Comcast Pursuing $35 Digital Dongle
Multiple cable industry sources have confirmed that Comcast Corp. (Nasdaq: CMCSA, CMCSK) issued a request for proposal (RFP) late last year for a relatively simple DTA (Digital Terminal Adapter) capable of taking in digital video and converting it into analog form. Although no such product has been produced, it’s believed that it will end up looking like a small dongle rather than a more traditional entry-level all-digital set-top such as the Motorola Inc. (NYSE: MOT) DCT700.
Rumors of the DTA project began to percolate last week when Comcast Corp. COO Steve Burke discussed on the company’s fourth quarter conference call the idea of migrating 20 percent of the MSO’s footprint to all-digital during the “back half” of 2008.
In those scenarios, it’s expected that Comcast will continue to deliver a small basic analog lineup of roughly 30 channels, but move its expanded basic analog tier to the digital domain. In doing so, it looks to reclaim upwards of 40 channels and reapply them toward expanded high-definition services or for fresh spectrum for Docsis 3.0. (See Comcast Spreads the Love and Comcast Closes In on 100 Mbit/s.)
Burke did not get into how Comcast expected to support that transition in customer homes, but it appears that the DTA project could factor heavily into the operator’s strategy.
A Comcast spokeswoman did not address the DTA project specifically, but said the MSO “looks at a number of different concepts and ideas with a number of different people. We’re very focused on the digital transition and we’re committed to helping our customers get through that transition.”
It’s believed that Comcast is looking to order about 25 million DTAs to help power an all-digital strategy cost-effectively for existing analog customers and to support existing digital customers who still have some TVs not connected to set-tops that receive analog programming. The volumes Comcast is considering are similar to what Verizon Communications Inc. (NYSE: VZ) is seeking in a set-top RFP the telco issued last summer. (See Verizon Set-Top RFP Could Be Worth Billions .)
As for the DTA’s simplicity, it’s almost easier to detail which elements likely won’t make it into the device because they are either unnecessary or cost-prohibitive enough to put the $35 target in jeopardy.
As a bare-bones, digital-to-analog converter, the DTA likely won’t house an upstream transmitter, an on-board electronic program guide, or support for the tru2way platform. (See Cable's 'tru2way' Play .)
“It [the project] keeps twisting and changing, so who knows?” says an industry source who has seen the RFP.
Likewise, there’s still some confusion about whether the DTA will support a traditional conditional access system. Because of the costs involved, there’s little chance it will contain a CableCARD interface. Sources familiar with the project suggest that Comcast may opt for a DVB-based encryption format or use even more limited protection because programming offered today on the analog basic and expanded basic tiers is already delivered “in the clear.” A downloadable CA system is another possibility, but considered a stretch at this point.
If a customer wants to use a particular cable outlet to view a premium channel, access video-on-demand content, or other more advanced digital services, they’ll require one of the more traditional (and powerful) CableCARD-based digital boxes.
The CA question
Although requirements for the DTA haven’t been finalized, the project brings up a tricky point involving the Federal Communications Commission (FCC) and the ban on integrated security set-tops that went into effect last July. (See Countdown to 'Seven-Oh-Seven'.)
The FCC has repeatedly denied Comcast’s waiver request for entry-level models with baked-in security, such as the Motorola DCT700, Scientific Atlanta Explorer 940, and the Pace Micro Technology “Chicago” DC501p. Comcast is appealing the FCC’s decision, arguing that the denials are hurting its ability to migrate to digital due to the elevated costs for lower-end set-tops with CableCARD interfaces. Comcast has claimed that the lowest-end CableCARD box from Motorola costs roughly double that of the DCT700. (See Comcast Takes CableCARD Battle to Court .)
It’s still unclear whether the DTAs would qualify for the mandate or if Comcast would require the blessing of the FCC to deploy the devices. Historically, the FCC has been more willing to grant special set-top waivers if operators were likewise willing to migrate to all-digital by the February 2009 digital TV transition. (See Verizon & Others Get Their Waivers.)
Short of going all-digital, U.S. cable operators are on the hook to deliver “must carry” TV stations in analog and digital format for three years after the switchover. (See FCC OKs Dual TV Carriage Rules.) As envisioned, Comcast’s DTA would ensure that the analog TV it’s connected to would be able to display a picture after February 17, 2009.
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It wasn't clear whether this box converted a single selectable digital channel (simple set top) or a box that converted 'expanded basic' digital channels to analog.
I assume the latter which makes it very interesting way to spend my coupons.
OP