Cable-ready DTV?

Operators, TV manufacturers move closer to standards for incorporating tuners, descrambling technology into sets

One of the bigger impediments to high-definition television may finally be crumbling. Cable operators and TV manufacturers are close to agreeing on standards that would finally make TV sets "cable-ready" for truly digital cable.

The talks are leading up to standards among cable systems that will allow consumer electronics manufacturers to incorporate cable tuners and descrambling technology in TV sets sold in retail stores. By ensuring that a digital TV set is "plug-and-play" on any cable system, an agreement would take a lot of the hassle and risk out of buying HDTV sets.

A key element, industry executives say, is that cable operators have relaxed their insistence that digital tuners not be allowed to relay high-quality signals to VCRs or other recording devices in subscribers' homes. Cable operators' research arm CableLabs also had sought to certify digital TVs the way it does cable modems.

Right now, even the most elaborate digital TV sets require a separate $250 or so (wholesale cost) set-top box to receive cable signals. Cable operators have never agreed on a single standard even for the boxes they own and lease out to subscribers. Nor have they been comfortable with consumers' actually owning the "conditional-access" equipment that tries to keep non-subscribers from receiving HBO or pay-per-view movies.

The lack of standards means that a $5,000 digital cable TV set might not work if the buyer moves from a neighborhood served by AOL Time Warner, say, to a Comcast system.

The consumer electronics industry wants standards that ensure that TV sets will work anywhere in the country as well as allowing them to grab business from dominant set-top makers Scientific-Atlanta and Motorola, which split 85% to 90% of the digital cable market. Cable operators, in turn, see delivering packages of HDTV signals as giving them a key competitive advantage over bandwidth-constrained DBS rivals.

Further, consumers' buying digital cable-ready sets don't require cable operators to tie up capital in a digital set-top.

The National Cable Television Association and Consumer Electronics Association acknowledge that talks are progressing but say that nothing has been finalized.

The FCC has ordered TV manufacturers to incorporate broadcast digital tuners in every TV set they make by 2007. The CEA—though not all its members—is challenging the order because so few homes rely on over-the-air signals, receiving broadcast stations via cable or DBS.

The FCC has not ordered cable operators to come up with standards, "but that's always a threat if we don't come to terms soon," said a senior cable executive.