Pondering cable providers' plans

Are next-generation set top boxes around the corner or years off?

For now, the DSL providers’ path is pretty clear. They’re beginning to roll out increasing numbers of residential gateways, and in time will benefit from the standardization of today’s proprietary hardware and software.

But the cable broadband providers’ path is harder to discern. They can follow the same data-centric path and offer CableHome-certified gateways, mainly for home network services and support. Or they can offer expensive, fourth-generation devices that deliver both entertainment and data applications. For instance, Scientific Atlanta’s Explorer 8000 Home Entertainment Server provides TV programming, digital video recording, picture-in-picture and video on demand, as well as Web browsing, e-mail, and gaming.

But just because the devices are available doesn’t mean cable providers can afford to deploy them. Or does it? Even the analysts are split.

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For now, the DSL providers’ path is pretty clear. They’re beginning to roll out increasing numbers of residential gateways, and in time will benefit from the standardization of today’s proprietary hardware and software.

But the cable broadband providers’ path is harder to discern. They can follow the same data-centric path and offer CableHome-certified gateways, mainly for home network services and support. Or they can offer expensive, fourth-generation devices that deliver both entertainment and data applications. For instance, Scientific Atlanta’s Explorer 8000 Home Entertainment Server provides TV programming, digital video recording, picture-in-picture and video on demand, as well as Web browsing, e-mail, and gaming.

But just because the devices are available doesn’t mean cable providers can afford to deploy them. Or does it? Even the analysts are split.

“I think we’ll see the cable MSOs act sooner to deploy advanced set top boxes,” says Kurt Scherf, analyst with Parks Associates. “My hunch is they’re backed into a corner by the resurgence of the satellite providers, EchoStar and DirecTV, who are rolling out PVR-enabled set top boxes at a rapid rate. They might not offer them nationwide, but I think they’ll have to act.”

Scherf’s colleague, analyst Michael Greeson, disagrees. “These boxes are unlikely to roll out in volume for a couple of years. To date, deployments have been very limited and remain in market trials; as such, they do not necessarily foreshadow more widespread deployments anytime soon. I think entertainment-centric residential gateways will be the exception, not the rule, and data-centric gateways will be the dominant type moving through cable MSOs distribution channels.”

Greeson adds: “I think the MSOs are banking on video-on-demand [a service satellite providers can’t offer] for the next couple of years to differentiate their services. They’ll then slowly begin rolling out PVR-enabled boxes to their high-end customers, then offer more widespread PVR service by, say, 2005 – 2006.”

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