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Cable/Video

Comcast, Moto Playing Nice With Devices

Question for the cable industry: Does cable TV content always have to end up on a TV?

Comcast Corp. (Nasdaq: CMCSA, CMCSK) doesn't think so, and the cable provider says its new encryption software business with Motorola Inc. (NYSE: MOT) is not a gambit to keep up with telco IPTV.

Comcast and Motorola intend to develop a next generation of “conditional access” software, which cable systems use to provision and bill for premium channels. Right now, the software resides solely on a set-top box, which decodes the content sent from the headend. But the new joint venture will work to divorce the software from the set-top box so that other devices (TVs, PCs, handhelds) could receive the content (see Cable Braces for Services Rush).

“A Motorola set-top has the decryption keys for a Motorola headend,” says Motorola spokesperson Paul Alfieri. “But the software could be downloaded to anywhere so that any box could decode a signal from a Motorola headend.”

The flexibility a new decoding mechanism affords could be seen as a bid to keep cable providers ahead of the functions that IPTV affords. Motorola claims its multiservice access platform delivers digital video to over 90 percent of North America's installed base of telco IPTV services.

The joint venture is actually two companies: The first, known as Combined Conditional Access Development LLC, will develop “next-generation” conditional access software; the second, called Conditional Access Licensing LLC, will be a software licensing business.

Both will be headquartered in the Philadelphia area, where Comcast and Motorola are located.

The development venture will be staffed by 50 or 60 Motorola engineers near San Diego, where Motorola R&D is. It will be managed by a four-member board with two members from each of the parent companies. A search for a CEO is now underway.

The licensing venture will be overseen by a five-member board with three members from Comcast and two from Motorola. The two parent companies are still studying the staffing needs of the licensing company, a Comcast spokesperson says.

Both companies insist the new ventures are not a ploy to keep cable current with IPTV. In fact, the cable industry doesn't seem to feel threatened at all by the RBOCs' talk of advanced video services. “The feeling with cable -- and right now I don’t know if anyone can necessarily argue with them -- is that telecom could be a looming threat, but they haven’t really proven anything yet,” Motorola's Alfieri says. “And the impending fiber networks and IP solutions haven’t been deployed yet on a large enough scale to really have a Comcast or a Time Warner feeling a threat.”

Indeed, the real thorn in cable's side is still the satellite guys. Comcast's interest in the joint venture is to gain “the flexibility to design applications that add customer value and help us compete more effectively with folks like the satellite providers,” company spokeswoman Jenny Moyer tells Light Reading.

Motorola’s Alfieri has a slightly different take: “It will help Comcast drive down the cost of the set-top boxes in their networks because they could go out to multiple suppliers."

Motorola’s interest in the venture is a little more conceptual. “For Motorola we recognize this sort of open, plug-and-play world where giving up the license allows us to open up a new business model,” Alfieri says.

“Our thought is that will grow the pie by letting consumers see a lot of different types of devices that need to be connected -- and the more devices that are sold, the better for the cable industry, which in turn is better for us at Motorola.”

This “anytime, anywhere” accessibility sounds similar to what's possible with digital rights management software in the IPTV world. But the Comcast/Motorola conditional access software will be sold within the cable industry only, and it will not speak IP.

“The cable industry’s feeling right now is that they are in a position of strength,” Alfieri says. “So they are going to move to IP in their own time and on their own terms, and not necessarily because they are competing with telecom.”

The new entity will begin by releasing expanded versions of Motorola’s existing encryption software, which is baked into the Motorola hardware used by Comcast subscribers now.

Comcast has over the past few years formed a number of joint ventures. In February 2004 it started a business with Gemstar-TV Guide developing an interactive onscreen programming application. It started TVWorks with Cox Communications Inc. (NYSE: COX) in January 2005 to market a development platform for new digital services. And in August 2004 it launched a middleware company called OCAP with Time Warner Inc. (NYSE: TWX).

Motorola and Comcast also announced they would continue their hardware supplier relationship -- in a big way. The two companies signed an agreement wherein Motorola will sell Comcast more than $1 billion worth of low- to high-end set-top boxes over the next few years (see Comcast, Motorola in $1B Deal).

— Mark Sullivan, Reporter, Light Reading

alchemy 12/5/2012 | 3:19:00 AM
re: Comcast, Moto Playing Nice With Devices Motorola and Comcast also announced they would continue their hardware supplier relationship -- in a big way. The two companies signed an agreement wherein Motorola will sell Comcast more than $1 billion worth of low- to high-end set-top boxes over the next few years

What really happened is Comcast bought off Motorola with $1 billion of business in exchange for Motorola allowing Comcast to migrate away from the Motorola-proprietary digital set-top box encryption technology. This gets Comcast out of the trap of vendor lock and should drive down the price on open-standard set-top boxes and CableCards. Comcast and Time-Warner have the deep pockets to do these kinds of deals with Motorola and Scientific Atlanta. The smaller MSOs that service the rest of the United States are stuck with vendor lock since there are no frequencies available on the HFC plant to run both the proprietary digital format and an open standard without deleting channels. They can't delete channels without pissing off their customer base and their media suppliers.
ozip 12/5/2012 | 3:19:00 AM
re: Comcast, Moto Playing Nice With Devices And of course, Comcast have did the TiVO deal two weeks after the Mot deal. Expect to see your Tivo directly connected to digital cable with a built in cable modem next year. And based upon Tivo current retail price, Im guessing Tivo boxes will cost the operators about 1/3 of what a MOT DVR costs them

Ah, cable, a complicated world.....

ozip
ozip 12/5/2012 | 3:19:00 AM
re: Comcast, Moto Playing Nice With Devices The truth in the cable business is that all of the deals always get re-negiotated later. Vendors rarely see the contract value that they announce. The MOT STB are really, really expensive so it wont be to hard for guys like Pace (who already have Motorola CA compatiable boxes) to undercut them.
dvrguy 12/5/2012 | 3:18:55 AM
re: Comcast, Moto Playing Nice With Devices tivo software will run on the moto stb. also cablecard isnt around because its one way not because moto or sa keep the cost high. stop burying your head in the sand and believing that the msos hate the stb vendors. if pace boxes were really that good they would have marketshare, since they are compatible with moto systems. their technology just doesnt stack up
alchemy 12/5/2012 | 3:18:51 AM
re: Comcast, Moto Playing Nice With Devices ozip writes:
The MOT STB are really, really expensive so it wont be to hard for guys like Pace (who already have Motorola CA compatiable boxes) to undercut them.

Pace can't ship a set-top box that can decrypt Motorola-proprietary encryption for digitial TV. Motorola would sue them into oblivion for patent infringment. This is the whole point of the $1B deal. In exchange for buing the gear from Mot, Comcast is allowed to change away from proprietary encryption to something that works in a dual mode. In the long run, this kills the General Instruments part of Motorola since they no longer enjoy vendor lock and all the huge profit margins that go along with it.
ozip 12/5/2012 | 3:18:47 AM
re: Comcast, Moto Playing Nice With Devices A trip to the Pace website might enlighen you. www.pacemicro.com Pace DC755 - Digicipher II (MediaCipher) Conditional Access, that be Motorola CA......

As for you rest, I agree with to your assessment of the strategy....


ozip
ozip 12/5/2012 | 3:18:47 AM
re: Comcast, Moto Playing Nice With Devices I definately wasnt taking the postion that operators hate STB vendors, in fact I would take the opposite position if asked. However, considering the price of comparable technology, STB's are far more expensive than they should be! Motorola recently bought a little company called Ucentric that provides a DVR similar to TiVO, and with OCAP, it will be almost impossible to tell the systems apart. The TiVO value is in their advertizing features....

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