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ADB Aims for US Set-Top Market

Advanced Digital Broadcast (ADB) staked its claim on the North American cable set-top market this week, believing the road to deployment will be paved by MSO adoption of the OpenCable Application Platform (OCAP) and the mandated migration to removable security, set to occur on July 1. (See Countdown to 'Seven-Oh-Seven' and Boxing Up 'Seven-Oh-Seven' .)

ADB tried to enter the U.S. cable set-top market about four years ago, but decided to back off. Although Pace Micro Technology and Pioneer (USA) Inc. had found some limited success taking on the classic set-top duopoly of Motorola Inc. (NYSE: MOT) and Scientific Atlanta , ADB determined that the direct-to-MSO box market was essentially closed off to other competitors at the time.

"We realized that was going to be an insurmountable task," says Michael Hawkey, regional president of ADB Americas. At the time, ADB decided to pull back its plans for the U.S. market and instead focus on the European and Asian markets.

It wasn't until the emergence of OCAP and removable security, handled today through the CableCARD, that ADB decided it made sense to resurrect its efforts in North America.

ADB, which has deployed 8 million set-tops for cable, IPTV, satellite, and terrestrial video services, believes its expertise with OCAP will help to establish a high level of credibility with cable operators as they begin to support the CableLabs -specified middleware platform. (See MSOs Say OCAP's Not a Snap.)

In fact, ADB has corporate connections to two OCAP stack developers: Osmosys SA and Vidiom Systems, a Colorado-based company that ADB acquired in early 2006. In May 2005, Vidiom locked in a licensing deal with OCAP Development LLC, a joint venture of Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Time Warner Cable Inc. (NYSE: TWC).

"We have to rely on OCAP knowledge and our OCAP base," Hawkey says.



On the product front, the company has released the ADB-7820-C-DEV, a CableCARD host set-top with enough horsepower to support the full OCAP stack and the Docsis Set-top Gateway (DSG), a signaling method that uses the in-band Docsis pathway to deliver guide information and other data. The model also has on-board high-definition television and MPEG-4 capabilities. That device will enter MSO testing by the end of this year, and a follow-up model will add a digital video recorder to the mix, Hawkey says.

ADB may eventually seek a retail channel for its set-tops, but its initial strategy for the U.S. market will be through direct deals with cable operators. Hawkey says ADB has already signed two important CableLabs accords: the CableCARD Host Interface Licensing Agreement (CHILA) and one for the downloadable conditional access system (DCAS), a removable security platform that's expected to eventually replace the CableCARD.

"We feel those initiatives will allow the fall of the duopoly and let us in the door," he says. With separable security entering the mix, SA and Motorola "don't get to wag the dog anymore. They are the tail," Hawkey says.

ADB, he adds, doesn't expect to take over the market and become the next SA or Motorola. Gaining 5 percent share of that business "would be a great upside for ADB," he says.

But ADB is biting off a big challenge. Pace has found some success, but has paid heavily to make it happen over a span of more than seven years. Pioneer dropped out of the cable set-top market in 2004, but a group within the company dedicated to set-top navigation systems and applications spun out a company called Aptiv Digital Inc. In March of this year, Gemstar-TV Guide International Inc. (Nasdaq: GMST) inked a deal to acquire Aptiv.

— Jeff Baumgartner, Site Editor, Cable Digital News

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