[opendtv] News: Breaking Free of Cable's Stranglehold
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
- Date: Thu, 6 Jan 2005 08:45:01 -0500
Perhaps this story provides a clue as to why more cable execs are
attending CES this year...
http://www.nytimes.com/2005/01/06/technology/06cablebox.html?adxnnl=1&oref=login&adxnnlx=1105018604-HJwtQeplR+LUJbfq5BEtAA
Breaking Free of Cable's Stranglehold
By SAUL HANSELL
Published: January 6, 2005
LAS VEGAS, Jan. 5 - Cable television companies are not among the
exhibitors here at the Consumer Electronics Show. But their influence
is everywhere, as equipment makers seek to work with - or bypass -
the cable industry's bottleneck control over the way most Americans
watch TV.
All the approaches address the central fact that consumers of most
current versions of digital cable service - the kind with the most
channels and advanced features - must now use a set-top box provided
by the cable system, usually for a monthly rental fee.
Those cable company boxes make it hard for most of the devices that
are on center stage here, like flashy flat-screen televisions or
advanced video recorders, to truly control the signals they are
receiving. Moreover, the cable companies are increasingly muscling in
on the electronics makers' business by enhancing their set-top boxes
with digital video recording abilities and other new features.
That cable trend has been a particular threat to TiVo, which
virtually invented the digital video recorder business in the late
1990's, but has struggled lately - in large part because it is
difficult for TiVo's machines to change channels on a digital cable
system.
TiVo is using this week's show to announce several moves to bypass
cable systems, by using the Internet and personal computers as media
for television delivery and viewing. "Offering service through one of
the primary cable platforms is not the best way to grow our business
at this time, because the economics are not very attractive," said
Michael Ramsey, TiVo's chief executive. Instead, "we have decided to
embrace the PC as our friend." As the various other consumer
electronics companies here weigh whether to work with or end-run the
cable systems, none of their options are entirely satisfactory.
Some, like Panasonic and Hewlett-Packard, have embraced the
uncomfortable industry compromise that was brokered by the Federal
Communications Commission. The F.C.C., seeking to curtail cable's
hegemony, has required cable companies to give subscribers the option
of forgoing a cable set-top box by renting a device the size of a
credit card that can be inserted into a television or video recorder
and allowing it to tune into the cable system's digital channels.
But this system, called CableCard, does not yet allow users to tap
into the most advanced services, like video-on-demand programming,
that are among the main selling points of digital cable.
The new Media Hub that Hewlett-Packard is showing here is a computer
using the Linux operating system, a machine that includes a video
recorder and two high-definition television tuners. It has a
CableCard slot.
Panasonic makes televisions that accept CableCards, but its
slow-selling DVD-based video recorders do not. "The cable companies
are heavily promoting their video recorders," said Yoshi Yamada, the
chief executive of Panasonic's North American operations. "There is
no question that is affecting our DVD recorder business."
A few manufacturers, though, have found ways to work more closely
with the cable industry. Samsung, for example, is announcing deals
this week that will allow it to build televisions that can use
advanced services from the Time Warner and Charter Communications
cable systems without need of separate set-top boxes. But for now,
those Samsung sets will not work with other cable systems - including
those of the biggest cable company, Comcast.
Digeo, an electronics company controlled by the billionaire Paul
Allen, is offering a fancy set-top box with a video recorder and
other features that it would distribute through the cable system
operators. It has a few tests going, including with Charter, which is
also controlled by Mr. Allen.
And others are trying to find ways to bypass the cable companies
entirely. The biggest proponents of this approach are the big
telephone companies, like SBC Communications, which are using their
high-speed DSL lines to offer video services, using hardware from
companies like 2Wire, which like SBC is an exhibitor here.
Meanwhile, Microsoft, which has been trying to muscle into the
consumer electronics business, is playing all sides. It has software
that is being used in cable boxes now under test by Comcast. It is
supporting Internet television offerings by SBC and BellSouth. And it
announced here on Wednesday a deal to make music videos from MTV
available to users of its Windows Media Center PC's.
"There will be a very healthy dynamic of competition between the
cable companies offering data, voice and video, and the phone
companies offering data, voice and video," Bill Gates, Microsoft's
chairman, said in an interview Tuesday. "We're making all our best
work available to all these people."
Microsoft figures prominently in TiVo's cable bypass strategy. TiVo
is announcing a pact here with Microsoft that lets programs recorded
on the TiVo be watched on a computer screen and on a Portable Media
Center, a class of hand-held video devices designed by Microsoft and
made by several manufacturers including Samsung.
TiVo is also introducing technology meant to allow users to download
video programs from the Internet and watch them on their televisions
with the use of their TiVo recorder.
In addition, TiVo says it plans to introduce a new line of recorders
that will accept CableCards. The company has declined to say when new
machines will be introduced or how much they will cost. And the
company is sharply critical of what it calls the cable industry's
half-hearted support of CableCard.
The cable industry, for its part, bristles at the accusations of the
electronics makers. It is fighting to have one part of the current
F.C.C. rules on CableCard relaxed: the requirement that, starting in
mid-2006, set-top boxes provided by the cable operators must
eventually use CableCards. The cable companies say that rule adds an
unnecessary expense to the boxes, but the electronics makers say it
is the only way to force the cable companies to properly support
CableCard technology.
Moreover, the cable companies say they will support technology that
would make it possible to use advanced services like video-on-demand
with CableCards. But negotiations to establish technical standards
have been going slowly, prompting the cable industry's critics to
accuse it of deliberate delays.
Cable executives deny the charge. "The cable industry is not holding
up an agreement on two-way cable cards in order to have a hold on the
retail set-top box market," said Brian Dietz, a spokesman for the
National Cable and Telecommunications Association. He said the
complexity of the technical issues made a quick resolution difficult.
This delay, whatever its justification, may be life-threatening for
TiVo. TiVo's chief, Mr. Ramsey, says the new initiatives announced
here will allow the company to differentiate its offerings from those
of the cable operators as well as from the features of other video
recorders.
"This will allow us to position the company as a premium supplier of
home entertainment and separate ourselves from generic base-level"
video recorders, Mr. Ramsey said.
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