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Tivo Redoubles Cable Ties

11/30/2007 7:00 PM Eastern

After some lingering wariness about working with cable, TiVo now has struck a full peace pact with the industry.

TiVo last week said it reached an agreement with major cable operators on a blueprint for a retail digital video recorder that will use the industry's OpenCable Platform middleware specification. It reached the deal after cable agreed to make certain “clarifications and adjustments” to the technology, the DVR company said in a filing with the Federal Communications Commission.

Moreover, TiVo said, with the adjustments it sought, OpenCable was preferable to the Consumer Electronics Association's Digital Cable Ready Plus (DCR Plus) proposal for standardizing access to two-way cable services.

In another sign of détente last week, TiVo and the National Cable & Telecommunications Association, along with CableLabs, announced that major operators expect to offer an adapter to TiVo customers in the second quarter of 2008 that will allow the DVRs to access switched digital video channels without a separate set-top box.

TiVo CEO Tom Rogers, in announcing third-quarter earnings, said the agreement on OpenCable means future TiVo devices will be able to access two-way cable services in any system that supports OpenCable.

“While the technical specifications are still being worked out, such a set-top box will mean TiVo subscribers will be able to get full access to cable VOD and other two-way cable services,” Rogers said.

That also means that a standalone TiVo box sold at retail “could fully substitute” for a set-top box supplied by a cable operator, he said.

Hitting Fast-Forward
Last week TiVo announced:
SOURCE: TiVo
Plans to develop an OpenCable DVR after reaching an agreement with the cable industry.
Comcast will charge $2.95 per month extra for TiVo service, and will begin marketing it in New England “shortly.”
Major cable operators in Q2 2008 will offer an adapter to let TiVos access switched digital video channels.
A multiyear deal with NBC Universal, which plans to sell interactive DVR ads starting Jan. 1 and subscribe to TiVo's DVR ratings research service.
A deal with media-buying firm Carat, which will use TiVo's audience research services.
Plans to introduce PC-based TiVo software in a deal with German multimedia software developer Nero.
Retail availability in Canada with Best Buy, London Drugs and other retailers.

'CONCERNS' ADDRESSED

In a Nov. 27 letter to the FCC, TiVo said had previously “expressed concerns about the cable industry's OpenCable Application Platform ('OCAP') specifications and license terms.”

According to TiVo, the cable industry has agreed to make adjustments to the OpenCable specification for the DVR maker to “build what TiVo believes can be a viable retail DVR with OCAP.”

Specifically, an OpenCable-based TiVo DVR would have a “TiVo mode” displaying all linear channels (including switched digital video channels) with the TiVo screen interface and full DVR functionality, as well as a “cable mode,” displaying all cable programming services with the cable operator's user interface but without DVR functionality.

TiVo also told the FCC that this “refined version of OCAP” is a preferable solution to DCR Plus for a variety of reasons, including time-to-market and the ability to receive all of cable's two-way services.

A “DCR Plus-based solution would take longer to implement and result in devices with more limited functionality that would not enjoy the full support of the cable industry,” the company said in its letter.

Cable has vigorously opposed DCR Plus, and having TiVo on board with OpenCable should help its cause before the FCC, which is considering adopting rules for opening access to two-way cable services.

Last month, the CEOs of the two biggest cable operators — Comcast's Brian Roberts and Time Warner Cable's Glenn Britt — personally lobbied FCC commissioners to emphasize the industry's commitment to the OpenCable Platform.

“We believe that this dialogue with the cable industry has been very constructive,” Rogers said in his prepared comments, “and demonstrates the cable industry's genuine desire to work with TiVo, not to mention the clear recognition that TiVo is an important offering for cable subscribers.”

SWITCHED ON

On a conference call with analysts last week, Rogers said TiVo expects large cable operators to distribute the Universal Serial Bus adapters to let the boxes tune to switched channels for no extra charge to customers who request them and provide free installation.

The NCTA had already committed to developing such a solution in August, after legislators — as well as TiVo's Rogers — had raised concerns that switched digital video technology represented a cable-industry initiative that would make some programming inaccessible to third-party consumer electronics.

Switched digital video transmits linear TV channels only when customers request them. That lets an operator deliver more programming in the same amount of bandwidth with the assumption that fewer than half the channels being switched will be viewed simultaneously.

The pact between TiVo and the cable industry is “a major breakthrough resulting from marketplace discussions that provides benefits for consumers and cable operators,” NCTA CEO Kyle McSlarrow said.

The specifications for the interface to the new adapter were developed in discussions among operators, CableLabs, TiVo, Motorola, Scientific Atlanta, BigBand Networks and C-COR. The NCTA said operators and TiVo will work “cooperatively” to inform TiVo customers about availability of the new adapter.

For the quarter ended Oct. 31, TiVo-owned subscription increased a net 4,000 in the quarter, compared with 53,000 net additions for the year-ago period, with the company standing at 1.7 million direct subscribers at the end of October.

The company reported 4.1 million total subscribers, an 8% decline from 4.4 million in the third quarter of 2006. The drop is the result of DirecTV customers dropping service; the satellite operator no longer offers TiVo DVRs.

September