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Do the Telcos Fear tru2way?

With cable MSOs rolling out tru2way, AT&T says its 'been there done that' while Verizon feels a little left out

Raymond McConville

May 27, 2008

3 Min Read
Do the Telcos Fear tru2way?

With several cable MSOs ready to make their networks nearly 100 percent tru2way-capable by the end of this year, yet another competitive wrinkle has been thrown into the cable vs. telco battle. (See MSOs Open Up on Tru2way.) Will telcos view the technology as a competitive threat, or will they embrace the idea in their own video networks?

With tru2way, cable MSOs will deploy open standard set-top boxes capable of running on any cable network. The boxes, thanks to a common middleware platform, would also be capable of supporting third party applications. Additionally, Panasonic Corp. (NYSE: PC), Samsung Corp. , and LG Electronics Inc. (London: LGLD; Korea: 6657.KS) are among those developing tru2way TVs that could deliver interactive, digital cable applications without the actual set-top box itself. (See What Is tru2way's True Potential? , Cable Makes Big 'tru2way' Play , and CES: Roberts Declares Open Season.)

Aside from the hardware implications, the most significant impact from this technology will be truly interactive, Internet-like TV as a result of third-party application developers getting access to the common hardware/middleware platform. Cable companies would in essence be delivering IPTV-like services to their customers without building the actual expensive infrastructure to do it.

For now, the telco competition doesn’t fear the potential of tru2way. For one thing, AT&T Inc. (NYSE: T) says it’s already been delivering what tru2way promises.

“One of the drivers of tru2way technology is to enable a two-way network for cable providers, and our IPTV network is, by its very nature, already a two-way network. Another driver is to enable interactive applications that can work with set-top boxes from different manufacturers, and we have that kind of applications environment today,” AT&T said in a statement to Light Reading.

Verizon Communications Inc. (NYSE: VZ) says it has no plans to adopt a tru2way type technology, but, going a step further, contends that tru2way, because it is still a cable-only technology, won’t deliver on its promise of interactive applications that an open environment will deliver. Further, it would have liked to have seen something developed that included the telco's hybrid IP/broadcast network in the mix.

“We view it as a proprietary cable initiative that does not embrace the variety of platforms in the entertainment space including satellite, IP, and Verizon’s hybrid platform. We believe a common platform should be defined to bring the benefits of interactivity to consumers regardless of the service provider they choose,” Verizon said, in a statement.

Whether the technology is a big threat to telcos or not, they shouldn’t see an immediate effect from it, given the premium price tru2way is expected to carry. Tru2way-capable TVs are estimated to cost $200 more than regular TVs, while a tru2way set-top box could also cost a couple hundred bucks itself.

“I don’t think having a set-top box sold [at] retail is a game changer, but having a TV that doesn’t need one could be as long as it isn’t priced too much higher,” says Alan Breznick, senior analyst with Heavy Reading. “Right now, it’s priced too high.”

— Raymond McConville, Reporter, Light Reading

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