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Cablers Grapple With DVR, VOD

6 May, 2004 By: Gary Arlen

NEW ORLEANS — When five loquacious executives collectively shut up, you know that the moderator has asked the right question. The deafening silence came at this week's opening session of the National Cable & Telecommunications Association convention.

Moderator John Clark, president of the Society of Cable & Telecommunications Engineers, bluntly inquired during a discussion of digital video recorders (DVR) and video-on-demand (VOD), “What features should a cable DVR have, such as 30-second skip?”

Clark's panelists — all chief technology officers and corporate planning executives, not on the front lines of the advertising angst about commercial skipping — tried to bypass the issue that could stymie their companies' commercial plans. Finally, Tony Werner, SVP and CTO of Liberty Media Corp., foisted the matter into other hands, insisting that it “should be a marketplace decision.”

Werner and other panelists were willing to acknowledge that if on-demand entertainment is stored and served from the cable headend (rather than via a DVR), then the cable operators can “identify how ads are skipped or when the commercials are watched.” The ad-skipping dialog during the convention's opening hours was part of the NCTA convention's on-going intrigue about how nascent technologies — including DVRs, VOD, high definition TV (HDTV), WiFi local networking and cable telephony services — will be integrated into cable's new world. The DVR/VOD issue also surfaced on a companion session about cable's opportunities in the broadband home. As cable operators struggle to expand their VOD agendas, consumer-controlled set-top DVRs are still seen by some as competitive.

Michael Collette, chief executive officer of uCentric Systems, a Boston-area home networking software supplier, insisted that the best solution is “a marriage” of the two offerings. Collette insisted that VOD is “about choice” and DVRs are “about control.” But fellow panelist Patrick Esser, EVP of operations at Cox Communications, conceded only that cable operators can benefit from such a marriage, “especially as costs come down.”

Atop the cable operators' checklist was the idea of greater convergence of content ownership and distribution. Despite Comcast's recently abandoned courtship of Disney, (“We're moving on,” said Comcast President/CEO Brian Roberts tersely during a keynote session), Roberts and his counterparts said they expect to develop tighter relationships with studios and program producers.

The chief executives were keenly aware of the policy implications of such consolidation — especially as Washington wants to tie ownership issues to cable's hot-button topics, such as pricing, profanity and indecency.

The brightest spotlight was on the “Broadband Home,” a 7,000 square foot super-house, showcasing the triple play of video, high-speed data services and voice telephony that is a mainstay of cable's next growth spurt. Hardwared included HDTV displays in almost every room, an Internet-connected refrigerator, video-enhanced treadmills and hot-tubs, and vast home server devices.

Nonetheless, the NCTA convention was laden with mixed messages about timing and product offerings. For example, in addition to their own sizeable displays, companies such as uCentric and Digeo (another Paul Allen-backed company) offered exhibits within the sprawling Motorola booth. Their goal was to show how their on-demand systems can be blended into the newest set-top cable boxes.

“Feature creep” is already setting into these barely deployed products. Digeo spotlighted its newly unveiled Moxi module, a $79 add-on device that allows viewers to tune into the Motorola/Digeo server in another room — highlighting the value of a dual-tuner device. But not far away, Digeo was previewing its next generation home server, which can offer four simultaneous channel tuners.

Tight-fisted cable companies acknowledged that they will take their time making choices about such advanced equipment and services. Federal Communications Commission Chairman Michael Powell lauded the arrival of even newer technologies – such as unlicensed spectrum (WiFi and other local networking applications) that can generate new entertainment distribution options. But Powell, an admitted gadget fan, also alluded to the potentially limited market “of us techno-geeks

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