Cable Tech

Will Cable's Superboxes Pay Off?

Cable operators are preparing to launch hybrid video gateways ahead of an inevitable IP video transition, but will the business model work if the devices run $400 a pop?

That's one of the key questions raised by a new Heavy Reading Cable Industry Insider: The Superbox Arrives: Hybrid Gateways to Unify TV & IP.

Although one operator believes these hybrid boxes can be had for $100 or less in volume, others tell industry analyst and report author Craig Leddy that full-featured devices, integrating things like DVRs, will likely run $300 to $400. At first, operators will probably have to lease them to customers -- which means the operator will have to buy the boxes, devise ways to manage them and train techs on how to install and troubleshoot them.

That sounds like a bit of a problem, particularly as MSOs are trying to trim their capital expenditures, reduce box costs, and, perhaps well down the road, get rid of leased set-top boxes altogether. (See Cablevision Eyes $50 Set-Top, The Rise of Cable Apps and Comcast, TWC Stream With Samsung.)

The gateways should reduce costs per-TV, because devices connected to them won't need their own CableCARDs and individual DVR storage.

But operators "will have to create a pretty big business model around this strategy," Leddy writes. U.S. cable, which has been losing video customers by the hundreds of thousands each quarter, will want these devices to support new apps and attract new video subscribers. (See Can Comcast Stop Losing Video Subscribers? and Q2 Video Scorecard: Cable, Satellite Get Creamed .)

So far, there's not much uniformity to cable strategies beyond some baseline gateway features, such as integrating cable modems and Docsis 3.0 technology. While Shaw Communications Inc. and BendBroadband look to Arris Group Inc. (Nasdaq: ARRS) for video gateways, Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Liberty Global Inc. (Nasdaq: LBTY) are going against the grain with products that adhere to their own technical specifications. (See Liberty Opens an IP Gateway, Shaw Deploys Arris Video Gateway and Comcast Demos New Web-Based TV Service.)

The report also outlines the cable gateway strategies of several suppliers, including Motorola Mobility LLC , Pace plc , Samsung Corp. and Technicolor (Euronext Paris: TCH; NYSE: TCH). Leddy also sheds some light on "Project Altoids," an obscure Cisco Systems Inc. (Nasdaq: CSCO) initiative whose name refers to the size of the remote client that would feed off the vendor's central gateway.

— Jeff Baumgartner, Site Editor, Light Reading Cable

This report, "The Superbox Arrives: Hybrid Gateways to Unify TV & IP," is available as part of an annual single-user subscription (six issues) to Heavy Reading Mobile Networks Insider, priced at $1,595. Individual reports are available for $900. To subscribe, please visit: www.heavyreading.com/cable.

Page 1 / 2   >   >>
msilbey 12/5/2012 | 4:53:51 PM
re: Will Cable's Superboxes Pay Off?

Given the experimentation here, it's going to be hard for operators to drive prices down to a comfortable rate. Either they'll have to standardize further, or kiss their margins goodbye. (No, the latter is not really an option.)

I also wonder if there's a way to take this gateway concept effectively one hop up in the network. In other words, create a gateway/hub for an MDU or a neighborhood and have it serve client boxes or smart TVs for a larger group. It seems like there'd be too many QoS problems, but in theory this hub-and-spoke concept might be a good transition step on the way to full-fledged nDVR.

Jeff Baumgartner 12/5/2012 | 4:53:50 PM
re: Will Cable's Superboxes Pay Off?

I think the fancier cloud-based guides and general OTT capabilities will help to get hybrid gateways rolling in the US.  Limitations in Netflix contracts prevent leased cable boxes from integrating its streaming service (provided msos would even be willing to integrate Netflix in the first place), but Arris has come up with an interesting way to sidestep that issue (LRTV interview) in its leased video gateways.

I also like the idea of having the gateway transcode QAM to IP on the fly to make it accessible to iPads and other IP-connected devices (within the reach of a home's WiFi access point, anyway). JB



AESerm 12/5/2012 | 4:53:50 PM
re: Will Cable's Superboxes Pay Off?

Network or RS (remote storage) DVR is how CVC is gunning for the $50 stb. Don't really need an intermediary step like MDUs to implement. To enable in-home storage, yes, adopt standards (DLNA) and let subs buy increasingly cheap NAS devices...while the operator is leveraging COTS storage at the data/video center. Or: Virgin Media is hooking up with TiVo (which was touting praise from Neil Berkett--and others--loudly at IBC). As is Suddenlink. Upper-income, i.e. top 2 1/2 quintiles, subs can opt for those boxes or, moreover, its compelling software. Possible integration, but no standards required.

msilbey 12/5/2012 | 4:53:50 PM
re: Will Cable's Superboxes Pay Off?

Nothing gets US operators moving like seeing someone else make money. If Shaw gets strong results, others will jump on the bandwagon.

This may also be the thing that pushes adoption of multi-room DVR. I was always surprised that Verizon didn't push the multi-room advantage further while it was ahead of the cable companies. For suburban family homes in particular, the ability to move TV around to different rooms is compelling feature. In the gateway model, it may get showcased more and therefore adopted more readily. 

craigleddy 12/5/2012 | 4:53:50 PM
re: Will Cable's Superboxes Pay Off?

I just heard that Shaw Communications in Canada has rolled out its Shaw Gateway in all its markets and expects to have 4,000 customers installed by month's end. They're competing with telcos by deploying a hybrid box (the Arris Whole Home Solution) that offers Docsis 3.0, a 500 GB DVR hard drive, MoCA home networking, and a new TV IPG (Moxi). What do you think will get hybrid gateways rolling in the U.S.? 

Jeff Baumgartner 12/5/2012 | 4:53:49 PM
re: Will Cable's Superboxes Pay Off?

Yeah, then we start debating what constitutes a gateway... I didn't touch on this, but Craig's report gets into the headed and headless gateway variety.

Speaking of CVC's RS-DVR, has anyone ever seen a review of it?   I've always wondered how well it handles trick-play functions and if users have to deal with the kind of lag you typically see with a traditional VoD stream.


Jeff Baumgartner 12/5/2012 | 4:53:49 PM
re: Will Cable's Superboxes Pay Off?

True, getting storage out of the box will get those costs down. I just wonder how long it will take for other MSOs to get their own RS-DVR services going now that CVC has blazed the path for everyone else on the legal front. 

Also, CVC is going with downloadable security so it's also carving out the costs of the CableCARD interface and the module itself.  That's a cost-effective combo (RS-DVR and no CableCARD) that I think other MSOs should pursue.  but CVC can't do it on its own and get volumes where they need to be to hit that $50 target; it needs other MSOs to join its cause. No confirmations yet, but we keep hearing that Cox and TWC have been giving a close look at CVC's downloadable security implementation. I would be floored if Comcast was also giving that particular set-up a serious look, but I would not be surprised if they were ironing out a downloadable option as well that would free them from the CableCARD sometime down the road. JB




msilbey 12/5/2012 | 4:53:49 PM
re: Will Cable's Superboxes Pay Off?

If operators move quickly to nDVR, what do the client boxes in the home look like? QAM receiver and a D3 modem? With an off-the-shelf external storage option? Not a gateway, but it would combine the QAM and IP functions. 

The bigger issue is getting the networks ready for nDVR. Sure the operators are moving in the right direction, but the traffic and storage load is sure to be huge. Even Cablevision is rolling the service out very slowly. 

msilbey 12/5/2012 | 4:53:48 PM
re: Will Cable's Superboxes Pay Off?

Interestingly, I find the lag with VOD on FiOS is much less noticeable than it was when we had Comcast. Could just be the system we were on, but we used to have a rotten time getting VOD to respond to rewind and fast forward requests.

paolo.franzoi 12/5/2012 | 4:53:48 PM
re: Will Cable's Superboxes Pay Off?

Just FYI, FiOS runs VOD over IP Video.



Page 1 / 2   >   >>
Sign In