Cables set-top set-to

Retailers accuse operators of dragging their feet over deadline for separating security protection and interactive-TV functions

The cable industry is squaring off again with retailers and consumer-equipment makers over digital set-top boxes.

In the latest round of acrimony, cable companies are trying to fight off a push to move up the government's 2005 deadline for banning MSOs' sale or lease of set-top boxes that integrate security protections with channel-surfing and interactive-TV functions. Retailers such as Circuit City and consumer-equipment makers, on the other hand, say the FCC should move the date to 2002, arguing that the cable industry is delaying development of open standards needed for manufacture of competing set-top boxes.

By slowing competitors, say retailers and their allies, cable companies can give themselves a crucial lead in introducing new TV services that competitors will have a hard time surmounting.

"The commission must require the cable industry to remove major barriers to the development of a commercial market for navigation devices as soon as possible," Consumer Electronics Association officials told the FCC in comments filed Nov. 15.

The cable industry, CEA said, is determined to control "virtually every aspect" of the delivery of cable services, violating the intent of the 1996 law that forced cable companies to make security-protection devices that are compatible with retail set-top boxes available by July 1 of this year.

Although the FCC has no official numbers on the availability of retail boxes, a coalition of retailers asserts that none of the devices are yet on the market. That's particularly galling, equipment makers say, because cable broadband modems are increasingly available in stores. "Cable MSOs already 'own' the market for navigation devices" but have turned to retailers to help establish a cable market for broadband data modems, wrote officials for the Consumer Electronics Retailers Coalition, a group comprising Circuit City, Best Buy, RadioShack, and Sears.

The retailers also argue that CableLabs, the cable industry's development arm, has been slow to develop standards that will be used by all cable systems for channel surfing and interactive services such as electronic program guides and are asking the FCC to set specific interoperability rules.

But cable industry officials say the complaints are unfounded and urge the FCC to eliminate the ban on integrated boxes altogether. With separate security devices on the market now, traditional cable industry suppliers such as Scientific-Atlanta are ready to build retail set-top boxes based on CableLabs' specifications, said officials from the National Cable Television Association. "To NCTA's knowledge, no retailer has placed an order or made even a conditional commitment to purchase the manufacturers' host devices," the trade group wrote.

Furthermore, cable companies are rushing to get retail products on the market so they can compete with the retail offerings of direct broadcast satellite providers. "AT&T must establish a retail presence in order to remain competitive in this hotly contested marketplace," wrote its attorneys.

By accelerating the ban, the FCC would actually slow the development of interactive services, cable companies and their allies wrote, because they will be forced to shift their attention from developing new services just to get separate but very basic channel surfing boxes out the door. Such a decision "would impede technical innovation and slow the growth of the interactive and enhanced TV market," wrote Worldgate, a developer of interactive services.