Small Cablers Plan Sub-$100 Set-Tops
LR Cable News Analysis Alan Breznick, Cable/Video Practice Leader, Light Reading 1/2/2007
Beyond Broadband Technology (BBT), a company comprising executives from Buford Media Group, WinDBreak Cable, and Tele-Media Broadband, has built a set-top that will allow smaller cable systems to inexpensively upgrade to all-digital networks. BBT executives say the box, slated to start shipping in volume by next fall, would initially sell for just under $100 and could eventually cost as little as $50 or even $35.
The new BBT set-top could emerge as a rival to pricier CableCARD-based digital set-tops that Cisco Systems Inc. (Nasdaq: CSCO) and Motorola Inc. (NYSE: MOT) are now building. Those proprietary set-tops will feature special slots for CableCARD security modules and are expected to cost at least $200 apiece.
Under rules adopted by the Federal Communications Commission (FCC) , MSOs must start deploying set-tops with separate CableCARD security modules in July. The Commission mandated the decoupling of the set-top and its security functions to spur retail competition between the cable industry's digital set-tops and the consumer electronics industry's cable-ready digital TV sets.
"They're designing it in a way that's modular," says Steve Effros, a veteran Washington cable lobbyist and consultant who's working with BBT. "These boxes could conceivably be much more efficient and much less expensive than what we've seen in the marketplace to date."
The BBT venture could also beat the cable industry's officially sanctioned Downloadable Conditional Access System (DCAS) project to the punch by a year or more. PolyCipher -- a $100 million joint venture of Comcast Corp. (Nasdaq: CMCSA, CMCSK), Time Warner Cable Inc. (NYSE: TWC), and Cox Communications Inc. -- is now developing its own downloadable security system. But that new software system is not expected to be ready until 2008 or 2009.
BBT officials say its no-frills set-top would support both analog and digital video service, enabling cable operators to reclaim their bandwidth-hogging analog spectrum. It would also support both MPEG-2 and MPEG-4 video formats, as well as high-definition TV.
Unlike Motorola and Cisco, BBT does not aspire to be a major producer of cable set-top boxes. Instead, the three small cable operators behind BBT aim to license their set-top design to cable tech vendors and other electronics makers.
"They won't be a new S-A or Motorola," Effros says. "They hope that all manufacturers will start building these puppies."
Cable operators would need to buy and install new headend equipment to make use of the new digital boxes. But BBT executives say the new headends, priced at about $10,000 per 120 channels, would cost much less than existing cable headends.
R. L. Drake Co., which makes a range of headend gear, video modulators, and other cable equipment, has signed up as the first box manufacturer. Plans call for Drake to produce prototype boxes for testing by April and, if all goes well, shift into full commercial production by the summer.
BBT has also enlisted Syndetik, a content aggregator, to provide satellite transponder support. In addition, Syndetik will encrypt and uplink more than 200 programming channels over C-Band satellites.
— Alan Breznick, Site Editor, Cable Digital News