"Nobody consulted us"...
Battle Over Set-Top Boxes Continues to Rage
By Jennifer L. Schenker
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11/21/97
The Wall Street Journal Europe
Page 4
(Copyright (c) 1997, Dow Jones & Company, Inc.)
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Europe's set-top box wars aren't over yet.
A September agreement among Europe's broadcasting pioneers to support open standards promises to bring standardized interactive TV and Internet services into European living rooms, with a richer range of content and more choice for consumers. But not all players agree to the truce, which aims at reaching agreement on a single standard so that set-top decoder boxes would be able to communicate and receive content from different digital sources.
"Nobody consulted us," complains Jan Steenkamp, chief executive officer of Open TV, a company which already makes operating systems for digital set-top boxes. But then Open TV, which is 44%-owned by France's Thomson SA, 44%-owned by Myriad International Holdings and 12%-held by Sun Microsystems, is among those with the most to lose if Europe agrees to adopt a common standard for accessing content in the digital-television market. That market is expected to generate about $11 billion by 2002. The company's chief rival, Canal Plus SA, signed on to the open-standards accord.
Open TV, gaining a foothold in the nascent market, has recently agreed to sell its proprietary set-top box operating system to some of Europe's largest cable-television operators as well as to French satellite-television operator TPS. It argues that a common, open standard will take time to develop and would wreak havoc on the installed base of existing equipment.
Open TV's clients include Deutsche Telekom, Sweden's Telia and Dutch cable operator Casema NV, members of the Eurobox consortium that is attempting to gain economies of scale by developing a digital set-top box that can be sold Europe-wide. Telia this week became the first European cable operator to begin selling Eurobox set-top boxes. It has installed about 3,000 of the devices in Swedish homes since Monday, said Hans Brattberg, technical director at Telia's Infomedia Television division and the European Cable Association's representative for Eurobox.
The boxes, which work only on cable networks, previously had only been available to consumers on a rental basis. The price depends on the length of service: 500 Swedish kroner if the consumer signs up for three years and 2,000 kroner if the client signs up for only one year.
TeleDanmark and Casema in the Netherlands, meanwhile, plan to start installing Euroboxes within the next few months.
Cable operators aren't opposed to a single common standard but they can't wait around for one to be developed, argues Fred Van Let, Casema's director of technology and research. Telia's Mr. Brattberg agrees. "We have thoroughly researched this and Open TV's technology is the best available on the market," he says.
Critics say that the Eurobox solution, which uses Open TV's technology, is less than optimal for consumers because they can only receive programming run over cable and can only access programming through one source. Under the current system, the proprietary set-top boxes give media companies control over their subscribers, leading to well-publicized power struggles in Germany and Spain.
"The way things work today is the company which controls the technology controls the subscribers," said Stephen Geddes, a media analyst at Kagan International's London office. "With an open system you could buy another access card and get anyone's product," he says.
It is not surprising, then, that some service providers and set-top box equipment makers are resisting a move to a common open standard for something called a common application-programming interface, a language that would allow set-top boxes to communicate and receive content from different sources. Such a move would force a major change in the way digital-television operators conduct their business, says Mr. Geddes. "They will have to start competing by providing better entertainment, better services and cheaper telephony," he says.
Canal Plus of France, BritishSky Broadcasting, Kirch Group of Germany and other key players came to an agreement at a September meeting of the steering group of the Digital Video Broadcasting consortium, a group which combines virtually all players in European television from broadcasters to regulators to makers of TV sets and set-top boxes.
The consortium has already determined digital-transmission standards and other essentials, it hasn't yet agreed on standards for set-top boxes. The lack of a standard has led to market fragmentation, with equipment manufactuers unable to achieve economies of scale and consumers settling for either stocking up in several set-top boxes or limiting their access to broadcasters.
The September steering group meeting was significant because key players agreed to work for a common open standard. Canal Plus indicated at that time that it is already working on a product based on Java, a programming language developed by Sun Microsystems Inc. that runs across platforms on the Internet and on a whole range of devices.
But the DVB still has key decisions to make about which application programing standard it will back, leading to much industry lobbying, said Albert Stienstra, a DVB representative and general manager of technology strategy and planning in Philip's business electronics division.
"Thomson has woken up now to the fact that there is quite a massive landslide in the direction of an open standard and that is why they are pulling all the ropes they can get hold of to get back in the race again," said Mr. Stienstra. |
