'Plug-and-Play' Looks Close

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The cable and consumer-electronics industries last week were putting the finishing touches on a "plug-and-play" agreement that would pave the way for digital set-top box and high-definition television technology features to be built directly into digital TV sets.

Throughout last week, cable sources said the two sides were very close to a final agreement that had been years in the making, but cautioned that a Nov. 8 USA Today
article which reported that a deal was done was premature.

"Negotiations between cable operators and consumer-electronics TV manufacturers concerning 'plug and play' DTVs continue on a constructive path," said Robert Sachs, president and CEO of the National Cable & Telecommunications Association. "Notwithstanding some reports in the press, a final agreement has not been entered into by the parties."

The deal would be the culmination of a long-sought dream of government officials, who hope to spur the adoption of digital and high-definition television by CE manufacturers looking for products to sell, broadcasters who are moving toward digital and HDTV delivery and, to some degree, the cable industry.

Cable MSOs have been cautious about pursuing "built-in" agreements because of a host of technology, security, copyright and business issues.

Operators want to make sure any agreement jibes with the recently-released OpenCable specifications and POD Host Interface License Agreement (PHILA) work by Cable Television Laboratories Inc. Although an OpenCable specification has been agreed upon, no digital cable set-top boxes have been made available at retail.

At the same time, the FCC has been pressuring the cable industry to move quickly on digital TV and HDTV issues. Three weeks ago, FCC chairman Michael Powell told a digital TV conference in Washington that "plug-and-play" cable compatibility issues were largely complete.

"The cable and CE industries are working to resolve the remaining business issues, and they're making significant progress," Powell said.

Cable sources said the industry was meeting with FCC officials last Friday to update the commission on the negotiations.

Several weeks ago, Panasonic announced it had signed the PHILA license agreement, adding its name to a list that includes Pioneer Corp., Scientific-Atlanta Inc., Motorola Inc. and Pace Micro Technology plc. That would allow Panasonic and Pioneer — both of which make TV sets and set-top boxes — to build digital TV sets that could receive HDTV signals and cable networks transported in digital format.

Before cable-ready televisions could hit the retail shelves, other TV makers would have to agree to the PHILA license and would likely need to incorporate the wider ranging OpenCable box specifications into their product designs.

A cable-CE deal might also be welcome news on Wall Street. Cable operators want to get as much spending on capital-expenditures off the books as they can, especially during a time when investors have hammered MSOs over rebuilds and equipment outlays.

"They may be thinking of it as a way to address the cable subscribers of today that aren't interested in premium TV and aren't interested in the premium services, and at least get them upgraded to digital spectrum in the name of spectrum management," said Greg Ireland, a digital TV analyst at International Data Corp.

But the CE industry also is under pressure: It faces a 2004 deadline to build expensive digital TV tuners into TV sets — a measure the industry fought vigorously.

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