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CE Makers Aren't Buying Cable's Pitch

1/19/2003 7:00 PM Eastern

Las Vegas— If Comcast's Brian Roberts, Time Warner Cable's Glenn Britt and Cox Cable's Jim Robbins were perched before the usual sycophants at a cable-industry event, the audience would be absorbing and embracing every syllable of their pronouncements about compatibility, high-definition TV and video parity.

But the cable honchos were working a tough room at the recent International Consumer Electronics Show. Skeptics were not impressed with what the cable executives said.

"Arrogant" and "gloomy" were two of the polite words I heard from electronics veterans to describe the imperious utterings of the cable leaders during a Cable Television Laboratories Inc. briefing session.

CableLabs CEO Richard Green and National Cable & Telecommunications Association president Robert Sachs presided over the hour, intended to bolster the nascent cooperation between the cable and CE industries in the wake of last month's digital-TV compatibility agreement.

Despite Sachs's remarks about "the commitment of the industry to high-speed data and high definition TV" and Green's assurances of "growth of what's in the pipeline," CE makers and their allies were unconvinced.

This despite the perception, based on the remarks at CES, that cable is willing to cooperate, but not to truly collaborate.

Roberts rules

The discomfort in Las Vegas stemmed from many sources, but primarily from recognition that Roberts controls key decisions about what kind of set-top box (with or without personal video recording capability) will go into cable systems.

His choice will affect what Cox, Insight and other MSOs buy. Hence, Roberts's go-slow approach — apparently endorsed by other operators — ran counter to the hurried-rollout mindset of electronics makers and dealers.

Attitude will affect the next — and more complicated — round of compatibility discussions, which will focus on bi-directional service.

A consumer-electronics executive optimistically hoped that the negotiations, which are just starting, can be completed in one year. But during their CES briefing, cable officials hedged on predicting any timetable, further contributing to the sense that cable will drag its feet into future rounds.

A negotiator from one of the biggest CE manufacturers took me aside. He lamented how difficult the first years of talks had been, especially since companies on his side of the table were marketplace competitors, while the cable oligopoly across the table never faced off against one another in the hunt for customers.

It was not a new thought, but his anguish augurs a slow process for the bidirectional phase of the compatibility negotiations.

To be fair, the cable executives tried to put on a good face. Roberts singled out Sony Corp.'s new Passage system, unveiled at December's Western Show in Anaheim, Calif., as a product that could speed up the manufacturer-retailer side of the equation.

Robbins insisted: "You'll see more retailing and more points of presence. We want to make it happen, change the TV experience, help people enjoy their cable even more."

But those rosy words quickly seemed meaningless to many in the audience when the topic turned to digital video recorders — and the role that cable operators envision for the looming explosion of digital recorders vis-à-vis their own video-on-demand plans. Green said simply that the existing deal covers any one-way device, including DVRs.

He and others grudgingly acknowledged that point of deployment (POD)-enabled DVRs will come into the marketplace.

Such tempered attitudes flew in the face of the DVR frenzy — and the larger home networking/media center mania — that permeated the CES.

After all, this was the show at which FCC Chairman Michael Powell characterized the TiVo he received for Chiristmas as "God's machine."

Cable operators' reluctance to bless DVRs (or personal video recorders, or whatever they are being called today) appeared to be a futile and contradictory stance in the shadow of a convention hall filled with such products.

It's not just TiVo Inc. and ReplayTV anymore. (Both of them unveiled vastly enhanced devices: The latest ReplayTV unit can hold up to 320 hours of video; TiVo's new version can store and deliver audio files, as well as video.)

Now Toshiba Corp., Hitachi Corp., Gateway Inc. and Sony are introducing similar recorders — and entire digital media centers — at prices from $200 to $2,000, and even higher for massive home-theater set-ups.

Overall, it sure looked like the CE industry won't wait around for MSOs to tell them how or where DVRs and home media controllers can be used with cable connections.

For one thing, the deals DVR makers are signing with direct-broadcast satellite companies are putting DBS/DVR combinations at least six months ahead of any eventual cable packages — or probably longer.

Samsung breaks ice

What came across as cable's haughty or condescending attitude did not preclude positive actions during CES.

Samsung Electronics America Inc. signed a license deal with CableLabs to become the first CE maker of a two-way interactive digital device compliant with the POD-Host Interface Licensing Agreement (PHILA).

Magis Networks Inc. showcased its HDTV wireless transmission system that ties into STBs for home networking.

And Microsoft Corp.'s e-Home demonstrations included connections to cable boxes, as well as independent services that can offer electronic program guides and similar interactivity without cable's involvement.

As cable executives were shepherded through CES venues — sometimes resembling a Cub Scout pack in expensive suits, guided by their CableLabs and Cable & Telecommunications Association for Marketing troop leaders – they couldn't avoid the convergence of their world with the glitzy and high-rolling consumer electronics business.

But as was underscored by the occasional confrontation, the cable and consumer-electronics industries don't always move to the same clock.

Their newfound compatibility is still just an idea, not a product — no matter what it says on paper.

Contributing curmudgeon Gary Arlen mans the I-Way Patrol for Broadband Week.

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