July 3, 2006 A CableCard That Hasn't Been Able to Kill the Set-Top Box By ERIC A. TAUB NY Times
http://www.nytimes.com/2006/07/03/technology/03cable.html?pagewanted=print To spur the adoption of digital television and HDTV and rid the home of one more bulky consumer electronics component, cable TV operators and the consumer electronics industry agreed on a compelling concept: new digital televisions, like their analog predecessors, would be "cable ready," able to receive programming without a set-top box. Consumers would simply plug the cable into the back of the set and insert an authenticating card in a special slot. Two years after the introduction of this technology, known as CableCard, the effort has stalled, the victim of conflicting business interests, manufacturing costs and a lack of consumer response. While six million CableCard-ready digital TV's have been sold to consumers, only 170,000 sets, less than 3 percent, are actually using a CableCard device. The rest are receiving digital cable and HDTV programming the more familiar way, through the cable company's rented set-top box. Frustrated by the lack of consumer interest, many television manufacturers have sharply cut the number of CableCard-ready models. According to Richard Doherty, an analyst with the market research firm the Envisioneering Group, 80 percent fewer television models with CableCard are available this year than in 2005. Sharp Electronics, which offered about 10 CableCard sets last year, now includes the feature only in two high-end TV's, with prices starting at $16,000. Royal Philips Electronics offered seven CableCard models in 2005 but just three this year. And Sony reduced its CableCard models from four to two, the least expensive of which retails for more than $5,000. "As manufacturers, we are disappointed in CableCard's rollout," said Rich Dinsmore, vice president for marketing at TTE Corporation, owner of the RCA brand. He said the card component increased the set's retail price by about $40, adding, "to collect that extra money in today's retail environment is very difficult when nobody talks about the feature in the retail store." One factor may be a lack of incentives for cable companies to encourage CableCard use, since the companies collect monthly rental fees for set-top boxes and can also count each box as an asset on their balance sheets. "The set-top box offers cable providers a point of control, a presence in the living room," said Ross Rubin, director of industry analysis for the NPD Group. " Comcast and Time Warner have had very good success with offering digital video recorders, which require a set-top box." One problem with the current CableCard technology is its limitations. The system allows one-way communications only, meaning that advanced services such as video-on-demand, pay-per-view and the cable operator's interactive program guide still require a set-top box. Ian Olgeirson, an analyst with Kagan Research, said that 45 percent of the nation's cable customers used set-top boxes that enabled them to receive such digital services. Two-way card technology that would work with advanced services is being developed, but the specifications are still being debated. LG Electronics, Panasonic and Samsung have begun developing products that will work with two-way cable access cards, even though all specifications have not been set. Samsung expects to have the nation's first digital TV capable of receiving two-way services without a set-top box a 56-inch rear projection model on the market by the end of this year. Other manufacturers are holding off until all technical details are worked out. "Whether it is 2007, 2008 or 2009 when key points are agreed upon, is hard to say," said Phil Abram, Sony's vice president for TV marketing. Meanwhile, the one-way technology languishes, with some manufacturers faulting the cable industry for failing to promote and offer the product adequately. "It has been a little hard to get CableCard support from cable operators," Mr. Abram said. "Some operators have made it difficult for consumers to get a card and encouraged them to take a set-top box instead." While the cable industry acknowledges that CableCard deployment has been low, it sees the lack of interest as an indication of consumer choice. "The cable operator is in the business of selling services, not hardware," said Neal Goldberg, general counsel for the National Cable and Telecommunications Association. The Federal Communications Commission mandated that consumers be made aware of CableCard's limitations, Mr. Goldberg said, and the cable industry is following that mandate by posting information on its Web sites and supplying it when consumers request a card. Once consumers learn that they will not be able to get pay-per-view and video-on-demand with a CableCard, he said, many opt for a set-top box. Yet with fewer and fewer CableCard-ready TV's, that choice may become moot. "The CableCard is essentially dead," said Mr. Doherty of Envisioneering. "It will go down in history like the Edsel." ================================================= George Antunes Voice (713) 743-3923 Associate Professor Fax (713) 743-3927 Political Science Internet: antunes at uh dot edu University of Houston Houston, TX 77204-3011 Reply with a "Thank you" if you liked this post. _____________________________ MEDIANEWS mailing list [email protected] To unsubscribe send an email to: [EMAIL PROTECTED]
