Cable ONE Looks to Pump Up HD-DTA Volumes

Cable One Inc. is pursuing an expanded waiver that would allow the MSO to deploy "at least" 200,000 Digital Terminal Adapter (DTA) devices with high-definition capabilities, claiming such volumes are necessary if the operator is to get unit prices in the desired neighborhood of $50.

Cable ONE, which ran the idea by some key Federal Communications Commission (FCC) Media Bureau members late last month, already has a waiver in hand that allows the operator to deploy so-called "HD-capable all-digital devices" (HD-ADDs) in its Dyersburg, Tenn., system. The MSO needs the waiver to sidestep an FCC rule that bans set-tops with integrated security.

Cable ONE intends to use those boxes -- sometimes referred to as HD-DTAs -- to fuel an all-digital strategy that will free up spectrum for high-definition television services and speedier Docsis 3.0 Internet services. As part of its condition of getting the waiver, Cable ONE has agreed to provide one HD-ADD to each subscriber at no cost and to offer additional boxes for a monthly fee not to exceed $1. (See Cable ONE Snares HD Set-Top Waiver .)

Cable ONE is the only MSO (so far) to obtain a limited waiver for a simple, integrated security box with HD capabilities. It's been arguing that the FCC should no longer classify HDTV services as "advanced" because they've become table stakes thanks to HD-heavy lineups offered by DirecTV Group Inc. (NYSE: DTV), Dish Network LLC (Nasdaq: DISH), and other competitors. (See HD No Longer an 'Advanced' Service? and Evolution Guns for HD Box Waiver .)

The MSO expects to have access to prototype HD-ADDs by the third quarter of 2010, and to begin deployment by late in the fourth quarter. However, the MSO noted in a recent ex parte filing that the 20,000 boxes it would need to order for the Dyersburg deployment "is too small to meet the $50 price point necessary to offer such devices to consumers for $0-1 per box as promised in Cable ONE 's original request." (See Cable ONE Seeks $50 HD Box.)

To reach the necessary economies of scale, Cable ONE contends that it will need to expand the deployment to at least eight additional systems serving about 70,000 total customers -- about 10 percent of the MSO's sub base -- and to deploy more than 200,000 HD-ADDs to complete the digital conversion in those systems.

But the operator has bigger plans in mind. "Ideally, Cable ONE would eventually like to use the HD-ADD company-wide," pledging to deploy Docsis 3.0 in every market that's allowed to use the device to reclaim analog spectrum.

The FCC hasn't acted on Cable ONE 's request for the expansion, but the MSO says it still intends to stand by its commitment in Dyersberg.

In the meantime, Cable ONE has had no trouble attracting vendors that are interested in developing HD-ADD devices, indicating that it has the luxury to choose from a field of 16 bidding companies.

Huawei Technologies Co. Ltd. , EchoStar Technologies, Irdeto Access B.V. , Latens Systems Ltd. , and Pace Micro Technology are among the box makers and conditional access system providers vying for the MSO's business, according to an earlier Cable ONE filing.

Those companies also stand to benefit should other MSOs obtain similar waivers for HD-capable DTA boxes, or if the FCC gives vendors the opportunity to apply for individual device waivers. The FCC has already granted waivers to a handful of standard-definition DTAs. (See Huawei Gets Box Break at the FCC , FCC Believes in Evolution-ary DTAs, and FCC Approves DTAs From Moto, Cisco, Thomson & Pace.)

— Jeff Baumgartner, Site Editor, Light Reading Cable