Friday, January 06, 2006

The Open Set-Top Box is (Slowly) Coming

Several announcements were made at CES this week that suggest that third-party cable set-top boxes (STBs) will start shipping, albeit in very small quantities, this year. Yesterday (Thursday,) CableLabs, the central R&D organization for the cable industry, held a press conference featuring some very heavy hitters, including Brian Roberts, the Chairman and CEO of Comcast, Glenn Britt, who holds the same title as Roberts at Time Warner Cable, Thomas Rutledge, the COO of Cablevision, Neil Smit, President and CEO of Charter, and Robert Miron, the Chairman and CEO of Advance/Newhouse Communications. Including Cox, which made a separate announcement, these companies have more than 53 million subscribers (as of March 2005.) Also participating were the Presidents of CableLabs, the NCTA (National Cable & Telecommunications Association—the cable industry’s largest trade group,) and LG Electronics.

All of these companies announced support for OCAP, the OpenCable Application Platform. OCAP is the specification for middleware connecting the applications running on an intelligent STB with the services provided by cable operations. OCAP provides a uniform API (application programming interface) that application programmers and OS developers can write their code to in order to connect to the applications and services provided by the cable operator.

For example, STB manufacturers or third-party developers could provide their own interactive program guides that show program names, times, descriptions and channels. DVRs can use this same information to automatically record programs for later programs, or even to automatically record selected shows whenever they’re broadcast, without user intervention (like TiVo’s Season Pass feature.) OCAP also supports third-party applications that may combine cable programs and data with Internet-based content, including interactive television, e-commerce and games.

Less widely reported, but very important, was a key announcement about DCAS (downloadable conditional access system,) a cable system-independent security system that downloads the cable operator’s specific security scheme to a STB. DCAS will supersede CableCARD, which is the current security solution for third-party STBs and television receivers. Every cable operator must supply consumers with CableCARDs that are compatible with their specific security scheme, and a CableCARD for one cable operator may not work on another operator’s network.

LG Electronics is the second third-party STB manufacturer to commit to DCAS (Samsung adopted it late last year.) However, as I discussed earlier, it makes little sense for future STBs to implement CableCARD if that technology starts to go away late next year. We may get DCAS-ready boxes with CableCARD slots as first-generation products, with CableCARD deleted to save manufacturing costs as soon as DCAS is released in its final form.

Prior to the CableLabs press conference, Comcast announced that it would purchase 250,000 OCAP-compatible set-top DVRs from Panasonic and 200,000 STBs without DVR capabilities from Samsung. Even if all those boxes are deployed, they represent a drop in the bucket compared to Comcast’s approximately 24 million subscribers. In fact, they really represent a test (both technology and market) before Comcast commits to a wide-scale rollout.

Comcast will initially deploy its OCAP boxes in Philadelphia (Comcast’s home,) Boston and Union, N.J. (very close to Philly,) and Denver (home of CableLabs.) Time Warner will upgrade its plant & equipment to support OCAP in five markets, the largest of which (by far) is New York City. Advance/Newhouse will “enable” OCAP devices in Indianapolis (upgrading plant & equipment while not committing to deployment,) and Charter said only that it would deploy OCAP in “selected” markets in 2006.

Now, these announcements could, and probably are intended to, put pressure on the FCC to extend or abandon its timetable for requiring the largest cable systems to replace their existing STBs with CableCARD-compatible ones. Cable operators want to move to a new generation of STBs on their timetable, not the FCC’s, and they don’t want to discard hundreds of million of dollars worth of perfectly good equipment.

Not to “bury the lead,” but TiVo also announced its forthcoming Series 3 high-definition DVR, which will support HD with two Version 1.0 or one Version 2.0 CableCARDs. TiVo vociferously criticized the cable operators’ slow implementation and development of CableCARDs in a letter to the FCC dated January 16, 2005. As currently planned, the Series 3 DVR will use its own middleware, not OCAP, and won’t support DCAS either, leaving consumers with a hard choice: Buy a Series 3 that may be obsolete in 18 months, or wait a bit for OCAP- (and, potentially, DCAS-) compatible DVRs from a variety of manufacturers. TiVo is probably going to have to redesign the Series 3 to support these standards or risk losing whatever share of the retail market it currently has.

Very few cable subscribers are going to get their hands on OCAP-compatible STBs this year, but that could change in a big way in 2007, especially once DCAS is officially released. The message to all the consumer electronics companies thinking about connecting their products to cable networks is: Adapt or die.
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