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Cable/Video

TVS Makes All-Digital Pitch

Cable operators with plant not built out to 750 MHz or greater are faced with a dilemma as they try to find the necessary headroom for video-on-demand (VOD), high-definition television (HDTV), and other services that soak up valuable spectrum.

The big question: If they operate 450 MHz or 550 MHz systems, should they bite the bullet on a bandwidth expansion to 1 GHz or more, or should they consider migrating everything to digital and thus reclaim all that spectrum being set aside for analog services?

With the February 2009 digital TV transition roughly a year away, some operators, particularly smaller ones with manageable subscriber bases (or even some larger ones that still serve some pastoral areas), are starting to take a close look at the all-digital option. For example, RCN Corp. is giving it a shot in Chicago, hoping to shift its entire sub base to digital by mid-April. (See RCN's All-Digital Challenge and RCN Reclaims Analog in Chicago .)

But it's the smaller cable system with a few thousand subscribers that's drawing the interest of Transparent Video Systems Inc. (TVS) . The San Carlos, Calif.-based company has entered this segment of the market with a platform, dubbed "Challenger," that enables operators to migrate to all-digital at reasonable cost.

Along the way, it could help break the duopoly enjoyed by Motorola Inc. (NYSE: MOT) and Scientific Atlanta in set-tops and conditional access (CA) systems.

TVS has signed on its first customer: Coaxial Cable TV, a rural operator that serves about 4,000 customers in Edinboro, Pa., off plant built out to 550 MHz.

The decision to give TVS a shot came down to simple numbers, says Coaxial Cable general manager Chris Lovell. While a rebuild would have cost the operator $3 million to $4 million, TVS's approach, which starts off with digital simulcast with a path toward total analog reclamation, came in at less than $1 million.

For its part, TVS is offering cable operators an integrated set of headend encoding, multiplexing, and QAM units, coupled with the Conax AS conditional access system.

TVS bases its system on Digital Video Broadcast (DVB), an "open" approach popular in Europe that has attracted at least 200 set-top box makers. So far, TVS has completed integrations for boxes made by Homecast Co. Ltd. and Kaon Media Co. Ltd., among others. Coaxial Cable is deploying (and selling outright) boxes from Homecast.

Coaxial Cable still receives digital program streams from Headend in the Sky (HITS), a product of Comcast Media Center (CMC) , but the operator no longer relies on Motorola-based headends and set-tops. "They [HITS] are just the transport stream for us now," Lovell explains.

Coaxial has also cut the cord on the interactive program guide (IPG) from Gemstar-TV Guide International Inc. (Nasdaq: GMST). It's instead using Homecast's homegrown IPG and purchasing program data directly from Tribune Media Services Inc.

Cost savings aside, Coaxial has another incentive to use TVS: competition. Like other small operators, Coaxial is under siege by satellite TV operators and their generally broader standard-def and high-def video lineups.

While the HITS-Moto combo was a "decent product…we were getting zero growth with it. We were just flat," Lovell says. "All of the marketing campaigns in the world didn't help." Coaxial reports that its digital sub base has growth by more than 60 percent since installing the new system in July.

Presently, Coaxial Cable is simulcasting its lineup in analog and digital, but the operator aims to move all its customers to digital as early as the end of 2008. About 1,000, or roughly 25 percent, of its customers have taken the digital service since the operator went live with the TVS system.

"It's an inevitability that we will get there," Lovell says. "We will go 100 percent digital."

Once the migration is complete, Coaxial Cable plans to drop analog and begin turning up VOD and HD services. Lovell wouldn't specify timelines for those new services, adding that it will all hinge on how quickly the operator can cut everything over.

To spur demand and to help speed and ease the transition, Coaxial Cable is offering three standard-def digital boxes (with remote controls) to each customer for no additional cost. Customers can rent the Homecast SD-DVR box for $8.75 per month.

"My belief is that we need to remove barriers of entry for consumers, and try to make it so [they] can get into a digital product affordably," Lovell says.

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