Cable Makes Big 'tru2way' Play
While a keynote from Comcast Corp. (Nasdaq: CMCSA, CMCSK) chairman and CEO Brian Roberts and some new product announcements from the likes of Panasonic Corp. (NYSE: PC) made for an attention-grabbing side show in Las Vegas at the Consumer Electronics Show in January, tru2way, which promises to create an open retail market for interactive digital boxes and televisions, will take center stage at the all-cable gig. (See CES: Roberts Declares Open Season and Comcast, Panasonic Unveil Portable DVR .) In addition to a two-day, pre-show tru2way Developers' Conference that starts on Saturday, one won't be able to swing a cat on the show floor proper without hitting a vendor that's touting some sort of tru2way booth demo.
But how rapidly will tru2way, and its promise to open up the floodgates to digital set-top competition, blossom in the U.S. cable market?
According to the latest edition of Light Reading's Cable Industry Insider, there's no reason for Motorola Inc. (NYSE: MOT) and Cisco Systems Inc. (Nasdaq: CSCO), the dominant duo in the cable set-top sector, to fret -- at least not for some time.
That's because the retail market for tru2way boxes and digital TVs will evolve much slower than the traditional cable operator lease market. (See Cable Set-Tops: Big Changes Ahead.)
But there are already signs that set-top competition will be intense in the coming years. In addition to Pace Micro Technology , which has already had some success in the U.S. cable market, tru2way is encouraging more customer equipment (CE) players, large and small, to invest in the cable market, including Panasonic, Advanced Digital Broadcast (ADB) , Digeo Inc. , Samsung Corp. , TiVo Inc. (Nasdaq: TIVO), and Thomson S.A. (NYSE: TMS; Euronext Paris: 18453).
In addition, Japan's Funai Electric Co. Ltd. (OTC: FUAIY), which makes gear under the Sylvania and Emerson brands, is expected to introduce a tru2way-powered set-top at this year's show, according to the report: Cable Opens Up: How Tru2way Will Change the Set-Top Market.
But there are still several significant CE companies yet to throw their weight behind tru2way, including Hitachi Ltd. (NYSE: HIT; Paris: PHA), JVC Americas Corp. , Pioneer (USA) Inc. , Sharp Electronics Corp. , Sony Corp. (NYSE: SNE), and Toshiba Corp. (Tokyo: 6502), which joined the Consumer Electronics Association (CEA) in petitioning the Federal Communications Commission (FCC) to consider DCR+, a competing interactive platform that could hinder the pace of cable's tru2way adoption. (See Brenner Defends OpenCable and Two-Way Battle Reaches FCC.)
The chief complaint of those vendors is that the tru2way license terms give too much control to cable MSOs. Although enthusiasm for DCR+ appears to be waning as more operators and suppliers throw their weight behind tru2way, an FCC mandate for the competing system could cause major headaches for the cable industry.
"The DCR+ plan would require significant changes in cable's infrastructure, including the separable security system endorsed by the FCC, and it could force a marketplace showdown similar to that of Blu-ray versus HD DVD," according to the report.
Regardless of possible DCR+ entanglements, several major cable operators are pushing ahead with tru2way deployments. Time Warner Cable Inc. (NYSE: TWC), the leader in the category, has already deployed north of 750,000 tru2way boxes, and could hit the 1 million mark by mid-year. The report, citing sources, says Comcast Corp. (Nasdaq: CMCSA, CMCSK) is preparing as many as 12 markets for the tru2way conversion.
With all known MSO activity factored in, Light Reading's Cable Industry Insider forecasts there will be roughly 2 million tru2way devices deployed by the end of 2008.
— Jeff Baumgartner, Site Editor, Cable Digital News
The report, Cable Opens Up: How Tru2way Will Change the Set-Top Market, is available as part of an annual subscription (6 bimonthly issues) to Light Reading's Cable Industry Insider, priced at $1,295. Individual reports are available for $900. For more information, or to subscribe, please visit: www.lightreading.com/cable.