with
the people at AT&T to make sure that we're meeting the right requirements in
getting it out there to meet their schedule. That, to me, is the top priority.

And right next to it is using the work that we're
doing here in conjunction with the OpenCable process to reach some industry standards,
because I think it's really important that we work together as an industry. We have
an opportunity here to take advantage of things like the Internet, rapid application
development and early service deployment, which can give us an extreme competitive
advantage over people like satellite and xDSL [digital-subscriber-line] products. I think
that it's a mistake if we're not working hand-in-hand with the other cable
operators to make sure that we can roll out national services.

One of the challenges for OpenCable has been that we have
different systems and we offer different services, and it's important that we reach
agreement on a technical standard. So that if [AT&T Broadband] is offering a service,
and it wants to make that available to a customer who moves to another cable operator, we
can do that through the right networking solutions and the right devices in the home, as
well as the right business arrangements.

I've had a number of discussions with other cable
operators since I've taken the position, and I think that there's a lot of
energy to get together and look at creating some industry standards that will help us to
take advantage of that position.

MCN: Is that more important to the larger MSOs?

LSP: I think that the smaller operators actually
benefit more, because they can then take advantage of a platform. For instance, if retail
is successful for OpenCable, it will give them an opportunity to get their customers some
more advanced devices at a reasonable cost. And they can also tap into the resources used
by the larger customers to create the services. So you can imagine that there are some
ways that it could really help the small operators a great deal. But in the end, the
customer's the one who's going to get a better experience.

MCN: Were you given any mandates when you came here?

LSP: Sell more HITS [laughs]. I think that we're
anxious, as I said earlier, to make HITS even more attractive. I think that it's been
a great success, and I want to say that I think Rich has done a fantastic job making it a
great product. I just want to make it better and more attractive.

MCN: What are some of the ways that it might be made more

LSP: Some of it is looking at the way that we package
it and the way that we promote it. I think that there's been some concern about
quality, but if you look at the past 12 months, I think that most of those have been
worked out. I know that [Fickle's] already in a number of discussions that I
can't talk about now that sort of address that issue of making it more of an
industrywide asset.