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Technology Stocks : C-Cube
CUBE 35.64-0.6%Nov 20 3:59 PM EST

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To: Rishi Gupta who wrote (26751)12/16/1997 4:38:00 PM
From: BillyG  Read Replies (1) of 50808
 
Rishi, I don't have any news from DAVIC. here's some settop box commentary.......

techweb.cmp.com

Digital set-top's hard road comes into view

By George Leopold and Junko Yoshida

ANAHEIM, Calif. -- A fresh view of where the digital set-top box needs to
go and the challenges it will meet in getting there emerged at the Western
Cable Show last week. The Internet--rather than PC operating systems or
microprocessors--will be the defining feature of the platform, cable-TV
executives said. But just how the set-top will support the Net's requirements
or the advent of HDTV broadcasts is still being debated.

Companies involved with the OpenCable initiative, which seeks to define
specifications for a set-top that handles digital data and video, expect to
complete their work by the second quarter of 1998, said Richard Green,
president and chief executive officer of CableLabs Inc. (Louisville, Colo.),
which is leading the initiative. The resulting set-top "will have to be operating
system-independent and microprocessor-independent," he said.

Green's comments reflected widespread concern here about the intentions of
PC players like Microsoft Corp. and to a lesser extent Intel Corp. regarding
the set-top. From senior executives down to program engineers, there was
seeming unanimity that Microsoft, which is pitching its Windows CE
operating system as the basis for a digital set-top design, would have to wait
in line with other potential bidders for the OpenCable standard.

"Beware of closed environments," warned Leo J. Hindery Jr., president and
chief executive of TCI Communications Inc. "We want to be [Bill Gates']
partner, but we don't want to be [his] download."

Others were more blunt. "Beware of Bill Gates," said Barry Diller, chairman
of HSN Inc. Microsoft's chairman, Gates, wants to play the same role in the
technology convergence of the cable industry that he did in making Windows
the dominant PC operating system. "That's a closed architecture," Diller said.

"We're not going to let one maker of hardware or software control this
industry," Ted Turner, vice chairman of Time Warner Inc., said to a round of
applause. "We will not turn over our future to Microsoft."

Since today's PCs are already equipped to receive both video and data, both
Microsoft and Intel are in position to influence the set-top's future. Lately,
however, the two companies appear to be following diverging road maps in
terms of accomplishing that goal. "We absolutely don't care if [an
Intel-proposed] advanced set-top computer runs Windows or not," said
Claude Leglise, vice president of Intel's content group. "When you first fire it
up, the set-top computer must do TV first. Having an operating system in the
set-top isn't a basic requirement."

Intel has been publicly sending a message to both broadcasting and cable
communities that their Intel architecture is no longer tied to Microsoft.
Microsoft, meanwhile, is also busy evangelizing the same communities, letting
them know that "we are very cognizant of the basics of TV," according to
Steve Guggenheimer, group product manager of Microsoft's DTV strategy.
Microsoft is promoting the microprocessor-independent Windows CE as a
basis for a range of boxes, including TVs, Web TV-based set-tops and
TV/PCs.

The friction between cable's leading lights and Microsoft illustrates the cable
industry's uncertainties as it begins to offer digital video over its networks and
prepares to offer data services next year and Internet telephony in the near
future. However, in steering clear of a Wintel-only world, the OpenCable
initiative seems to be opening new doors for non-PC set-top vendors who
are upbeat about their future.

Robert Van Orden, a director at Scientific-Atlanta Inc., said "three barriers
that hampered the development of digital set-tops have finally started to crash
through." The cost of a set-top box is coming down, agreement on standards
is falling into place, and content--whether already available on the Web or
newly created in HTML and JavaScript--is finally emerging to generate
service revenue, he said.

Scientific-Atlanta announced here that it has signed a letter of understanding
to work with Network Computer Inc. (NCI; Redwood Shores, Calif.),
which is owned by Oracle Corp. and Netscape Communications Corp., to
provide enhanced interactive TV applications for cable subscribers through
NCI's DTV navigator ported to Scientific-Atlanta's Explorer 2000 digital
set-top. The "Internet is a great equalizer," said David Limp, vice president of
consumer marketing at NCI, referring to the move to design set-tops around
the Net rather than Windows.

Indeed, cable operators have a strong interest in parlaying their investment in
an infrastructure for cable modems based on the Internet Protocol by using it
for interactive digital set-tops as well. Beyond the minimum requirement of
delivering digital video on MPEG-2 streams with an electronic program
guide, the basic cable set-top will need to have some level of Internet
connectivity so that users can surf the Web and send e-mail, according to
many set-top vendors and cable operators at the show. It will also be able to
download through IP-based network-interactive applications written in
HTML and JavaScript.

Observers at the show here said the OpenCable spec will have to deal with
several issues swirling around the merger of the Net and the digital set-top.
These include choosing one of the many flavors of HTML in use by industry
and resolving communications issues related to return-channel protocols.

CableLab's Green stressed a key "middleware" layer as the place where
issues such as different versions of HTML will be resolved. But the
middleware issue is clearly a sticking point, according to some people in the
industry who are not entirely sold on how successful the OpenCable spec
might be. The spec lacks a definition of how to launch a program or call a
program on a platform in a remote client-server environment, some said.

In a related issue, others are concerned whether their set-top system will use
a "skinny channel" as a return channel, using either DAVIC-based protocols
or the Next Level-defined protocol, or a back channel that's compliant with
the Multimedia Cable Network System (MCNS) spec for cable modems.
The issue here is cost. If a system vendor needs to make its box MCNS
compliant, the box may have to incorporate two tuners--one for digital video
delivery and another for MCNS--which could make it more expensive.

Green acknowledged that the OpenCable initiative faces several tough
choices. While Intel's Intercast, Wink, WorldGate, NCI and WebTV all offer
their own solutions for data delivery, many of them have different extensions
or different variations of HTML. Choosing one and making a clearly defined
API is one task the OpenCable initiative needs to finish.

Another big question is how cable companies will handle the transition to
make their boxes compatible with terrestrial digital TV signals. Regulatory
issues may have a significant impact on that issue for digital set-top designers.
For instance, regulators must still decide whether cable operators will be
required to carry digital signals transmitted by local broadcast affiliates.

The so-called DTV "must-carry" rules, which will be debated soon by the
Federal Communications Commission, "obviously are a very big issue for us,"
said Jerry Yanowitz, vice president of the California Cable Television
Association. Cable operators in the Los Angeles area, for instance, face the
prospect of having to offer/carry programming from as many as 20 broadcast
stations that are scheduled to begin digital TV transmissions next year,
Yanowitz said.

The FCC expects to take up the must-carry issue as early as this winter, said
FCC Commissioner Susan Ness. The FCC will have to consider the inquiry's
implications for a range of technical parameters, including resolution formats,
the number of programming streams that converters will have to carry and
whether broadcasters and cable operators should be allowed to work out
these issues on their own under local agreements, she said.

"Part of the problem is that it's transitional," Ness said. "What do we do in the
interim?" The FCC must initially focus its inquiry on the top ten U.S. markets
where broadcasters are required to begin offering digital TV programming
next year, she said. The FCC wants a "rapid transition from analog to digital
TV."

Regardless of the FCC's decisions, lawmakers have made it clear that they
want HDTV to get a fair shot in the marketplace, Ness said.

All of these issues have implications for set-top designs, but observers here
said the OpenCable spec fails to fully take them into consideration. Indeed,
CableLabs' Green downplayed the significance of HDTV as a factor in the
evolution of the set-top spec.

Green noted that OpenCable's DTV solutions include a family of boxes, one
of which translates HDTV signals into SDTV at the head-end, since it has to
modulate VSB-based DTV signals into QAM-based signals anyway. "A
cable can carry twice as much information as that of terrestrial broadcasting,
because it's a much cleaner environment. It would be foolish for us not to
remodulate," Green said.

Nevertheless, industry analysts predict set-top converters will play a key role
on the success or failure of HDTV. Multimedia Research Group Inc.
(Sunnyvale, Calif.) estimates that there will be 36 million digital-TV viewers
by 2006, including 22 million using set-top converters on existing NTSC sets
and 16 million watching HDTV receivers.
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