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Set-top boxes underwhelm overbuilder

Aug 6, 2001  •  Post A Comment

Overbuilder network RCN has decided to adopt digital cable conditional access solutions from two non-American providers, citing its frustration with the stranglehold that two large American cable technology infrastructure developers have on the United States’ digital set-top and conditional access markets.
Conditional access technology allows viewers to securely order advanced services such as pay-per-view and video on demand through their set-top boxes.
RCN’s courtship of European technologies stems from the obstacles it has encountered in trying to launch an Internet-on-television service for its customers.
Hoping to offer the Web portal developed by sister company Digeo Broadband (which, like RCN, is owned by Microsoft co-founder Paul Allen’s investment vehicle Vulcan Ventures), RCN has searched in vain for an economical set-top box produced in the United States that is capable of running several advanced applications including television and Internet service simultaneously, said Rick Rioboli, RCN vice president for technology and product development.
The company attributes the dearth of low-priced advanced set-tops to the force that leading American set-top producers Motorola and Scientific-Atlanta are wielding with their proprietary digital cable conditional access mechanisms-Motorola’s Digi Cipher II and S-A’s PowerKey.
Rival set-top manufacturers have been deterred from establishing themselves in the American cable market because of the obstacle presented by Digi Cipher II and PowerKey’s ubiquitous presence in U.S. cable systems, Mr. Rioboli said, pointing to the legal and technical challenges inherent in trying to tailor one’s set-top hardware to operate on top of competitors’ proprietary conditional access infrastructure.
“It’s only the U.S. that uses proprietary conditional access,” Mr. Rioboli said. “In most other countries they use standard conditional access.”
Proprietary conditional access means a company holds intellectual property rights for its conditional access technology, which it then licenses out to other set-top box manufacturers. In contrast, standard conditional access is an agreed-upon standard that all set-top box manufacturers are free to use.
Proponents of standard conditional access systems say technology would be easier to license in the United States, as it has been in Europe, which uses an open DVB digital cable standard.
Mr. Rioboli said RCN is seeking to circumvent the two dominant American conditional access providers by implementing nonproprietary conditional access systems from European developers Canal Plus Technologies and NDS. Canal Plus’ Mediaguard conditional access tool, for one, complies with Europe’s omnipresent DVB standard.
Avoiding the licensing constraints associated with Motorola and Scientific-Atlanta technologies would attract a multitude of potential set-top hardware makers, including Sony, Thompson, Philips and Samsung, which Mr. Rioboli said would bolster price competition among manufacturers and encourage the introduction of more affordable advanced set-tops.
“The benefits are multiple vendors,” Mr. Rioboli said. “We could get higher-functionality boxes at lower costs.”
Mr. Rioboli conceded, “There’s some operational complexity of having multiple set-top boxes in the same system.” But he added, “The potential benefits you could see are cost reduction and new functionality [of offerings] such as PVRs.”
The overbuilder provides cable television over its broadband network pipes to more than 433,000 subscribers in urban locales such as New York City, Los Angeles and Chicago. It also offers high-speed Internet access and telephone connections. All of RCN’s services can be purchased either a la carte or through discounted bundles that include other related services.
Currently, only a subset of those cable customers are offered digital cable. But those numbers will grow soon when the company introduces digital cable service in Chicago-the only major market RCN serves that still only offers analog cable. Digital cable is already provided to RCN customers in New York City, Boston, Los Angeles, San Francisco and the Philadelphia area.