Evolution Passes on Tru2way

Evolution Broadband LLC has suspended a strategy centered on tru2way headends and set-tops because, the company claims, the economics simply don't add up for the nation's Tier 2 and Tier 3 MSOs. (See Evolution Thinks Small .)

Colorado-based Evolution has developed a digital video system for that market that uses headends and set-tops based on the Digital Video Broadcasting (DVB) standard. But rather than coupling that with a tru2way architecture, Evolution now believes broadband-connected HD-DVRs from TiVo Inc. (Nasdaq: TIVO) can serve as the most economic alternative for independent MSOs that are seeking to launch advanced interactive platforms.

"Unless something changes dramatically, in terms of the economics and willingness of those that provide the hardware and software to accommodate the needs of a smaller system, we don’t anticipate investing much more in tru2way," Brent Smith, president of Evolution's digital division, tells Cable Digital News.

Evolution reached that decision after analyzing a tru2way strategy over the last 18 months, and even had some overseas box partners prepared to develop the boxes. "As it stands today, everything we've investigated suggests there isn't an economic solution to offer tru2way in markets below the urban centers," Smith says.

As a "conservative estimate," Smith says the headend hardware costs for tru2way run in excess of $100,000, factoring in elements such as the OCAP (Open Cable Application Platform) play out server, the common download server, the administration console, and the interactive program guide (IPG) application server. On top of that MSOs must ensure that their cable modem termination systems (CMTSs) are upgraded to support the Docsis Set-Top Gateway (DSG) for the data communications path to the tru2way box -- a mode that that smaller operators likely don't have deployed in their existing CMTSs. MSOs also have to factor in the annual software support agreements for tru2way, plus any premium costs associated with the tru2way version of an IPG.

Although $100,000 doesn't necessarily represent a massive financial hit for a cable system that serves 500,000 subscribers, "if it's serving 5,000 subs, it's huge," Smith says.

Instead, Evolution plans to use regular Internet connections to deliver widgets and other interactive apps "versus something that is purpose-built for the cable industry," he says.

Evolution expects that to come to fruition through its partnership with TiVo. That strategy will rely on TiVo broadband-capable HD DVRs to pipe in video-on-demand content "over-the-top" from Netflix and other TiVo content partners, and funnel in the guide data and other interactive applications.

Those TiVo boxes can then use a CableCARD from Motorola Inc. (NYSE: MOT), Cisco Systems Inc. (Nasdaq: CSCO), or Evolution (recently certified by CableLabs ) to authorize the cable operator's linear digital video services, but do so without the need for a tru2way middleware stack or a tru2way headend. (See TiVo Covers Its Cable Bases and CableLabs Blesses Evolution's CableCARD .)

If the cable operator already supports CableCARDs, they can deploy the TiVo option right away with virtually no incremental headend costs, Smith claims, because the box uses a regular Internet connection to download guide info. But it's not free, either. The MSO must be willing to buy the TiVo boxes and purchase lifetime subscriptions for them (Evolution's not disclosing those fees).

Comporium Communications is the first Evolution partner to use the TiVo option, but Smith expects 2010 to be "a very big year for that."

Tru2way: For the big guns only?
Evolution's decision to shelve its tru2way plans is another indication that near-term, wide adoption may be limited to the nation's largest cable operators. The six largest "incumbent" cable operators, representing 80 percent of all U.S. cable subs, are wiring up their headends for tru2way, though they collectively missed the July 1 deadline to get that done. Still, there's evidence of some tru2way application momentum about three months after CableLabs introduced "reference implementation" of the the tru2way stack. (See MSOs to Miss Tru2way Date , Revealed: The Tru2way MOU, and CableLabs: 'Hundreds' Have Downloaded Tru2way Reference Stack.)

But Evolution might not be the only company serving the Tier 2 and Tier 3 cable markets that could give tru2way a pass.

R.L. Drake LLC is going after that market with "Digital Freedom," an MPEG-4–based headend/set-top platform that uses a downloadable conditional access system from the Beyond Broadband Technology LLC (BBT) cable consortium. Although the boxes are powerful enough to support the tru2way middleware, the company won't go through the trouble and expense of incorporating tru2way into its integrated system until a customer asks for it. (See Drake Heats Up Digital Strategy and Drake Downloads Some Deals .)

"They [R.L. Drake] haven't committed to integrating [tru2way] until after they get customer feedback," a company spokesman says. "To date, customers haven't brought it up."

RCN Corp. , a competitive cable overbuilder, has already mothballed its tru2way plans as it gears up to use TiVo as its primary DVR option sometime next year. (See RCN: Tru2way Can Wait and RCN Makes TiVo Its Dominant DVR.)

But there still may be other options coming for smaller operators that want to tru2way. The Comcast Media Center (CMC) and several tech partners, including Motorola, have jointly developed a centralized system that enables small- and mid-sized MSOs to deploy Enhanced TV Binary Interchange Format (EBIF) applications without having to absorb big headend costs. They have also held that the platform, called HITS Advanced Interactive Services (AxIS) will support tru2way, as well. (See Comcast Media Center Buffs Up for EBIF , CMC Plays Host to iTV, and More MSOs Test 'HITS AxIS'.)

— Jeff Baumgartner, Site Editor, Cable Digital News

Interested in learning more on this topic? Then come to TelcoTV 2009, the telecom industry’s premier event for the exploration of a comprehensive entertainment convergence strategy, to be staged in Orlando, Fla., November 10-12. For more information, or to register, click here.

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