& cplSiteName &

Cable's Google Shield

Jeff Baumgartner
8/19/2011
50%
50%

Google (Nasdaq: GOOG)'s proposed acquisition of Motorola Mobility LLC may let the folks from Mountain View, Calif., into cable's digital video henhouse, but a deal Comcast Corp. (Nasdaq: CMCSA, CMCSK) struck with Moto more than five years ago prevents Google -- or anyone else, really -- from taking it over. (See Cover Sheet: Google to Acquire Moto Mobility.)

In March 2005, Comcast and Motorola inked a "broader strategic relationship" that involved a $1 billion set-top purchase order, but more importantly called for the formation of two conditional access joint ventures: Combined Conditional Access Development (CCAD) and Conditional Access Licensing (CCAL).

CCAD focuses on next-gen conditional access technologies, such as a downloadable video security. CAL gave Comcast a non-exclusive license for MediaCipher, Moto's conditional access technology. Comcast manages CAL and can license MediaCipher to other MSOs and set-top vendors.

A cable industry source familiar with the agreements says the deal also gave Comcast a controlling stake in the Motorola Digital Access Controller (DAC), the command-and-control element for Motorola-based cable headends. The DAC allows set-top boxes to register themselves on the network and, when you really boil it down, represents the "brain" of cable's Motorola-based networks.

If the deal gets done, Google would certainly own Moto's set-top box business and the devices themselves, but it would not be able to commandeer the bulk of U.S. cable TV networks. Comcast has already cleaved out control of that important piece.

"The one thing Google can't control is [the] controller. If that was in Google's hands right now, I think [the cable industry] might be a lot more worried," the cable source said. The 2005 deal "prevents [the DAC] from being sold out from underneath us."

"Comcast has been good at putting up a wall 'for the just in case,'" says another industry source who's familiar with CCAD/CAL.

But to be clear, there doesn't appear to be a rampant belief that Google, which has butted heads with cable now and then and has been viewed as a disruptor to cable's pay-TV business, would attempt to seize cable's Moto-based networks. But safeguards are in place.

"I think if Google is smart, they'll recognize that the cable guys are not their enemy," a cable exec says. "Establishing a peace of sorts with service providers in general is probably a good thing for Google, not a bad thing."

The 2005 deal is certainly good for Comcast, which has about 80 percent of its footprint based on Motorola's digital video platform, according to an estimate issued Friday by Sanford C. Bernstein & Co. Inc. Analyst Craig Moffett. What about the other cable operators that rely heavily on Moto?

They should be protected, too, so long as they don't mind obtaining the DAC licenses through Comcast.

And this is all tied to the legacy, QAM-based Motorola video platform. Google's better chance to make a difference -- and perhaps exert more influence on cable's video future -- will more likely come as MSOs migrate to IP-based video platforms.

Much of that speculation has centered on the idea of porting Android to the cable set-top box -- an idea that some high-ranking cable industry leaders and engineers are already warming to. (See Will Google Be Good for Cable? and Will Google Droid Up the Set-Top Box? )

— Jeff Baumgartner, Site Editor, Light Reading Cable

(4)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
ycurrent
50%
50%
ycurrent,
User Rank: Light Beer
12/5/2012 | 4:55:46 PM
re: Cable's Google Shield


Is there a similar arrangement in the industry regarding Cisco's STB?

ycurrent
50%
50%
ycurrent,
User Rank: Light Beer
12/5/2012 | 4:55:45 PM
re: Cable's Google Shield


Thanks. Very interesting.  I wonder how this type of "lock-in" differentially affects the perceived value of the STB/cable video solution business at Motorola Mobility vs. Cisco. It would seem that a greater premium would go to Motorola, than to Cisco (were Cisco to consider selling its STB business...).


Meanwhile Adara and Cisco have a hosted SDV offer that can co-exist with (and replace) Motorola digital video platforms...

Jeff Baumgartner
50%
50%
Jeff Baumgartner,
User Rank: Light Sabre
12/5/2012 | 4:55:45 PM
re: Cable's Google Shield


I'm not aware of anything similar to the degree of the Comcast-Mot deal from 2005, but it's a good question.  I believe there was some licensing terms Cisco had to agree to be involved in the universal DTAs that run on both Mot- and Cisco-based networks, but i think that's a much different animal since those boxes don't use full-fledged conditional access system. But perhaps there was some command and control concessions too. Any cable engineers in the house who can say? 


I'm also not sure there was as much concern about obtaining and implementing PowerKEY licenses back in the day as there was for Moto's CA.  Pace for a long while had a terribly hellish time trying to get boxes made that could run on Mot cable networks...Motorola made it very difficult on them by giving them incomplete info or just cause other interference to slow down Pace's progress... or so I used to hear. 


Meanwhile, TWC was able to get Scientific Atlanta to be a bit friendlier, allowing companies like Pioneer, Pace and Panasonic to obtain the CA licenses but also the other help they needed to at least develop SA clones that would actually  work on SA-based networks... though I'm not sure how many Panny ended up selling from that effort. Pioneer eventually gave up on the direct-to-MSO STB biz in 2004  because profit margins kept dwindling. I don't remember SA shedding many tears over that. JB

njguy
50%
50%
njguy,
User Rank: Light Beer
12/5/2012 | 4:55:29 PM
re: Cable's Google Shield


"Google would certainly own Moto's set-top box business and the devices themselves, but it would not be able to commandeer the bulk of U.S. cable TV networks"


Own the devices?  Commandeer??


Moto doesn't OWN these networks.  Moto sells equipment to service providers.  If Goog/Moto doesn't build equipment the providers want, the providers won't buy it.


Why do you write this up like we could all wake up to GoogleTV on our Moto boxes without the consent of the cable companies??


"But to be clear, there doesn't appear to be a rampant belief that Google, which has butted heads with cable now and then and has been viewed as a disruptor to cable's pay-TV business, would attempt to seize cable's Moto-based networks. But safeguards are in place."


Then what was the point of this article?

Featured Video
Flash Poll
Upcoming Live Events
March 12-14, 2019, Denver, Colorado
April 2, 2019, New York, New York
April 8, 2019, Las Vegas, Nevada
May 6, 2019, Denver, Colorado
May 6-8, 2019, Denver, Colorado
May 21, 2019, Nice, France
September 17-19, 2019, Dallas, Texas
October 1, 2019, New Orleans, Louisiana
October 10, 2019, New York, New York
November 5, 2019, London, England
December 3, 2019, New York, New York
December 5-3, 2019, Viena, Austria
All Upcoming Live Events