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MSOs Switch Digital Gears

Several leading North American cable operators, eager to save bandwidth and clear more space for advanced video and broadband services, are finally beginning to roll out switched digital broadcast technology.

Indeed, four of the five largest MSOs in the U.S. -- Cablevision Systems Corp. (NYSE: CVC), Comcast Corp. (Nasdaq: CMCSA, CMCSK), Cox Communications Inc. , and Time Warner Cable Inc. (NYSE: TWC) -- are tinkering with switched digital video in at least one pilot market, cable officials and tech executives say. At the same time, they say, Canada's largest cable operator, Rogers Communications Inc. (NYSE: RG; Toronto: RCI), is quietly carrying out switched digital trials.

"Everybody is now looking at it," says Jeff Taylor, director of product strategy and management in the subscriber networks sector at Scientific Atlanta . "It's getting an awful lot of attention... You'll probably see a lot more attention in 2007."

Cablevision formally joined the switched digital ranks earlier this week, announcing it has converted its entire New York metro area properties to switched digital systems. The MSO, which has 2.3 million digital cable subscribers and passes more than 4 million homes in the city and its near suburbs, installed the technology this past fall with BigBand Networks Inc. (Nasdaq: BBND)

Notably, the announcement marked the first time that a major U.S. cable operator has disclosed a switched digital deployment in any market with a particular tech vendor. (See Cablevision Switches With BigBand.)

Making use of the bandwidth savings gained from switching digital channels, Cablevision officials are introducing nine new packages of international channels throughout their service area. These include bundles of Spanish, Russian, Chinese, Korean, Italian, Japanese, Polish, and Portuguese channels, which will cost subscribers an extra $4.95 to $24.95 per month.

On the same day that Cablevision announced its deal with BigBand, Comcast said it's testing switched digital video in two undisclosed markets, with aims to deploy the technology commercially in the second half of the year.

Rick Rioboli, VP of product platform engineering for Comcast, said the MSO sees switched digital as a way to add a greater number of bandwidth-hogging HDTV channels to its programming lineup. Speaking at the Society of Cable Telecommunications Engineers (SCTE) 's Emerging Technologies conference in Houston this week, he said Comcast might otherwise have to start dropping some channels to make room for more HD fare.

Like most MSOs, Comcast did not identify the equipment vendor that it's using for the two switched digital trials. The answer is anybody's guess, because the MSO is a big customer of all three major players in the emerging switched digital business -- BigBand, Scientific Atlanta, and Motorola Inc. (NYSE: MOT).

Time Warner Cable, an early leader in the emerging market, has formally deployed switched digital in two confirmed markets -- Austin, Texas, and Columbia, S.C. -- after conducting tests in those markets with BigBand. Time Warner officials have talked about extending the technology to at least six more markets by early this year. The MSO is relying on switched digital to carry its new time-shifting video service, Start Over.

Cable equipment vendors say Cox is also preparing two switched digital trials, including one with Motorola and one with Scientific Atlanta. Cox executives, whose company is now privately held, haven't said much about their trial plans yet.

And Rogers, tech sources say, is staging at least one switched digital trial and may launch the technology later this year. Similar to their counterparts at Cox, Rogers executives have disclosed little about their plans so far.

Thanks to these early moves, cable tech vendors are looking for a fair amount of switched digital trials and launches this year as MSOs seek ways to add more HD channels to compete against satellite TV and telco TV providers. Tech officials then expect to see a large number of system rollouts in 2008.

"I think it's going to move rather quickly," says Bruce Bradley, director of product management for Motorola's Connected Home Solutions division. "It's not just a one-time answer."

— Alan Breznick, Site Editor, Cable Digital News

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