Getting ready for cable's digital era
Pity the poor cable TV set-top box. For at least the past 10 years, everyone from consumers to legislators have been trying to rid the planet of the devices, but "the box" that resides on top of millions of TVs refuses to go away. They have remained ubiquitous simply because of their utility—first as a way for operators to offer more than 13 channels, then as a method to provide volume control. Now, the newest thing is the digital set-top, and this time, it's bringing more than just TV. This computer on top of a TV is a true service enabler.
Cable operators were the first video providers to boldly announce that they were embracing the digital revolution and would offer the equivalent of a 500-channel universe. They were beaten to the punch by DBS providers, but, true to form, operators are now rolling out digital boxes that are so fully featured, they promise to rewrite the way systems roll out new services.
General Instrument is now about six months into its production cycle for the DCT1000 digital set-top, and has shipped roughly 200,000 units to several MSOs, including Tele-Communications Inc., Cox Communications, Comcast and several others that prefer not to be identified for competitive reasons, according to Denton Kanouff, vice president of marketing at GI's digital network systems business unit.
Waiting in the wings to take its bow is Scientific-Atlanta, which won a major contract from Time Warner Cable to deploy the "Explorer 2000" set-top, which features real-time reverse for interactivity.
And of course, Zenith is busy developing and manufacturing a digital set-top for the Americast consortium of telephone companies, while Hewlett-Packard is awaiting an opportunity to show its stuff. And finally, companies like Pioneer, Toshiba and Pace Technologies are now signing up as licensees of either GI or S-A to second-source set-tops, now that the industry has developed a standard set-top design around the MPEG-2 protocol.Not plug-and-play, yet
Predictably, TCI and some of the other operators are still getting used to deploying the new-fangled digital boxes. Although the nation's largest MSO is rolling out in Hartford, Conn., the process is still far from plug-and-play installs, according to one source familiar with the roll-out, who asked not to be identified.
Nevertheless, there are no major concerns, according to Kanouff, who reports that the roll-out is progressing "very well." In fact, by the time this article is read, GI will have shipped 200,000 set-tops and installed at least 30 digital headends, he adds.
In fact, GI believes the market has already matured a little—at least to the point where a wider range of digital products can be supported. That's why the company intends to show two new digital set-tops at this month's National Cable Show in New Orleans.
Slated for debut are a new, broadcast-only box that could sell for $50 less per unit than the DCT-1000, and a new, "advanced interactive" box that will sport a next-generation microprocessor and a TDMA-based return channel that is more conducive to file transfers and session-oriented gaming, Kanouff says.
These set-tops are so new that names hadn't even been decided for them by the time Kanouff was interviewed for this story.
In the meantime, S-A is busy developing the Explorer 2000 for Time Warner, who bought 550,000 set-tops, all headend and network control software and system integration expertise from the Atlanta-based manufacturer and expects to begin deploying units by the end of 1997. This unit features real-time reverse and has been built from a data-centric point of view, according to Bob Van Orden, S-A's Digital Video Systems business unit director. "We focused our efforts on (helping operators) build a digital network to match DBS first, while providing a platform to offer even more services," he says.
S-A isn't going to be as aggressive as its arch-rival in its plans to offer a suite of digital products, says Van Orden. He says S-A has no intention to pursue the low-end portion of the market.
Instead, S-A's efforts will be focused toward designing cost out of the box components. But that doesn't mean anyone will soon see a less-expensive device—instead, buyers will end up getting more features, greater graphics and better processors for their money.
Included in the Time Warner purchase is the PowerTV set-top operating system, which recently announced a new release of its software that supports near-video-on-demand applications, secure digital broadcasting and a host of other audio and Internet Protocol compliant features. Release 1.1 especially adds more Internet capability—the company has already worked with Spyglass to develop a Web browser and has shown a complete Java environment operating over the new software release. "We have made significant improvements over the past 12 months that will make advanced television applications even easier and more powerful to implement," says J. Bowmar Rodgers Jr., chief operating officer at PowerTV.
The new release builds on PowerTV's first offering, which was specifically designed for the set-top and advanced TV applications. That release was small in footprint, yet offered advanced graphics support, especially when married with the company's Eagle graphics chip.Some new faces, too
Included in the Time Warner deal were orders for S-A licensees Pioneer and Toshiba, who intend to provide a total of 450,000 more set-tops based on the S-A/PowerTV platform.
But GI also has a few licensees that stand poised to build digital set-tops for the burgeoning market. Just last month, Pace Micro Technology plc, a London-based manufacturer of set-top hardware, licensed GI's MPEG-2 system, including its DigiCipher II conditional access system.
Pace, which is already producing DVB-compliant receivers for deployment in Europe, intends to pursue the U.S. cable TV market as a second-source of GI hardware. Pace officials recently disclosed that they have been holding exploratory discussions with MSOs and can now move forward with development, with an eye toward having product available by the end of 1997, according to a statement released by the company.
Apparently left out in the cold, at least for now, is Hewlett-Packard, which made quite a splash a couple of years ago by licensing the GI system for its Kayak set-top. In fact, HP had a letter of intent from TCI to purchase roughly 250,000 boxes. But, to date, that agreement has not advanced beyond the LOI stage.
"Our fate rests in the hands of the cable operators," says Casey Sheldon, brand manager for interactive broadband products at HP. She says cable operators' digital deployment plans are apparently in flux, given that even TCI issued a request for proposals as late as last October seeking a set-top that would pass through analog signals offered by TCI, and receive Primestar digital signals as well.
"We responded in depth to that," says Sheldon. "Cable operators seem to be changing their plans—their thinking has changed. We simply need to know what they want."
But Sheldon is quick to point out that the demand for more service offerings hasn't fallen off. "We don't see consumer interest waning at all," she says. But while cable operators go back to the drawing board to decide if high-speed data or digital video is the key priority for their new-service rollouts, HP is content to wait.
"We have become masters of living with ambiguity," Sheldon says light-heartedly. "We are eager to get started, but willing to wait."Are the MSOs ready?
So, if the vendors are ready and willing to provide product, what are the operators' plans?
While TCI and Time Warner have made very public announcements about backing off their telephony plans, digital TV deployment continues to be a high priority for them. At TCI, which has been suffering lately through severe economic hardships, digital TV has become the number-one project.
In fact, while TCI intends to do less telephony, it will more than make up for it by deploying digital video systems, according to insiders. Internally, TCI engineers are working to understand everything they can about digital bitstreams and how they are affected by cable networks. Once those parameters are understood, TCI will roll out digital boxes in a vast majority of its systems, an inside source said recently.
The rest of the Top 5 MSOs, which control the lion's share of the cable subscribers, also have aggressive rollout plans. Cox, for example, plans to place digital set-tops in front of about 5 percent of its subscriber base by the end of 1997, and will double that to 10 percent by the end of 1998, according to Alex Best, senior vice president of engineering at Cox.
At the same time, analog addressable box purchases will fall from 350,000 units to about 200,000 next year, Best says.
US West/Continental Cablevision hasn't yet publicly disclosed its digital rollout plans in detail, but is rumored to be close to deals with both GI and S-A for purchase orders, which could be announced by the National Show.
Naturally, cable operators say the digital roll-out would accelerate with a more aggressive pricetag attached to the set-tops. While some cost reduction can be expected from greater integration that will reduce chip counts and make manufacturing more efficient, as Van Orden noted earlier in this article, the industry shouldn't expect a $200 box anytime soon. But that doesn't mean the operators won't continue to press for one.
"I don't see why they should be greater than $200 apiece," says Best. "Depending on the bells and whistles, they can be twice that today. We need multiple suppliers, and of course, the vendors have to come down the learning curve. So, I'm optimistic that someday we'll get there."
Someday got a lot closer when the industry managed to hammer out a standard late last year that allows cable operators to populate their systems with digital set-tops from multiple vendors. By separating the core encryption and access control from the modulation, compression and signal transport layers, a system can purchase set-tops from rival companies and have them work in the same system.Driving costs down
But perhaps more importantly, the standard will attract additional manufacturers, which creates competition and lowers prices for end-users.
The interoperability spec "helps in a couple of ways," notes GI's Kanouff. "Standards in the industry drive the market and drive costs down, because component companies are more willing to jump in and build things (when) the market is expanded."
As for other manufacturers, Zenith is occupied developing and manufacturing digital set-tops for the Americast consortium. The Chicago-based electronics firm has teamed with Divicom to build an MPEG-2 based, QAM box for the telcos.
Meanwhile, the other, nearly defunct consortium, Tele-TV, will have to renegotiate its contract with Thomson, now that Bell Atlantic and Nynex have abandoned their plans to offer video using MMDS technology.
Reportedly, Tele-TV took delivery of only about 200,000 set-tops out of an order that was originally projected to total as many as 4 million units.
According to one source inside the company, however, set-top development efforts within Tele-TV continue. Specifically, Bell Atlantic needs a set-top for its fiber-to-the-curb system it plans to build next year. Tele-TV has reportedly chosen the vendor for the box, but hasn't yet disclosed who it is.Even analog wins
Despite all the movement—finally—on the digital front, new, advanced analog boxes remain popular among operators and will continue to be for some time, according to Steve Necessary, vice president and general manager of analog video systems at S-A.
In short, cable operators are less hesitant to place a set-top on top of a customer's TV because they offer so many new services, including messaging, virtual channels, on-screen guides and more.
"A year ago, all of that was wishful thinking" (that customers would see the value of these new boxes), admits Necessary. "Now we have some pretty good, hard facts to support it."