Standards, Cooperation Needed for Retail

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Today, the idea of digital cable set-top boxes on retail shelves remains a theory. Changing that to fact will depend on several factors — not the least of which is a more level playing field for digital box makers.

That was the consensus view of a panel of cable operators, retail electronics sellers and set-top box manufacturers at last week's National Show here.

The panel delved into why digital boxes are not available, despite the fact the cable industry largely met the Federal Communications Commission's July 2001 deadline for introducing boxes with point-of-deployment cards.

Panel moderator Chris Bowick, senior vice president of engineering and chief technology officer at Cox Communications Inc., said the lack of retail box distribution in the cable industry was a result of digital cable's organic growth. Suppliers Motorola Inc. and Scientific-Atlanta Inc. have dominated the segment, and up until now, standards have not been a factor.

"The two major guys that sold us the boxes today are the same guys who sell us the equipment for the headend," he noted.

Therefore, according to panelists, DTV requires a uniform, open standard similar to the Data Over Cable Service Interface Specification developed for cable modems. That process has generated more than 70 cable-modem competitors, and a wide range of features and retail pricing.

That's the idea behind the OpenCable specifications developed by Cable Television Laboratories Inc., the industry's technology think tank. OpenCable's Applications Platform (OCAP) sets up the blueprint for a common middleware specification that will allow boxes from different makers to run the same applications, and tie in to the same cable control systems.

But that's just one step, the panelists cautioned.

STICKER SHOCK

Fear of sticker shock is also a factor. Up to now, cable operators have provided set-tops for rent, and some have argued that customers won't want to pay the full, hefty price for a digital box at retail.

But one lesson to be learned from consumer-electronics history is to not be sidetracked by the idea that customers will be driven back by the expense of new devices, according to Circuit City Stores Inc. president and CEO W. Alan McCollough.

In most new-product introductions — including that of the DVD player — prices started high, then dropped as the technology caught on with consumers, he noted.

Smelling a ready market, more consumer-electronics competitors typically enter the fray — and that contributes to falling costs, even as the product is improved.

"Please don't talk about cost in the digital world, because it is a fleeting thing," he said. "I think primarily what you see is in a digital world, if you let competition take over, you will see extraordinary innovation and extraordinary reduction in cost."

McCollough then turned the issue back on Bowick, asking him what prevents cable operators from demanding digital set-top boxes that meet a common interface and conditional-access standard.

LEGACY FACTOR

Part of the problem is due to the fact that a significant number of legacy boxes — all using the proprietary conditional-access systems — are already in the field, Bowick said. Gravity generated from these boxes, he said, played a role in adopting newer units that met the OpenCable specifications.

"OCAP is really the glue that will allow us to develop applications on one platform," he noted. "Now it is only a matter of timing. How fast can we push?"

Cable's digital boxes do offer greater functionality than those of its direct broadcast satellite competitors, which offer units from multiple manufacturers at retail, noted Cablevision Systems Corp. retail division president Jeffrey Yapp. Cablevision is unique among many cable operators in that it has a retail subsidiary, The Wiz.

Fostering cooperation between the cable service provider and the consumer-electronics world is a crucial step, said Yapp.

"I don't think in the past, the industry has worked as closely together as we could have," he noted. "Now it is an issue of getting to the same standard."

WORKS FOR DBS

But Thomson Multimedia executive vice president Enrique

Rodriguez noted that satellite competitors EchoStar Communications Corp. and DirecTV Inc. have created a retail box-distribution business without a common standard for conditional access or applications interface protocols.

The element that made DBS successful was the creation of a service — and a piece of hardware — with appeal for a customer walking into a retail store.

"We need to find a way to get the consumer to come in, look at the product and buy them in a retail world," he said.

Five years from now, McCullough said, the retail digital box would depend on the MSOs' willingness to adopt the uniform OpenCable standards. If it develops like the DOCSIS cable-modem market, the future could "see an extraordinary range of products, low cost products and consumer demand beyond your wildest dreams," he said.

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