Cable One Inc. has selected its initial set-top box and conditional access partners as the MSO prepares to become the first US operator to deploy hi-def Digital Terminal Adapter (DTA) devices with the security already baked in, Light Reading Cable has learned.

Multiple industry sources tell Light Reading Cable that the MSO has placed a purchase order for about 25,000 HD-DTA boxes from Digital Multimedia Technology Co. Ltd. (DMT) that use integrated security from Nagravision SA .

Cable ONE will use that product combination as it looks to fulfill a special waiver it received from the Federal Communications Commission (FCC) back in May 2009 that gives the operator the green light to deploy the boxes in one system and sidestep a ban on integrated security that went into effect almost three years ago. (See Cable ONE Snares HD Set-Top Waiver .)

Cable ONE will initially use those simple, one-way "channel zappers" to support an all-digital strategy in Dyersburg, Tenn., that will help free up spectrum for a broader HDTV lineup and speedy Docsis 3.0 cable modem services.

As a condition of the limited waiver, Cable ONE has agreed to provide one of those boxes, something the MSO likes to call "HD-capable all-digital devices" (HD-ADDs), to each customer at no cost and to offer additional boxes for a monthly fee not to exceed $1.

It was not immediately known how much Cable ONE is paying for those devices, but the operator has already indicated that it will need volumes to exceed 200,000 units before it can hit a desired target of $50, and has already asked the FCC for an expanded waiver that would allow it to install HD-DTAs in markets other than Dyersburg. One source who's familiar with the budding HD-DTA market says unit prices are likely to remain in the neighborhood of $80 in "limited volume quantities." (See Cable ONE Seeks $50 HD Box.)

Officials for DMT were not immediately available for comment on Wednesday. Nagravision and Cable ONE declined to comment.

Cable ONE has yet to offer a date on which it will start to deploy HD-DTAs in the Tennessee market, but indicated in earlier filings with the FCC that it could be ready to start things up by the fourth quarter of 2010.

Nagravision and DMT beat out an array of set-top box and video security competitors for Cable ONE's Dyersburg project. An FCC document filed by Cable ONE last November identified several companies that were angling for that business, including Cisco Systems Inc. (Nasdaq: CSCO), Motorola Inc. (NYSE: MOT), Conax AS , Huawei Technologies Co. Ltd. , Irdeto Access B.V. , Beyond Broadband Technology LLC (BBT) , Latens Systems Ltd. , NDS Ltd. , EchoStar Corp. LLC (Nasdaq: SATS), and Evolution Digital LLC.

Their initial loss at Cable ONE may not matter when compared to the longer-term potential of the still infantile HD-DTA market. Although Cable ONE remains the first and only US MSO to obtain a waiver to deploy the devices, a new CableCARD ruling proposal underway at the FCC could eventually extend similar exemptions to other operators and cause the market to explode. (See FCC Inches Towards Net-Agnostic Gateways and FCC Chews on HD-DTA Exemption .)

— Jeff Baumgartner, Site Editor, Light Reading Cable