Top Five Telco TV Threats
Not to pop that bubble before it all gets underway in Anaheim on Nov. 11, or anything, but we've taken a stab at five barriers that could slow down the telco TV train. We left the most obvious one -- traditional cable TV services -- off the list, but please take a gander at these, and let us know if there are any we missed or if there's an item you think doesn't belong here in the first place.
With apologies to Maverick and Goose, let's make no mistake about it: Cable feels the need... the need for speed!
And most cable MSOs, some faster than others, are trying to meet or beat telcos with Docsis 3.0 (sometimes referred to as "D3"), a CableLabs platform/spec that uses IPv6 and bonds together multiple 6 MHz channels to produce (shared) speeds in excess of 100 Mbit/s -- enough to cross swords with fiber-to-the-premises (FTTP) and more than enough to stick a dagger in the heart of DSL.
Domestically, Comcast Corp. (Nasdaq: CMCSA, CMCSK) is by far the most aggressive -- wiring up 20 percent of its systems with D3 this year, and everywhere by mid-2010. (See Comcast Enters the Wideband Era .) Others, like Time Warner Cable Inc. (NYSE: TWC), are taking a more systematic approach, deploying it "surgically" where it needs it most (i.e., to match up with Verizon FiOS). (See 'Surgical' Strikes .)
But faster speeds and competitive pricing might only scratch the surface of D3's potential. Some new chipsets under development give cable an obvious path toward delivering IPTV (and even video sourced from the public Internet) directly to the set-top box, a move that could wipe away any real or perceived advantage that the telcos like to point to. (See TI Flexes Docsis 3.0 Muscle .)
OK, we are all aware that the cable industry, inspired by CableLabs president and CEO chief Dr. Richard Green, thinks there is no reason that telco TV service providers should not be able to adopt tru2way . (See Telcos: Climb Aboard the Tru2way Train.) This "open" set-top/headend platform, which uses common middleware and headend systems, promises to unleash the innovation of the consumer electronics (CE) industry and spur on a healthy retail market for digital TVs and set-tops.
So far (and perhaps to no one's surprise), there have been no takers from the telco TV world. Meanwhile, the six largest "incumbent" cable MSOs are installing tru2way in their headends now and are getting ready to buy gobs of boxes based on tru2way -- all but giving the CE guys the kind of "common reliance" they covet.
That has not only attracted former tru2way/OpenCable hater Sony Corp. (NYSE: SNE), but other big names, including Panasonic Corp. (NYSE: PC), Samsung Electronics Co. Ltd. (Korea: SEC), and LG Electronics Inc. (London: LGLD; Korea: 6657.KS) . (See Revealed: The Tru2way MOU, More Firms Go the Way of Tru2way, and tru2Way Tallies Two More.) Heck, even EchoStar Corp. LLC (Nasdaq: SATS) is on board, and it's apparently not just for show. (See EchoStar Blazing Way to Tru2way .) The momentum, Dear Friends, is on the side of tru2way.
But that hasn't been enough to make the telcos throw in with tru2way. Among them, Verizon Communications Inc. (NYSE: VZ) claims tru2way isn't compatible with its FiOS TV system. (See Verizon Stokes a Tru2way Stalemate and NCTA Counters Verizon's Tru2way Claims .) While there's some debate about the technical merits of that argument, others believe that Verizon will do anything in its power to avoid being saddled by a technology and license scheme that's under the control of one of its biggest competitors. Instead, it's pushing "VueKey," a separable security system that looks and smells like the widely deployed CableCARD module and CableCARD "host" interface, but allows for IPTV flows, and isn't encumbered by the middleware component of tru2way. (See ATIS OKs CableCARD for IPTV.)
Verizon is making progress with that, and Motorola Inc. (NYSE: MOT) (which wants to remain a Verizon video supplier) and Cisco Systems Inc. (Nasdaq: CSCO) (which would like to become a Verizon video supplier) will support it. But the big question is whether VueKey will gain further adoption from CE retailers. It's likely it won't, at least not until VueKey offers them a scalable consumer footprint to go after.
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