Sony seems to have engineered a key first step in the bid by cable operators in the US, to free themselves from the long term set top control exercised by Motorola and Scientific Atlanta. The FCC has long mandated CableCard, an attempt to allow standardized set top hardware to be separate from the encryption and conditional access system used with it. However this only tends to work with one way systems and does not take account of VoD, pay per view and EPG services, which require two way connections.
Now Sony has agreed through the US National Cable & Telecommunications Association (NCTA) a binding Memorandum of Understanding (MOU) with the six largest cable companies ‘ Comcast, Time Warner Cable, Cox, Charter, Cablevision and Bright House Networks ‘ which serve more than 82% of all US cable subscribers, on a new design for two way digital cable ready TV sets.
Sony has not yet said when these devices can be brought to market, but they will be based on the Tru2way standard and such a move will knock a huge hole in the multibillion dollar Motorola business for cable set tops in the US, especially because Sony plans to drag with it many other Consumer Electronics manufacturers, and has already invited them into the MOU, and Samsung has already responded positively.
Effectively this is the creation of a two-way ‘plug-and-play’ platform inside all the top end TV sets, and it is being talked about as the end of set tops. Of course the cost of putting the set top electronics inside a top end flat TV will be far lower than an external set top, and given that these are coming down aggressively in price every season, it will mean that the set top market may well just evaporate for US cable.
This negotiated industry agreement establishes the fundamentals for a competitive retail market for ‘two-way’ digital cable-ready devices. It addresses how such products will be brought to market with interactive services like video-on-demand, digital video recording and interactive programming guides.
In addition, the agreement makes it clear that consumers will be able to enjoy a choice of differentiated two-way products at retail and through cable operators from a variety of consumer electronics and information technology manufacturers. The agreement includes safeguards to facilitate the development of a robust, two-way retail market and to ensure that cable operators can continue to develop and offer new competitive services.
As part of the agreement, the parties will adopt the Java-based ‘tru2way’ along with streamlined technology licenses and new ways for content providers, consumer electronics manufacturers, information technology companies and cable operators to cooperate in evolving the tru2way technology.
The other key element of this agreement is that the CE built Tru2way devices will facilitate ‘write once, run anywhere’ applications, so that interactive TV and other applications can be easier to bring to market. Detailed terms of the MOU have not yet been released, while other potential signatories complete their review of the document.
It has now been over ten years since Congress ordered the cable industry to allow outside electronics makers to compete for its set tops with the CableCard initiative.
While the CableCard ‘ a PCMCIA style card that separates out all the conditional access data and processing ‘ will still be needed, before there was an agreement on a genuine two way version of the hardware to go with it, set tops were still being rented in their millions just to keep Motorola and Scientific Atlanta in business, between them taking over 75% of the US cable set top market.