Negotiating the broadband waters
The economy remained fragile, the show floor was a remnant of its former self, but the cable industry at the 2003 National Show in Chicago looked like anything but a ship tossing and bobbing in treacherous seas.
The industry leveraged a newfound intimacy (2003 attendance was 16,700, down slightly from 17,500 in 2002) to tout services that are available now, such as high-definition television and IP telephony, and cable's all-digital platform of the future.
VOD and iTV also played a role at this year's gathering, but HDTV by far was the star of the 2003 cable confab.HDTV'S CABLE COMING-OUT PARTY
HDTV has been the talk of consumer electronics shows for years, but the 2003 National Show will likely go down as its cable coming-out party.
Consider foremost the HD Pavilion, which served as the show's centerpiece, allowing show-goers to gawk at the technology in all its beauty. And instead of just showing pretty flowers and awe-inspiring helicopter flyovers, the Pavilion also demonstrated that the HD vaults are quickly filling up with content from the likes of ESPN, HBO, Showtime and HDNet.
The HD Pavilion could bring a tear to the eye of even the fussiest couch potato.
Perhaps nailing down the point that HDTV is in fact here to stay, even Starz Encore plunged into high-definition waters, finally joining its premium competitors HBO and Showtime.
Starz Encore CEO and Chairman John Sie did even one better, putting himself squarely in the middle of an HD technical debate, chiming in with the opinion of what HD platform should be used for movies. He called on operators to use a bandwidth-saving concept called Hi-Def/Hi-Res Statistical Multiplexing, or Stat Mux. More specifically, Sie urged MSOs and programmers to adopt the 480i platform, which, he claimed, absorbs one-third the bandwidth of 1080i, but does so without losing a noticeable amount of picture and audio quality.
Although HDTV has yet to reach critical mass, cable operators appear to be doing what they can to make the service available, according to figures from The National Cable & Telecommunications Association.
NCTA reported at the show that cable customers in 78 of the top 100 Designated Market Areas (DMAs)–including 18 of the top 20–were passed by at least one cable operator that provides HDTV as of June 1.
Tom Rutledge, president of Cablevision Systems Corp.'s cable and communications unit, offered a glimpse into HD's future during the show's closing session, announcing that the MSO will launch an HD video-on-demand service this summer. Complementing Cablevision's iO: Interactive Optimum digital service, the HDVOD slate will offer programming from MSG Network, Fox Sports Net New York and Showtime.
The importance of powerful HD programming wasn't lost on an HDTV panel consisting of a mix of cable and retail interests. Without strong content, selling HD televisions is like "selling the drills without the bits," noted Dave Sprosty, vice president, subscription services, for retail giant Best Buy.
With more programming running down the pipeline, all three "pillars of HD"–content, distribution and retail –have now coalesced, said Dave Watson, Comcast's executive vice president, sales, marketing and customer service. Following its first HD launch in Philadelphia in 2001, Comcast has the service in front of 9 million subscribers, with plans to have 65 percent of its footprint HD-capable by year-end, Watson said.
The transition to HD "is our Haley's Comet," added Bob Perry, vice president of marketing for Mitsubishi Electronics. He pointed out that falling prices on HD sets will drive the service mainstream. He backed that up by explaining that a 50-inch projection analog set with one tuner went for $2,299 at retail in 1997, while a 50-inch high-definition analog set with multiple tuners currently carries a price tag of $1,499.DIGITAL MIGRATION
HDTV was the show's most prominent subject, but it wasn't the only one by a long shot. Carrying momentum from May's Cable-Tec Expo, the topic of an eventual migration to an all-digital world shared part of the spotlight.
Motorola unveiled the DCT-700, a box whose form factor might remind one of a cable modem rather than a set-top.
Motorola did not provide specific pricing, but said the device will go for less than $100 per unit.
Despite its petite dimensions, the DCT-700 will contain enough muscle-power to handle interactive program guides, impulse pay-per-view and video-on-demand.
Still, there are thousands of cable customers out there who won't want a set-top–big or small–foisted upon them.
That device, the Digital Cable Adapter (DCA), replicates what a set-top-free analog cable environment looks like, but for an all-digital world. The DCA, which converts digital signals for play-out on analog TVs, also comes equipped with two tuners, a makeup that would enable a customer to view digital programming on two TVs, or to watch one channel while recording a different one on their traditional VCR.
Pace's new device is also devoid of separate conditional access and encryption, meaning it can be deployed on systems based on either the Motorola Broadband or Scientific-Atlanta platform.
Neil Gaydon, president of Pace Micro Technology Americas, told reporters at the show that the device will sell for $69 per unit, or $34.50 in "per-device" logic. Hitting that price will require "extremely high volumes...5 million units plus," Gaydon said, acknowledging that Pace still needs to complete some silicon work.
Gaydon envisioned that cable operators would be willing to give away the devices to consumers in order to "buy back" what they would save on bandwidth alone. Plus, an all-digital world would also open the door to much cheaper set-tops, because those boxes wouldn't have to house expensive analog tuning and encoding components, he added.
Another approach, which wasn't readily apparent on the show floor, involves the use of cheap, DOCSIS-driven set-tops for IP-based video services. Arris officials shed some light on that method during a briefing right after the show, explaining that such boxes would leverage common cable modem termination systems and customer support.
The device itself–which would contain an RF tuner, cable modem, RF bypass for analog TV, a smartcard-based conditional access system and standard AV outputs–could cost $50 to $100 per unit in high volumes.
The so-called DOCSIS set-top could also transport out-of-band messaging that is typically carried via dedicated channels, including data for interactive program guides. CableLabs already has documentation for that method in its DOCSIS Set-Top Gateway (DSG) interface specification.
In addition to helping cable operators free up bandwidth, an all-digital platform can also provide a strong side benefit: the slowing or elimination of service theft. "Virtually all theft is in the analog world," said Steve Burke, president of Comcast's cable division.
But migrating to digital is just one approach to the problem. Cablevision's Rutledge reminded everyone that switched video techniques will also give operators the bandwidth they require. That technology will make it "possible to have rich analog and digital...and have all of the capacity in the world," he said.OPEN SESAME
The 2002 Western Show will long be remembered as the show that introduced the world to "Passage," Sony Corp.'s encoding platform for digital cable services that can live alongside proprietary conditional access platforms from Scientific-Atlanta and Motorola Broadband. The news of it wasn't quite as jarring at last month's National Show, but it left its mark on it, nonetheless.
Comcast, following a battery of lab tests, made its interest in Passage official, striking a deal to license the technology from Sony. The largest MSO in the U.S. also confirmed plans to conduct a field trial of Passage in an undisclosed location sometime this month.
If Comcast decides to expand beyond the trial phase, the agreement could enable Comcast to deploy a variety of set-tops and other digital "hosts" on Passage-enabled systems even before OpenCable becomes deployable. Sony also alluded that consumer-side Passage gear could also become available via retail channels.
Passage "can help cable operators use their existing infrastructure to offer their customers new choices and communications products, which may be available directly from the operator or eventually from retailers," said Greg Gudorf, senior vice president of Sony's Digital Platform Division of America.
Sony has tested Passage on 19 different Motorola digital set-top models with an unnamed third party, company officials said. Sony is also looking at doing similar testing for the S-A platform, but has not yet entered into any commercial trials that run alongside S-A's infrastructure and CA.
Comcast marks the second MSO to ink a Passage licensing deal. Charter Communications was the first, sealing its agreement in January.IP GETS A VOICE
IP telephony, though it didn't grab many show headlines, did make some noise in Chicago.
After offering VoIP services directly to DSL and cable modem customers and keeping network operators out of the revenue loop, Vonage has since changed its tune somewhat, showing that it is willing to work with MSOs, as well.
Vonage entered the show by signing deals with Advanced Cable Communications and Armstrong Cable. Advanced Cable will partner with Vonage in Coral Springs and Weston, Fla., offering local and long distance IP telephony for $39.99 per month to cable modem subs. Armstrong, meanwhile, offers cable services in areas of Pennsylvania, Ohio, Maryland, West Virginia and Kentucky, but did not specify where it will initially offer VoIP.
Though Vonage officials declined to disclose specific pricing, an industry source familiar with the turnkey model said Vonage would get about 25 percent of the take, or about $10 per month per subscriber. Gemini Voice Solutions also got into the act, scoring a partnership with Adams Cable Service.
Despite all of the news involving smaller MSOs, the bigger operators also chimed in on their VoIP plans. Cablevision's Rutledge declared that VoIP "is ready for prime time." The MSO is backing up that statement with deployments.
Comcast's Burke reiterated his company's position, noting that it won't go after that market with guns blazing until after margins rise at former AT&T Broadband systems and after the company puts a firm tourniquet around basic sub losses in those markets.
That period won't last forever, Burke promised, adding that somewhere in the 2005 to 2007 timeframe "we have to make phone a big business."