Cable set-top-box maker Scientific-Atlanta Inc.’s stock dropped for the
second straight day amid fears that new Federal Communications Commission
"plug-and-play" legislation will end the stranglehold S-A has had on digital
The FCC ruling, which was widely expected, allows television-set
manufacturers to make sets capable of receiving digital-cable programming
without set-top boxes.
S-A stock fell 4.4% Thursday ($1.50 per share) to $32.36 apiece. On
Wednesday, the stock dropped $3.16 per share (8.5%) to $33.86 each.
In a research report, Rodman & Renshaw Inc. analyst Daniel Ernst said the
FCC ruling would end the "set-top duopoly" S-A and Motorola Inc. have enjoyed
Ernst likened the plug-and-play ruling to the implementation of the Data Over
Cable Service Interface Specification standard for cable modems. When DOCSIS was
implemented, the number of vendors supplying cable modems rose from two to 20
and the price of cable modems dropped from $250 each to $40.
"We believe that over the next two years, competition and pricing of basic
digital set-tops will follow a similar path," Ernst wrote.