T-minus three weeks and counting...

The U.S. cable industry's three primary set-top suppliers -- Motorola Inc. (NYSE: MOT), Scientific Atlanta , and Pace Micro Technology -- are all gearing up in anticipation of the Federal Communications Commission (FCC) -mandated ban on boxes with integrated security. (See Countdown to 'Seven-Oh-Seven'.)

Starting July 1, any newly purchased and newly deployed digital set-top must have separable security, more often than not occurring via a special interface that houses the CableCARD, a removable module that authorizes the box to receive digital cable services. This marks the latest in a series of reports from Cable Digital News that will track the industry's progress as it prepares for the deadline.

Motorola, SA, and Pace have all developed CableCARD-capable "host" models that are similar in feature and function to their integrated security counterparts. They are also two-way, able to handle interactive cable services such as video-on-demand (VOD). This table outlines the different models and a short note on their capabilities and features.

Table 1: CableCARD 'Host' Makers & Models

While those products differ in many respects, execs from each vendor report at least one common thread: The majority of orders from operators call for the set-top to be pre-married to the CableCARD, a move that will remove some of the operational uncertainty (and some added costs) out of the equation.

"Our intention was to offer product in either configuration," says Rob Folk, senior product manager, digital video solutions for Motorola's Home & Networks Mobility unit. But the majority of Motorola's customers have asked for the card to be pre-inserted, he adds.

"90-plus percent" of host box orders are of the pre-mated variety for Scientific Atlanta, according to Dave Clark, director of product strategy and management for the company's subscriber division.

As for the CableCARD models themselves, "all products have gone into mass production," Motorola's Folk says.

SA's strategy was to create CableCARD versions of the company's mostly widely used set-tops with integrated security. One big reason: "To be risk-averse as we approach 'Seven-oh-Seven,’ " Clark says. Moving to the CableCARD "is a major changeover," he adds, so SA stayed with already proven chipsets for its first family of "host" set-tops.

That will also ensure SA doesn’t get saddled with heaps of unusable parts. "We're sticking with models that have been in production for awhile," Clark says.

But there are some key differences. The "host" versions have a larger memory footprints, giving them enough firepower to support the OpenCable Application Platform (OCAP), a common middleware layer specified by CableLabs .

To help with the transition, Pace's boxes use a software platform called "EngineWare" that allow the set-top to run legacy apps as well as those that run on OCAP-based. It will also aid in "flipping," the process of shifting the box from legacy to OCAP mode. In demos, Pace has shown it to take seven or eight minutes to complete the flip, though the speed at which it can happen correlates to the amount of capacity an operator sets aside for just that function.

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Although all four of the models in Pace's CableCARD host family are interchangeable in a pure OCAP environment, they are targeted only to Motorola cable systems when used in pre-OCAP mode.

"It's not that we couldn't do SA, but today we're going after an existing customer base that's been buying Pace DVRs for the past few years," says Tim O'Loughlin, vice president and marketing for Pace's Americas division, which counts U.S. customers such as Bresnan Communications , Time Warner Cable Inc. (NYSE: TWC), and Bright House Networks .

O'Loughlin says Pace has received orders for all four host models. Among them, Pace's Vegas and Tahoe are already available. Among the balance, Pace's Miami box, which sports a Serial-ATA hard disk drive port, will become available in July, according to O'Loughlin.

SA's factory started cutting over to CableCARD-based set-tops on May 1. In fact, SA set a date (that SA declined to disclose) for all set-top orders to slip over to host boxes if no prior agreement was put in place.

Cost questions
One of the loudest complaints about the migration is the higher cost of the boxes, which require a new set of circuitry and configurations to house the CableCARD. The module itself also adds to the bill or materials (BOM).

RCN Corp. has already complained that the Motorola DCT700 costs about $232 per unit, versus just $84 each for the DCT700, an all-digital box with integrated security.

As for the cost difference between integrated and host boxes, Clark of SA points out that the new class of device require more processing power just to meet the CableCARD specs.

Those costs, when considered for an entry-level set-top box, takes the BOM into a "significantly different cost zone," Clark explains, adding that the BOM delta is much narrower with more advanced boxes that handle HD and digital video recording.

The big & small of it
Some smaller operators have complained -- or at least expressed worry about -- obtaining CableCARD hosts in time for the deadline, causing some to consider an expensive deferral request with the FCC.

"Do you think Motorola will put me ahead of Comcast? Absolutely not," says Bill Bauer, president and CEO of WinDBreak Cable, an operator in the Nebraska panhandle with fewer than 100 customers. "I could put the order in, but I know I won't get any delivery," he adds, believing that manufactures applying most of their capacity for host boxes on major operators.

Vendors, meanwhile, say timing is everything.

"We've been working and encouraging (smaller MSOs) to get orders in the books so we could plan our production capacity," says Folk. He says the first customer Motorola shipped production units to in mass quantities was a "small" operator, but declined to name it.

More about the subject of small operators, and the special challenges they face with the transition, will be covered in the next installment in the series.

— Jeff Baumgartner, Site Editor, Cable Digital News