Having matured from nice concepts into must-have product offerings, video-on-demand and HDTV services dominated last week's NCTA show in Chicago. Rolling them out, however, still offers a challenge for cable operators. More services mean more ways to keep subscribers from heading to satellite, but more services also mean increased opportunity for 750 MHz plants to fall victim to bandwidth crunch.
So how will operators prevent that crunch? One possible way is the all-digital cable plant: A cable operator gives each subscriber (and each TV) a digital set-top box to receive the digital signals that replace analog signals. Analog services currently take up nearly 75% of the bandwidth of a 750 MHz facility, which the industry acknowledges is a tremendous waste of bandwidth. Each analog channel could be converted into six to 10 SD digital channels or two HD channels. Such a move would open up the bandwidth to provide hundreds more standard-definition channels, dozens of HD channels and plenty of headroom for other services, including all flavors of VOD.
Comcast is currently looking over its cable facilities to find a system that can serve as a test-bed for the rollout of an all-digital facility, according to Chief Technology Officer Dave Fellows. He hopes to have a two-way system selected by the end of the year so that Comcast can get a sense of how difficult it will be to complete the changeover.
"We need to flush out a number of issues," he said. "Like how many analog TVs really need digital set-top boxes and how digital ad insertion would work."
According to Comcast CEO and President Brian Roberts, moving to an all-digital facility won't require rebuilding the network but is still years away. At this point, he said it's "time to step up the R&D effort."
The all-digital plant interests other operators as well. Dallas Clement, Cox senior vice president, strategy and development, said that anything that helps better optimize bandwidth efficiency is worth a closer look. So the all-digital plant is enticing. But, he quickly added, the costs of set-top–box replacement loom as a tremendous obstacle. Cox, he noted, would have to supply roughly 16 million set-top boxes to serve analog TV sets.
And those set-top boxes need to be very inexpensive.
"There are a lot of people who think you can make a very cheap digital set-top box for around $35, although it's probably not a set-top box," said Roberts. Instead, it would be a chip embedded in the TV set.
That embed solution would work for TV sets in the future, but legacy sets would still need an external digital set-top.
In recent years, the trend in set-top boxes has been to add functionality like interactive services or electronic program guides. To reach the cheaper price point, though, all of that functionality would have to be moved to the headend or eliminated altogether.
Fellows noted that, theoretically, set-top-box functions could be reduced to a single chip, as cable modems are.
Set-top–box manufacturers are clearly interested in helping cable operators with the digital dilemma. Most have already stopped manufacturing or developing analog-only boxes, at least domestically. And, according to Jennifer Cistola, Scientific-Atlanta vice president, marketing, subscriber networks, operators no longer buy analog boxes, which further curtails manufacturer interest.
So that leaves a market full of hybrid analog/digital set-tops, some of which incorporate HD and/or digital video recording.
One factor working in cable operators' favor, say set-top–box manufacturers: Building a purely digital set-top box is much less expensive than building one that can handle analog signals. And eliminating that expense means less expensive set-tops for MSOs.
"The cost of high-end boxes will drop by as much as $80 without the analog tuner," said Sandy Barblett, Pace vice president of national accounts.
Several companies are already working on low-end one- or two-tuner solutions. Pace has developed the Media Adapter, which measures about 3 inches long and 11/2 inches wide and is missing only the silicon to become a cost-effective set-top–box replacement. Once Pace gets some orders from MSOs, Barblett said, the company will approach silicon manufacturers to help complete the box. He said a one-tuner model will cost $34.50, a two-tuner model $69, and, once the silicon is ordered, the box can hit the streets in nine months to a year.
"It doesn't handle two-way, DOCSIS or conditional access, but its advanced splitter can control both a VTR and a TV," he said. "You can't ignore the VTR."
At the show, Motorola exhibited a low-cost digital set-top box: the DCT 700, priced at less than $100 and about the size of a cable modem. Senior Product Manager Chris Seymour said it has already been ordered by a Mexican cable operator looking to defeat cable piracy.
Unlike Pace's box, the DCT 700 offers additional features most cable operators will want to make available to subscribers, Seymour said. "It's small, fully functioning and has an electronic program guide and return path for VOD and PPV functionality."
Another option that is likely to become prevalent is the use of Internet Protocol (IP) to deliver video services. Such a system, Fellows said, will be the correct answer someday although cable operators need to find out how to get from the current infrastructure to one that is IP-based.
Some companies say they'll be deploying IP-based systems that include IP set-top boxes. Arris Vice President, Broadband Marketing, Stan Brovant said an IP set-top box will be available for $50-$75 and will enable a bundle of services including IP telephony. Telephony, noted both Brovant and Cox's Clement, has proved effective in reducing churn rates.
For all the movement toward digital boxes at this year's show, it will still be two years before they have the break-in price point that cable operators are looking for, said Pioneer Vice President of Software Engineering Haig Krakirian. And there's the sheer number of set-tops to be replaced: "There are 79 million set-top boxes out there with analog capabilities, and they won't be switched out overnight."
Massive switch-out aside, there's still some debate on whether the bandwidth-constraint problem even exists. "We don't feel capacity-constrained," said Dick Parsons, CEO and chairman, AOL Time Warner.
That could, of course, change. Cable networks increasingly require more bandwidth for VOD services and HDTV. However, an all-digital facility eliminates the difficulties concerning digital must-carry because there will be plenty of bandwidth for digital signals of all sorts.
The final factor that could really make all-digital possible is the increasing effort by MSOs to get subscribers to buy the set-top box, which would place the burden of conversion more squarely on the subscriber. Additionally, it would place the cable set-top box alongside satellite systems in retail stores. That presence could help sway people considering a switch to satellite to stay with cable and buy the digital set-top box that best meets their needs, whether a box capable of simple standard-definition content or one with headroom for interactive software and services or, at the high end, HDTV and PVR functionality.
"Two years from today, we'll be as close to the all-digital plant as we are to voice-over-IP–related services today," said Clement. "We'll be knee deep in figuring an all-digital cable facility out."