Dirt was turned on Digital Cable in 1997. Spring 1998, should see a crop sprouting.................................................
mediacentral.com
Boxed In: Digital Deployment's '97 Spadework
By Jim Barthold
If 1998 becomes the year of digital's widespread rollout, it will be largely due to the groundwork laid last year.
"In '97, the [cable] industry installed over 500 digital headends [and] that has never happened before in this business," said Ed Breen, the chairman-CEO of General Instrument Corp. "In analog, we're the world leader in market share [and] we never, ever installed that many headends."
Many of those headends were built to receive signals from Tele-Communications Inc.'s Headend In The Sky [HITS], which were passed to digital set-tops without further local encryption.
TCI, along with Cox Communications Inc., Comcast Corp., Shaw Communications Inc., MediaOne and Time Warner Cable, will take up to 15 million GI digital set-tops over the next three to five years. As part of that deal, GI swapped 10% of its stock for HITS' authorization center, another 10% to TCI and its "friends and family" and 6%-plus to other industry players.
"Part of the reason we like the acquisition we made [in HITS] is that we can help control that mechanism to keep security whole for the cable industry," said Breen, who added that GI doesn't expect to lose money.
He continued: "There is a revenue stream that's generated from that which can be a very nice business. It's going to be a very competitive pricing package to the industry so that it is easy for everybody to launch digital and not pay a high fee to get in."
That, Breen added, will help smaller operators, many of whom are the "friends and family" that TCI cited.
"I think you're going to see the smaller operator part of this industry jump-start just as fast as you're going to see these larger players getting into the business," Breen predicted.
The largest player - TCI - has been upgrading its infrastructure and installing most of GI's headends.
"[Some] 58% of our plant, as measured by customers, is already hybrid fiber/coax and only needs the two-way components in order to be fully upgraded," said TCI chairman-CEO John Malone. "That's a program started six months ago that is expected to be complete in the next two years."
The GI boxes will evolve into four family members: the DCT-1000; the DCT-1200, with 256 QAM [quadrature amplitude modulation] that will afford more robust signals or higher compression levels; the DCT-2000, which approaches many of the requirements of CableLabs' OpenCable interoperability initiative; and the DCT-5000, which is expected to be fully OpenCable-compliant with a built-in Multimedia Cable Network Systems [MCNS] Data Over Cable Interface Specifications [DOCSIS] cable modem.
The boxes will interoperate with OpenCable units, including Scientific-Atlanta Inc.'s. That vendor said it expects to have its first interactive Explorer 2000 boxes ready for Time Warner Cable in the next few months.
"It [GI's DCT-5000] will embrace what we've called a Pegasus architecture in [1 million] boxes that we're buying from S-A and Pioneer and Toshiba," said Jim Chiddix, the CTO at Time Warner. "It will keep evolving and it will evolve to functionality that the boxes we buy in '98 ... won't become obsolete. Technology and innovation will allow them to do new functions, new services, over time."
Time Warner has ordered 500,000 DCT-5000s.
"One of the beauties of OpenCable is that the technology has a lot of flexibility," Breen said. "The operating systems can be downloaded into the box. It's not only downloaded, but it's flexible to make changes as you go along."
Microsoft Corp., which has been reluctant to discuss the GI box deal, has been aggressively pushing its own operating system.
"We want to make an operating system for a set-top box," said Mike Conte, Microsoft's group manager for digital TV. He added that Microsoft agrees with the OpenCable initiative, including the fact that future retail box sales will probably be branded and marketed by a leading consumer electronics firm - and not a traditional cable vendor.
"There's a lot of opportunity for us ... to make the right kind of arrangement with the consumer electronics technology partner," Breen said.
TCI's stake will give it a say in GI's partnership plans.
"What GI agreed to with TCI was that they would seek, and we would have the right to approve, another player in this waltz that would probably be a major consumer electronics/technology company," Malone said.
Sony Electronics Corp. and Thomson Consumer Electronics Inc. have been mentioned as prospective GI partners, primarily due to their expertise with DBs services.
Another player with long consumer electronics tentacles is Panasonic, a division of Matsushita Electric Corp. of America. Panasonic, which has been involved in digital satellite efforts and OpenCable, replied to TCI's recent request for information [RFI] on next-generation digital set-tops that the GI order was partially based on.
Although the vendor isn't well known among U.S. consumers, Pace Micro Technology PLC of the U.K. also has licensed GI technology and is a TCI box second source.
A GI spokesman last week declined to offer any specifics, but did allow that negotiations with consumer electronics companies are continuing. The spokesman also indicated that some kind of announcement along those lines will be made soon.
(January 5, 1998) |
