Set-top deals: Brilliance or blunder?

Sat, 01/31/1998 - 7:00pm
Roger Brown

Remember that TCI made these deals with two goals in mind: to jump-start its foray into digital TV; and to compel the industry at large to do the same thing via an interoperable, standards-based platform. There's little doubt in my mind the former will be achieved; it's the latter I'm not so sure about.

Under the "Open-Cable" initiative, cable operators want to develop and specify a digital set-top design model so that they can replicate the success they had in the cable modem arena through the MCNS process. The goal, as it was for MCNS, is to get manufacturers to agree to build products that conform to the specification. This could eventually allow customers to actually own their set-tops, which would help the MSOs by freeing much-needed capital that today is sunk into proprietary set-tops.

If successful, the OpenCable initiative would attract a variety of world-class electronics manufacturers to the industry. Competition between them would become fierce, and set-top prices would drop, while innovation would flourish.

But did the cable operators throw that possibility out the window by signing such a huge deal with GI? Did that monstrous deal have a chilling effect on other manufacturers? And why did TCI sign a deal before CableLabs actually defined an OpenCable box? Or does a deal of this magnitude define the OpenCable box as TCI's set-top?

Malone's ability to galvanize the industry is unquestioned, and in this case, should be hailed. But six months from now, will all the major operators continue to see eye-to-eye when it comes to OpenCable?

Under the GI deal, even if TCI and others deploy digital set-tops as fast as they possibly can, GI will have essentially the entire market to itself for a long time. What incentive does Zenith, Samsung, Toshiba or anyone else have to get into the game?

On one hand, cable operators have said they want to make overtures to manufacturers to get cheaper set-tops and sell them at retail. But by giving all their business to one player, they may have just perpetuated the old, business-as-usual, single-source model.

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