Is the cable industry within reach of the $50, all-digital set-top?

Although the cable industry would never want to be associated with the word "cheap," the word certainly applies to the price some operators are willing to pay for bare-bones boxes that will spur the migration to a more bandwidth-efficient, all-digital environment.

The first price to be bandied about was $50. Then it was $35. Then, once it was decided that those boxes would need to support things like DOCSIS signaling, a second tuner and advanced codecs, it was back to $50 again.

When such a box might show its face was cleared up somewhat this summer at the CTAM Summit in Boston. There, Comcast Cable Executive Vice President and Chief Technology Officer David Fellows estimated that chipsets could appear by mid-2005, with the first products showing up by the end of that year. He acknowledged that the first set of boxes would likely carry a sub-$100 price, and then creep down as volumes ramp up.

Those thin-clients are also a component of the Next Generation Network Architecture (NGNA), a project originally drawn up by Cox Communications, Comcast Cable and Time Warner Cable, and about to come under the auspices of CableLabs. NGNA, at least in its initial request for information, also sought data on all-digital boxes supporting advanced elements such as digital video recording (DVR), as well as a whole-home device called the Video Network Interface Unit (VNIU).

While Fellows hopes to have a low-cost, all-digital product in Comcast's hands by the second half of 2005, others could decide to wait a bit longer–anywhere from one to four years–as MSO/programmer agreements are redrawn to address the digital age. But others, like Charter Communications, are on an even faster track.

Obstacles galore

Charter, which is conducting a high-profile, all-digital project in Long Beach, Calif., would like to get its hands around the CPE question even before all of the NGNA details get sorted out.

Wayne Davis
"We can sit back and wait for others to come up with solutions for us so five years from now we kind of get there, but it's our belief that we need to get there sooner, (rather) than later," says Wayne Davis, Charter's executive vice president and chief technology officer.

But there are many challenges ahead. One is to figure out a financially feasible way to deal with all of those cable outlets. Even if the average digital customer has two-plus set-tops, that still doesn't tell operators how many outlets are in the home.

The concept of putting a cheap set-top on every outlet is "unwieldy" and not the final answer, Davis argues, because the equipment will bear huge costs even at $50 per unit.

Another wrinkle is the fact that about two-thirds of cable subscribers remain resistant to having any type of device on their TV set. "There's a reason for that," Davis says. "Either they don't see the value in the [digital] service, or they don't want a digital set-top box, or both. We think that is an obstacle that we need to overcome in some way. The cable industry has been giving away outlets for years as a competitive advantage over DBS. We don't want to upset that paradigm," he adds.

Dave Feldman
Among the ideas on the table is a whole-house video networking platform or media center that provides digitally decoded analog signals to all of the TVs in the house. But that device, perhaps in the form of a VNIU (video network interface unit), is further out. Charter is also considering an unobtrusive convertor that's a bit further along in the product development cycle.

"I don't think, personally, that the technical challenges are that severe. I think it's a packaging and integration issue," notes Dave Feldman, Charter's vice president of technology.

Hitting the target

Still, the scaled down all-digital box will be the first solution to hit the market. But it won't hit that magical $50 price point right away.

Stripping out the analog component is a good start, however. Industry experts suggest that $40 to $75 can be shaved from the cost of an analog-free box. While that will help drive down the cost of a basic digital decoder, the removal of analog will have an even greater savings impact on all-digital boxes with HD and DVR capabilities, explains John Hildebrand, vice president of multimedia technology at Cox.

Rich Nelson
"Analog components make a bigger impact on more advanced boxes," agrees Rich Nelson, vice president of marketing at Broadcom Corp., a leading cable silicon provider. "Making an analog signal look good on HD displays requires some complex processing."

It's also difficult to make a $50 box before it is known what specs and capabilities that box will support. And that hasn't been decided yet.

But operators still have some bare requirements in mind. At this point in the game, Hildebrand envisions that the box would be capable of running an IPG, handling two-way applications such as video-on-demand, and supporting encryption.

"We don't want to have one-way devices out there. Two-way, interactive boxes will be very important to us," Hildebrand says.

Two-way will also enable cable to install what amounts to a digital Trojan Horse–a box with sufficient memory to upgrade to OCAP (OpenCable Application Platform) middleware and additional services without having to replace the hardware itself, notes Bill Luehrs, corporate executive vice president, Americas, for Advance Digital Broadcast (ADB), a European set-top maker that's making a run at the North American cable set-top market.

But how quickly the box makers can achieve that price point will largely be determined by the silicon providers. But even they aren't exactly sure when they will be able to deliver until they know what the operators want.

"The biggest challenge is to figure out what that spec is going to be," says Nelson. "There are various tradeoffs…that would add or ultimately subtract the costs. What's in that box ultimately will determine that."

Knowing the specs will help chipmakers to integrate functions, use fewer chips and reduce costs. Broadcom could turn a multi-chip product around fairly quickly, "but it might not hit the cost point," Nelson says. "A highly integrated, single chipset solution will drive down those costs. We can turn it around quickly if [the operators] don't want integration right away."

Conexant Systems also has some silicon on the horizon as well as some chipsets available now that could fit cable's all-digital bill, according to Jeff Crosby, the chipmaker's vice president and general manager of set-top box products.

Among them is the CX2443x series chipset, an all-digital design originally developed for Europe and the OpenCable market in Korea.

Box product plans

Motorla's all-digital DCT-700
Motorola’s all-digital DCT-700 box uses
its own MediaCipher conditional
access system.
The idea of a $50 all-digital box really came to the forefront during the 2003 National Show in Chicago. There, vendors such as Motorola Broadband and Pace Micro Technology began showing off cheap, all-digital prototypes.

Pace showed off what was then called a Digital Cable Adapter (DCA), a small, two-tuner "set-back" device carrying a target price of $69. Motorola, in turn, showed off the DCT-700, an all-digital box equipped with the vendor's own MediaCipher conditional access system. NGNA, in contrast, is asking for boxes with an open CA.

Motorola has yet to announce deployments or trials for the DCT-700 in the U.S. market, but is gaining traction in Latin America and Canada, says Bernadette Vernon, director of strategic marketing for Motorola Broadband's consumer entertainment solutions division.

The DCT-700 supports IPG, pay-per-view and video-on-demand applications, and sells today for less than $100 per unit.

While Motorola has begun deployments for its initial all-digital product, the same can't be said for Pace's DCA idea. Although there was some initial excitement for the product, much of that early response has since waned because of some technical shortcomings, including its lack of support for conditional access and IPG applications.

"We have patents on that product and could productize it, but I think the industry has moved past it due to lack of interest," says Michael Pulli, president of Pace's Americas division.

But Pace has other all-digital products on the roadmap, and expects to take a modular approach with future models. That way, cable operators can decide whether or not to add advanced codec and DOCSIS support, for example.

Amino Designs
Amino is making a name for itself
in IPTV circles, thanks to its small
and sleek designs.
U.K.-based set-top maker Amino Communications is getting some cable attention–if for nothing but the tiny form factor of its IPTV boxes.

Amino, which recently opened up a U.S. office in Georgia, has seen an about-face in how cable operators view IPTV technology. "Twelve months ago when you talked IP to the cable operators, they didn't see an opportunity," says Roy Kirsopp, CEO of Amino. "But they're now starting to look at IP set-tops."

These days, Amino's low-end, Linux-based boxes still cost more than $100, but the company expects that number to sink as shipments rise.

On the digital convertor front, Charter is also looking at some of the technology emerging for the broadcast digital migration happening in Europe and Asia.

"That has created a mass market there for devices that are really geared to just receiving broadcast digital television over the air. Those products aren't far, conceptually, from what we're interested in," Feldman says.

And, it turns out, such a device may not need a full conditional access system.

Taking another 'Passage'

Sony Electronics stands to be one of the companies to benefit from that possibility, as it turns out that there could be more than one application for its Passage system.

Passage–originally created as a method for operators to run dual conditional access systems and to break down the Motorola/Scientific-Atlanta duopoly–could also be used to add a security layer in low-end digital set-tops.

That, says Sony Electronics Vice President of Television Marketing Greg Gudorf, would remove an expensive element from the digital set-top paradigm: support for a full-fledged CA system.

Sony is proposing that Passage be used as a "simple" security system for inexpensive, all-digital boxes that aren't providing high tiers of service. As designed, this application of Passage would also reduce passive theft.

"This would provide more security than today's analog [products]," Gudorf says, but warns that he is not positioning Passage as a security or CA replacement. "If you want the full-end security for HBO…you still need a full CA system," he adds.

At least two set-top box manufacturers already plan to use Passage in just this way: ADB and Quanta Networks Systems (QNS), a Taiwanese company whose parent, Quanta Computers, is one of the world's leading laptop manufacturers. Other vendors in the CPE arena with Passage licenses include LG Electronics, UEC, Visionetics, Humax and Digeo.

With Passage on board, set-top makers "can have a solution in that under-$50 category," Gudorf claims. Sony, in partnership with cable operators, could also incorporate Passage in Plug & Play TV sets.

DVR, HD still key

Although many top MSOs are looking for the low-cost digital box to speed the all-digital migration, that doesn't necessarily mean that's where they are training most of their focus. Several operators, Cox Communications among them, are aiming instead to spend more effort pushing and deploying set-tops with on-board HD and DVR capabilities.

HD and DVR set-tops "are what we're deploying today," explains Cox's Hildebrand, noting that the MSO is now in the habit of re-deploying thin-client devices to customers who want the basic digital box.

"Most of the interest has been on the high-end set-tops," says Dave Davies, vice president of strategy and product marketing for Scientific-Atlanta Inc.'s subscriber networks division. "It comes down to having a product and feature set that's competitive with satellite."


A billion here, a billion there–the moving costs of the digital shift

Naturally, not all of the all-digital jib-jab is technical in nature. The government, of course, has taken a keen interest in the digital transition.

This summer, House Commerce Committee Chairman Joe Barton (R-Texas) put forth the notion that it could cost more than $1 billion to ensure that people in the U.S. who don't get cable or DBS can receive free digital over-the-air signals. The Federal Communications Commission (FCC) is proposing a transition by Dec. 31, 2008.

The National Association of Broadcasters (NAB) painted an even uglier financial picture last month, claiming that 73 million TV sets would require $300 boxes if the analog-to-digital transition happened today. The potential price tag? About $22 million.

But the $300 is considered an over-the-top sum in the years ahead. Motorola Broadband Chief Technology Officer Carl McGrath testified in July that Motorola could make a $67 converter in 2007.