Forget cable set-tops at retail

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Don't expect regulators' and retailers' wishes for digital-cable set-tops to
be widely and cheaply available to come true anytime soon, cable equipment's
largest manufacturers said.

Speaking at UBS Warburg LLC's annual media conference, executives from
Motorola Broadband Communications Sector and Scientific-Atlanta Inc. said
encryption and pricing issues are likely to keep set-tops out of
consumer-electronics stores for years.

Even at the current high production volumes, digital set-tops wholesale for
$250 to $300; a retail price would be even higher.

'Somebody's got to step up to the bar and subsidize the cost of the unit,'
S-A chief technology officer Robert McIntyre said. 'Until somebody subsidizes it
and you can walk into Circuit City [Stores Inc.] and buy a $300 box for $79,
don't expect it to happen.'

He added, 'And while DirecTV [Inc.] and EchoStar [Communications Corp.]
heavily subsidize equipment to sell their DBS [direct-broadcast satellite]
services, cable companies aren't likely to take that route.'

McIntyre continued, 'Modems are open because they give you access to the
Internet.' But cable operators delivering movies and TV programs have to block
piracy.

'The fundamental difference between Motorola, Scientific-Atlanta, Pioneer
[New Media Technologies Inc.] and Pace [Micro Technology plc] set-tops is how do
we control and encrypt the product. I would argue that you don't want to open it
up to anybody else,' he said.

Cable consumers and critics are chronically annoyed at charges for set-tops
that can commonly range from $3 to $6 per month, allowable even when cable rates
were still regulated.

What regulators want is for consumers to pick up their own converters at Best
Buy Inc. the same way they can buy a VCR or, for that matter, a cable modem for
$100 or so.

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