No Penalties for Missing Tru2way Date

Five of the six top U.S. cable MSOs may have collectively missed the July 1 "deadline" to have 100 percent of their headends rigged up for tru2way, but that won't result in any sort of financial penalties. (See MSOs to Miss Tru2way Date .)

Last year, Comcast Corp. (Nasdaq: CMCSA, CMCSK), Time Warner Cable Inc. (NYSE: TWC), Cox Communications Inc. , Cablevision Systems Corp. (NYSE: CVC), and Bright House Networks agreed to have all the headends of their digital cable systems ready for tru2way by today. Charter Communications Inc. (Nasdaq: CHTR) has another year to fulfill its obligation. (See Sony Supports tru2way and Revealed: The Tru2way MOU.)

"We use the word 'deadline,' but this is a contractual agreement," explains Neal Goldberg, the VP and general counsel of the National Cable & Telecommunications Association (NCTA) . "We're not under a regulatory deadline or under any statutory requirements like the hard date of the DTV transition."

The memorandum of understanding (MOU), signed last year, includes a Force Majeure clause that comes into play if any party is prevented or delayed from meeting the obligations of the agreement. Some of those circumstances include "Acts of God, war, terrorism, acts of government, and failure of suppliers, subcontractors, and carriers." Even if any of those contribute to a delay, the clause calls for the MSOs to satisfy the obligation "as soon as reasonably practicable." However, the MSOs involved in the MOU aren't saying when they now expect to have 100 percent of their headends tru2way-ready, but insist they've made a good-faith effort to do so.

The cable side of the agreement says the nasty economy and shifting priorities caused in part by a moving "hard" broadcast digital TV deadline all contributed to missing the original July 1 date. Depending on how one keeps score, the rotten economy could be construed as an Act of God, while a moving DTV deadline is certainly an act of government. (See Broadcasters Rally 'Round June 12 and Rebuilding Analog TV .)

"If you were in a contract court, you'd argue that [cable] had substantially completed with the rollout and, therefore, there's no contractual remedy. By no means are lawyers fighting lawyers on this one," Goldberg says. "This is real. This isn't vaporware by a long shot."

But how close the industry came to hitting the deadline is a tough one to judge. None of the MSOs have said individually or collectively how close they got to having all their headends ready to go by today, but Comcast was "not that far off," according to Comcast Corp. SVP of strategic planning Mark Coblitz.

He says the MOU served as a mechanism to clear a logjam between the cable and CE parties. "We moved from sitting on opposite sides of the table to sitting on the same side of the table," Coblitz says.

He acknowledges that there wasn't much science involved in the selection of the original July 1 date. "It had to be far enough out that we had a good shot at making it," Coblitz says. "It looked like a good target, and we're going to come awfully close."

Among the MOU's "founding" MSOs, Time Warner Cable also came up short of hitting the date. However, the MSO already has more than 2 million tru2way boxes deployed, according to MSO spokesman Alex Dudley.

Cox, meanwhile, issued a statement claiming that it has made "tremendous progress" toward getting its headends tru2way-ready. "We are currently conducting readiness testing in all of our locations and expect validation efforts to continue into late July," Cox said.

Charter, which still has another year, is "on schedule," according to a company spokeswoman. So far, the other MSO MOU partners -- Cablevision and Bright House -- have not released any formal updates on their tru2way activities.

Although the MSOs failed to hit the headend requirement of the MOU, they are already ahead of the game on the next obligation of the original Sony agreement -- that they have tru2way middleware in 20 percent of new set-tops they purchase after July 1. That facet of the deal will terminate once the MSOs have deployed a total of 10 million of those devices.

Retail aims still far out
But one key goal of tru2way and the MOU in particular is to develop "common reliance" between cable and the CE industry, and spawn an open retail market for digital set-tops and television sets. Even when all the MSOs get their headends ready for tru2way, much more time will pass before they turn up those capabilities and retailers and consumer electronics jump in to support tru2way.

Presently, Comcast is the only MSO supporting tru2way at retail, with two sets from Panasonic being offered in small pockets of Denver, Chicago, and Atlanta. (See Tru2Way in Atlanta and Denver, Chicago First to Get Tru2way TVs.)

Time Warner Cable, Dudley says, will launch trials supporting tru2way consumer products in a couple of markets later this year.

On the set-top side, just one box -- made by Advanced Digital Broadcast (ADB) -- has been certified by CableLabs for retail distribution. But that "set-back" box, which Sony Corp. (NYSE: SNE) may market in tandem with some of its Bravia digital TVs, isn't for sale yet. (See Sony-Comcast Store Has Tru2way 'Set-Back' Box , Sony, ADB Ink Tru2way Deal, and Sony Drives ADB's Set-Back.)

A number of other box makers have expressed privately that they intend to shoot for tru2way certification later this year.

In the meantime, major U.S. MSOs have already seeded their systems with boxes outfitted with the CableCARD, a removable security module that's part of tru2way. According to the most recent NCTA figures, the top 10 incumbent cable MSOs have deployed more than 14 million operator-supplied boxes with CableCARDs. However, they've deployed just 437,800 CableCARDs for use in retail devices, and most of those are for one-way, unidirectional "Plug & Play" TVs and not for newer, interactive tru2way TVs.

— Jeff Baumgartner, Site Editor, Cable Digital News