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Technology Stocks : WorldGate Communications, Inc. (WGAT) -- Ignore unavailable to you. Want to Upgrade?

To: Benny Baga who wrote (487)	11/15/2000 7:53:21 AM
From: Benny Baga	Read Replies (1) \| Respond to of 589

Is Cable Boxing Itself In? cablevisionmagazine.com Advanced set-tops may be just what the industry doesn't need BY TOM KERVER In last issue's Industry Forecast, Hal Krisbergh--former set-top-box king at Jerrold and General Instrument, now CEO of WorldGate Communications--made a compelling case for positioning interactive technology at the headend, rather than inside expensive new digital boxes. The gist of Krisbergh's argument: Cable operates networks, just as phone companies do. Phone companies have long recognized that customers are best served when the technology is embedded at the so-called "central office." It enables all sorts of revenue-enhancing services for consumers who continue to use the same, simple, inexpensive telephones that have long been a part of their lives. Cable, therefore, would be well advised to follow a similar model, perhaps by utilizing the 42-year-old TV remote as effectively as the phone companies have maximized the effectiveness of the 125-year-old telephone. Anyone who has visited Insight's Rockford, Ill., system has to be impressed with the amount of headend-based technology that can be effortlessly and economically moved into consumer homes through the relatively low-cost DCT-2000 digital set-top. And according to Krisbergh, most of this technology--save for true video-on-demand--can be offered via an even less expensive set-top, available from Motorola (and presumably others) for about $99. It's not so important whether you prefer a $99 box without VOD-enabling capability, or one that that costs slightly more but provides for VOD. What is important is that either option, relying on headend-based technology, opens a whole new realm of simple, affordable interactive choice for consumers. Either of these set-top solutions for interactivity seems preferable to the expensive new DCT-5000 boxes and their counterparts. Each will cost cable operators "about $100 more" than the DCT-2000 types, according to what a cable CEO recently told us. To make matters worse for the high-end boxes, the nine-year-old pipe dream of their "open cable" interoperability is barely breathing. Says Pioneer Digital's principal software engineer Haig Krakirian, "It will be at least four years, maybe much longer, before a consumer can take one of these boxes with him to a different system in a different part of the country." The impasse goes right back to West Coast computer rivalries, with Microsoft, Sun and others vying in isolated software environments. That brings us back to Krisbergh, who thinks cable errs by allowing Silicon Valley and Redmond, Wash., to dictate new topology for digital-system architecture through transformation of set-tops into virtual PCs. But that's the Bill Gates way. Perhaps unfortunately for cable, it has also been the John Malone/CableLabs way. The reality of the PC-type advanced set-top is that--absent a household IT department or a clever teenager--it will probably suffer the same sorts of crashes and viral infections that plague PCs everywhere. Since only a fool would buy a box that doesn't work everywhere, the cable company will surely own these boxes. So the cable company will get the blame whenever the crashes occur and the viruses attack. The non-profit Pew Research Group says 50 percent of Americans have never used the Internet, and 32 percent don't ever want to use it. Put expensive, quirky set-tops in the hands of cable customers and those percentages might even grow--even as cable's digital visions sputter