Adjusting for Comcast’s new numbers the top five MSOs, Cablevision, Charter Communications, Comcast Corporation, Cox Communications, and Time Warner Cable, collectively deployed 557,296 CableCARDs. Extending that to the top ten MSOs gives a small bump to 595,296, which shows how many customers are concentrated into the largest MSOs. By way of comparison, these same ten MSOs have installed more thsn 32,000,000 CableCARDs in MSO provided STBs. And that is the best evidence of just how badly CableCARD has flopped in the retail market.

At this point TiVo is effectively the only retail CableCARD vendor left! There are a handful of PC CableCARD tuner products, but the total sales are negligible. CableCARD enabled TVs are all but gone from the market. And now that Moxi is gone I think TiVo is the last retail CableCARD DVR. Personally I think this demonstrates why we need AllVid to create a truly competitive open market.

Cablevision reports 27,472 CableCARD subscribers, an increase of 8% over the previous report. But before you get too excited, the new numbers include subscribers from Optimum West, which was integrated into Cablevision during the quarter. These 27,472 subscribers account for 39,462 CableCARDs, so there are a number of multi-card households. During the reporting period they actually had 5,288 new CableCARD installs, 57% of which were self-installs. The rest opted for professional installs, which cost an average of $34.95. The good news is they average 1.0 truck rolls per install, so they get it right the first time. And they charge $2/month per card.

Charter reported a total of 31,884 CableCARDs in service. And they still average 1.5 truck rolls per professional installation, the worst of the lot. I can believe it, I’m a Charter customer. The techs I’ve worked with have all been great, but many have expressed a desire for more training on CableCARD and TiVo. I’ve heard from a number of them that they’re really not being trained, and it seems like there are a couple of ‘experts’ in the area that they always end up calling. (I’ve had to have Charter out a couple of times for CableCARD and/or Tuning Adapter issues. Invariably it ends up being a back end problem, but the phone techs give up and insist on sending truck. Then the tech ends up calling around until he finds the right person to fix the issue.) Charter also charges $2/month per card, and an average of $35.00 for professional installs.

Comcast, from their corrected 2/23/12 numbers, has 370,407 CableCARDs in customer homes. Since the last report they installed 25,789 new cards, with only 29% being self-installs. It seems like Comcast customers opt for professional installs 71% of the time, which I find surprising, though it might be explained by the pricing. While they charge an average of $26.00 if it is a separate trip, it drops to $7.15 if it is part of a larger installation. And it takes an average of 1.04 truck rolls, so odds are good they’ll get it right the first time. Comcast’s first card is generally free, and additional cards in the same device average $1.50. (It isn’t in the report, but I believe additional cards in other devices are normally $2/month.)

Cox has 52,479 CableCARDs in service, at an average cost of $1.99/month. Customers who opt for a professional install pay an average of $24.00, though it takes an average of 1.1 visits. So your more likely to get to have the chance to get to know your installer better than with Cablevision or Comcast.

TWC has 75,542 CableCARDs in use with 54,575 subscribers, so again we know there are a number of multi-card households. TWC’s cards are the most expensive, at an average of $2.37 (I’ve heard that they charge quite a bit in some areas, which would explain the elevated average). Surprisingly their install numbers are even most skewed than Comcast’s, with 83% electing professional installs, which cost an average of $28.16. Why do so many people opt for professional installation? I’d love to know the motivation there.

All in all, not much has changed since the last report. I wish the different MSOs would normalize their reporting – some report self-install vs. professional installs. Some report costs with more granularity. Subscribers vs. number of cards. It’d be nice if they’d all report the same things in the same way. I can dream.

AT&T has settled with TiVo, offering payments that will total at least $215 million, and potentially much more, in exchange for a mutual patent licensing deal. TiVo will receive $51 million up front, followed by recurring quarterly payments guaranteed through June 2018, for a total minimum payment of $215 million. In addition to these minimum payments, AT&T will pay recurring per-subscriber monthly license fees should the level of U-Verse subscribers exceed“certain levels”. Just what those levels are wasn’t revealed in the press release, but TiVo apparently expects the total payments to“significantly exceed” the minimums. In this case what’s good for AT&T is good for TiVo – the more subscribers they get, the more TiVo makes.

The Form 8-K TiVo filed with the SEC regarding this settlement reveals more of the details about the payments as well as the patents involved:

Under the Agreement, AT&T has agreed to pay TiVo a minimum amount of $215,000,000 (the “Payment to TiVo”) plus incremental monthly fees per DVR subscriber if the growth of AT&T’s subscriber base exceeds certain pre-determined levels. Based on currently available industry forecasts, TiVo expects that the total fees payable to it by AT&T under the Agreement will significantly exceed the guaranteed minimum Payment to TiVo. The first $51,000,000 of the Payment to TiVo is due on January 3, 2012 and the remaining amount is due to TiVo in equal installments 30 days after the end of each calendar quarter in the amount of $5 million for the first four calendar quarters and approximately $6.5 million in subsequent calendar quarters through the calendar quarter ending June 30, 2018. Any incremental additional per subscriber fees are due to TiVo on the same schedule.

Pursuant to the Agreement, TiVo granted AT&T a limited license under its advanced television patents, including the patents that TiVo had asserted against AT&T (U.S. Patent Nos. 6,233,389, 7,493,015 and 7,529,465), to make, have made, use, sell, offer to sell and import advanced television technology in connection with AT&T multichannel video programming services, including AT&T U-verse, subject to certain limitations and exclusions. AT&T granted TiVo a limited license under its advanced television patents, including the patents that AT&T had asserted against TiVo (U.S. Patent Nos. 5,809,492, 5,922,045, 6,118,976 and 6,983,478), to make, have made, use, sell, offer to sell and import advanced television technology in connection with TiVo products and services, including products and services provided to other multichannel video programming service providers, subject to certain limitations and exclusions.

We may learn more about the terms when TiVo files their Form 10-K after their fiscal year ends on January 31, 2012.

In addition to the settlement payments there is also the indirect benefit to TiVo in reducing their legal costs by no longer needing to pursue the suit. It also eliminates the distraction and allows their legal team to focus their efforts on Verizon. Speaking of Verizon, that’s where all eyes are now as they’re currently the sole remaining target for TiVo’s patent suits. With victories against EchoStar/DISH and now AT&T, it doesn’t seem unreasonable to expect Verizon to taking a serious look at their chances of victory and weighing it against the cost of a settlement. I fully expect TiVo to also be making a reinvigorated push to establish deals with the remaining US cable providers, such as Time Warner Cable, Cablevision, and Bright House Networks.

Taking a look at the top 10 US MVPDs (as of June 2011):

1. Comcast Corporation 22,525,000 – business relationship to allow VOD access to retail TiVo units, now in trials
2. DirecTV 19,433,000 – business relationship with licensing and new THR-22 DirecTiVo just released
3. Dish Network Corporation 14,056,000 – $500 million legal settlement and licensing
4. Time Warner Cable, Inc. 12,235,000 – no known agreement or licensing
5. Cox Communications, Inc. 4,838,000 – business relationship to allow VOD access to retail TiVo units, in development
6. Charter Communications, Inc. 4,413,000 – distributes TiVo directly to customers
7. Verizon Communications, Inc. 3,848,000 – ongoing patent lawsuit
8. AT&T, Inc. 3,407,000 – $215 million legal settlement and licensing
9. Cablevision Systems Corporation 3,284,000 – no known agreement or licensing
10. Bright House Networks LLC 2,139,000 – no known agreement or licensing

In addition, of course, TiVo is being distributed to customers of smaller cable MSOs Suddenlink (#11), RCN (#16), and Grande Communications (not in the top 25). Each victory, licensing deal, or business arrangement strengthens TiVo’s hand at the negotiating table. TWC, like Comcast, is large enough that they develop a lot of their technology and software in house. As such I don’t really expect them to adopt TiVo as their new platform, as Charter has. However, I would not be surprised to see them make a deal with TiVo to support VOD on retail TiVo units, just as Comcast and Cox have, in exchange for staying out of the legal crosshairs.

Verizon is more of a wildcard. They have a rocky track record when it comes to developing and releasing software updates for their FiOS STBs. And they have a small enough user base that outsourcing their software development to TiVo and benefiting from their economies of scale might benefit them. Their architecture is not all that different from Virgin Media in the UK and ONO in Spain. TiVo has already shown they can handle a hybrid cable/IPTV system with those networks, which is what FiOS is. To me that would be the ideal solution, as FiOS joining Team TiVo would increase development funding. And it is likely that they’d push the addition of features to match what they’ve implemented in house, which would benefit everyone. But they may also simply negotiate a licensing settlement like AT&T’s.

AT&T is pure IPTV and they’re using Microsoft software end-to-end. It was pretty much an impossibility that they’d adopt TiVo’s software for their STBs given the infrastructure they’re using. The licensing settlement is really the best result we could hope for in this case. Cablevision and Bright House could easily adopt TiVo as their next-generation STB platform. They’re smaller than Charter, who already has, and Suddenlink, also a TiVo user, is more than half as large as Bright House.

Oh, there is another reason I think TiVo will move more aggressively to establish deals with more MSOs on the back of this settlement: Google. More specifically Google’s pending acquisition of Motorola, the largest STB vendor for cable systems in the US, and Google TV. Back in August when I looked at the announcement, and specifically at the implications for TiVo, and then more recently in November, I stated that I full expect Google to bring the Google TV platform to Motorola STBs as a standard option.

More and more MSOs are looking at OTT (over-the-top) content to increase their competitiveness, which is a prime reason MSOs have turned to TiVo, and Google TV’s Android platform and apps would be a huge boon. Google has Sage TV to provide DVR technology and placeshifting, which also allows them to compete with EchoStar’s SlingLoaded offerings. They could build the streaming client into every Android phone and tablet sold, as well as Google+, that’s a very big stick – or carrot, depending on how you look at it. If Google’s acquisition of Motorola goes through, they will do this. I’m certain of it; it just makes too much sense.

But it will all take time, most likely a few years. The acquisition itself will take time. And then the work to port Google TV to Motorola HW and/or developing new HW to better support Google TV/Android needs to be done. Then they need to land MSO clients for the new HW/SW bundle, and get it deployed. It all takes time. And that time gives TiVo a window to expand their beachhead in the industry. Once an MSO has a significant deployment of TiVo HW and/or SW in the field they’re much less likely to walk away from that investment and adopt another platform.

I expect TiVo to redouble their efforts on the back of this victory. They may even have some deals in their back pocket to announce at CES this month. But for now they can celebrate one victory in an ongoing war.

That’s how much of a flop CableCARD has been at retail, less than 2% of the cards deployed are used in retail devices, like TiVo. I don’t blame the retail devices, but rather the pain involved in obtaining CableCARD (self-installs only mandated 8/8/2011) and the artificial limitations on retail CableCARD devices (no OnDemand, for example). tru2way is an even bigger flop, basically being stillborn. And this is why I don’t feel like we can rely on cable industry developed solutions, but rather we need something like a solid AllVid mandate backed by and FCC with some teeth to make sure it happens.

But I digress, let’s get back to this report and look at each of the five MSOs reporting.

Cablevision has 25,303 CableCARD subscribers with 36,692 cards deployed, an average of 1.45 per household. For this reporting period, which spans time before and after the self-install mandate, 43% or 1,395 were professional installs and 57% or 1,851 were self-installs. They charge $2/month per CableCARD. And if the customer elects for a professional installation there is a fee that averages $34.95, but the average number of truck rolls per install is just 1.0, so it seems like they get it right the first time.

Charter Communications had 31,425 CableCARDs in service as of August 31, 2011. They begin allowing self-installs on August 1, before that a professional installation was required. Interestingly Charter says their average number of truck rolls per install is 1.5, which indicates they’re customers probably have some more trouble getting it working. I’m a Charter customer and I have required multiple truck rolls in the past due to installers not having working cards on their truck, etc. Charter also charges and average of $2/month per CableCARD, and there is an average $35.00 fee for professional installs.

Comcast is the big one, with 367,064 CableCARDs in customer homes. In this reporting period they installed 38,403 CableCARDs, split almost exactly 50/50 between professional installs and self-installs. The average truck rolls per install is 1.03, so it seems like they get it right nearly every time. Comcast also has the best pricing, the first card is free and each additional card is $1.50/month. For professional installation, if it is part of a larger install it is an average of just $7.15. For a trip just to install a CableCARD they charge an average of $26.

Cox Communications has 50,791 CableCARDs in the field. Each card costs $1.99/month. For professional installations they charge an average of $24 and it takes an average of 1.1 truck rolls. So not as good as Cablevision and Comcast, but certainly a lot better than Charter.

Time Warner Cable has 74,047 CableCARDs in place with 53,503 customers. Until 8/8/2011 and the FCC mandate they required a professional installation, since they they’ve allowed self-installs. Which helps explain the 87%/13% split for the reporting period. The good news is they seem to get it right with an average of 1.03 truck rolls for professional installs, which cost an average of $26.64. CableCARDs run an average of $2.50/month.

So it seems like Charter is having the most trouble getting CableCARD working right the first time, and Cox is struggling a little, but Cablevision, Comcast, and Time Warner Cable are doing fairly well in that department.

There’s more interesting information in the full report, if you care to read it.

• Comcast: Checking their website it doesn’t look like anything has changed since last week. There are still FAQs saying that you need a professional install, but CED Magazine is reporting that they’re allowing self-installs now:
  

  “Certain markets have had limited self-install options for CableCards since about 2007,” said Comcast spokeswoman Jenni Moyer. “Beginning in early August, we’ll start rolling out a CableCard self-install program across our footprint where customers will be able to go into our sales, service or payment centers and pick up a CableCard self-install kit, go home, install it, and then call in to activate it.”

  Comcast doesn’t ship the CableCard self-install kits to customers.

• Time Warner Cable: As expected, TWC has started allowing CableCARD self-installs. They’ve even created help guides for InfiniTV, Moxi, and TiVo.
• Cox Communications: They were already allowing CableCARD self-installs before the mandate. They have an instruction sheet online.
• Charter Communications: Their website gives mixed signals. The FAQ still says professional installation, but they have a self-install page. I think they just missed updating the page:
  

  Due to the technical complexity associated with the pairing of the devices, all installations of a CableCARD MUST be completed by a Charter Technician. Self-installation of CableCARDs is NOT an option for customers and thus customers cannot pick up a CableCARD from a local office

• Verizon FiOS: As with Cox, they were already offering CableCARD self-installs. You can order your CableCARD online.
• Cablevision: They’ve also been offering CableCARD self-installs. The information is on their site.
• Bright House Networks: They allow self-installs for Road Runner broadband, which means they should be allowing CableCARD self-installs as of August 8th. But I can’t find info on self-installs on their site, and there is a page that still says they’ll be allowed soon:
  

  CableCARDs are professionally installed by Bright House Networks. The option to install a CableCARD yourself will be available in the near future.

  If anyone knows of information on their site indicating CableCARD self-installs, leave a comment.

• Suddenlink Communications: According to their CableCARD FAQ they are allowing self-installs.
• Mediacom Communications: I couldn’t find a good reference on their website, but a post on their support forum by one of their reps on Saturday indicates they are allowing users to pick up CableCARDs and do self-installs:
  

  You can pick-up or have a tech install a cable card for you for a minor fee. This would be $1.99 per month for each card.

• Insight Communications: I couldn’t find anything useful on their site. Searching their site for ‘CableCARD’ only returns four hits. It looks like they offer broadband self-installs, so they should be covered by the August 8th mandate. If you have more info, let us know in a comment.
• CableOne: Same as Insight, nothing clear from their site. It seems like they offer broadband and cable box self-installs, so they should also be covered under the August 8th mandate. Leave a comment if you have any info, thanks.
• WideOpenWest Networks: Their website still says they require a technician to install CableCARD, it is under the ‘Equipment’ section of the FAQ.
  

  Can I install a CableCARD by myself?

  No. To ensure that your installation is performed properly, a technician is required to install and activate your CableCARD. Please contact us to set up an installation appointment.

  They do seem to allow cable modem self-installs, so they should be under the mandate.

• RCN: I couldn’t find a good page on their site, but I did find a forum post on DSLReports dated July 28th, by Jason Nealis, RCN’s Sr. Director, Video Product and Video Operations:
  

  The way this will work is that a customer can receive a kit via mail or they can pick one up at a local office.

  In the Kit it will have instructions on whom to call, basically you will install the card and then go thru a IVR and have the work order closed and a hit sent to the card.

  Then you will have to call in with your pairing information and have the card paired to receive encrypted channels.

OK, I think that’s deep enough. These smaller provider’s tend to have sites that aren’t as useful when it comes to finding info, and those I’ve listed already cover the vast majority of cable customers in the US.

If you have any additional info, please leave a comment.

EDIT 8/11: Matthew Zinn, Senior Vice President of General Counsel for TiVo, today made a blog post about the new CableCARD rules which included a few useful links:

In the meantime, for additional information regarding CableCARDs and consumers’ rights visit www.fcc.gov/guides/cablecard-know-your-rights or www.fcc.gov/guides/digital-cable-compatibility-cablecards-plug-and-play.

If you have questions as to whether your cable operator is complying with the CableCARD rules, you can email the FCC at CableCARDEnf@fcc.gov or call (202) 418-1160. To file a complaint, visit www.fcc.gov/complaints.

If your cable provider isn’t following the new rules, report them to the FCC.

You can pick-up a (M-Card) CableCARD at your local Optimum Store*. Install the CableCARD in your Digital Cable Ready (DCR) HDTV, TiVo or MOXI DVR using the Cablecard Self-Installation Guide. With one call to your local customer service representative, you will be able to enjoy our video services. You can also order a CableCARD by contacting your local sales representative who will schedule a professional installation. The installation charge is $34.95.

They’ve even published a CableCARD Self-Installation Guide to help users through the process.

Thanks to Jason for the tip!

That is, of course, if the numbers are true – and they may not be. See the table below and especially the first footnote¹. Comcast’s numbers for September are estimated to be 10-15% lower than actual due to an internal error. We could be looking at an increase of more than 34,000 users instead of only 2,000!

While 34,000 would certainly be better than 2,000, it still isn’t really setting the world on fire. Maybe the M-Card is a ray of hope in those numbers – if customers who previously used two S-Cards are trading them in for a single M-Card on devices like the TiVo HD, it would result in a lower cumulative number. Still, I don’t expect that’s a huge number either.

This is not to say that the total number of CableCARDs in use is that small, not at all. Since the FCC’s ‘integration ban’ went into effect on July 1, 2007, forcing cable MSOs to begin using CableCARDs in their own STBs, those same ten MSOs have deployed over 7,800,000 CableCARDs in their STBs. So in less than fifteen months they’ve deployed more than twenty times the number of CableCARDs as have been issued for 3rd party UDCPs in the four years they’ve been available.

The integration ban was supposed to force cable MSOs to ‘eat their own dog food’ and thereby improve support for CableCARDs. The idea was that this would help foster the overall CableCARD market. Better support from MSOs would lead to more products, which would mean more 3rd party UDCPs in the field. For the most part, this hasn’t happened.

Why not? Well, I think I can sum it up in one brand name: tru2way. Starting late last year, and getting an official launch at CES in January, OCAP became tru2way and marked a push to get consumer electronics companies on board. Then starting with Samsung in May, followed by a larger push by Sony later that month, CE vendors started jumping on the tru2way bandwagon.

What does this have to do with slow CableCARD adoption? Well, these same CE vendors have held off on releasing UDCPs while they work on tru2way-enabled devices. Why invest in developing and marketing a unidirectional product when you’re going to obsolete it with a two-way product in a year? The first tru2way products are starting to trickle out, and there will probably be a bunch of them on display at CES in January. So I think the push for tru2way was a major contributor to lax CableCARD pick up. Vendors just haven’t been releasing CableCARD-enabled products so there aren’t many options for consumers, which naturally means not many cards are being deployed. Really the only major CableCARD product out there right now is TiVo. CableCARD TVs are thin on the ground. CableCARD-enabled Media Center PCs have had anemic sales. And Digeo outright canceled their Moxi CableCARD HD DVR.

CableCARD was slow out of the gate, and by the time MSOs had the infrastructure worked out vendors were already looking toward round two with tru2way and they just decided to sit round one with UDCPs out entirely. The deployment of SDV and the need to develop a Tuning Adapter, and to support it, was very likely a factor in that as well. I don’t expect to see any real pick-up in CableCARD utilization until a sufficient number of tru2way devices are available to consumers, and then I do expect to see a real uptick.

The filing also has information from several MSOs on their CableCARD pricing and install practices. To compare June to September:

¹Comcast states that their September number may by low by 10-15% due to internal reporting errors.

The count for this reporting period of CableCARDs installed in one way retail devices in active customer homes is estimated to be 10-15% lower than the actual number due to internal Comcast reporting errors that are the result of an internal Division reorganization during the reporting period. The next quarterly report will more accurately reflect the actual count.

Since Comcast has such a large installed base this could be the reason for the seemingly small total uptick. The other four combined yield an increase of 3,429. Comcast’s apparent drop of 1,383 drags it down. But if they’re short just 10% they would actually have an increase of 20,334 users. And 15% would mean an increase of 31,192! So we’d be looking at a total increase of 23,763 to 34,621 – rather more than around 2,000. And that’s just from these five MSOs.

²Comcast allows self-installs in at least some areas – 68% used truck rolls, 32% were self-installs.

³First card is free, fee for additional cards.

⁴$10.43 if install is included with other services, $25.14 if purpose visit.

⁵0.2% of Time Warner installs are self-install, which is negligible.

⁶The average is $2.26, but they report most divisions are $1.75 – which must mean the remaining divisions are rather higher to bring the average up.

Picked up from TWICE.

Press release below:

Jul 28, 2008 12:03 ET

LG Electronics, Cable Operators Reach Two-Way ‘Plug and Play’ Accord

Pro-Consumer ‘tru2way™’ Pact Clears Path for Video on Demand, Digital Video Recording and Other Interactive Services

ENGLEWOOD CLIFFS, N.J., July 28 /PRNewswire/ — LG Electronics, Inc. today announced the signing of a memorandum of understanding (MOU) with the top six U.S. cable operators, supporting the use of the “tru2way™” technology platform for delivering two-way interactive digital cable services without a set-top box.

“This pro-consumer pact means that LG tru2way HDTVs planned for 2009 and beyond will receive the newest interactive cable services, from video on demand to interactive programming guides, in virtually every media market and without a set-top box. Equally significant, it will facilitate the development of a viable, two-way retail market,” said Dr. Woo Paik, LG Electronics president and chief technology officer.

Developed by Cable Television Laboratories Inc. (CableLabs™), tru2way “plug and play” technology is backed by the nation’s six largest cable companies — Comcast, Time Warner, Cox, CableVision, Charter and Bright House Networks — which together account for an estimated 80 percent of all U.S. cable subscribers and some 105 million homes.

Underscoring the significance of today’s announcement is LG’s role as one of the fastest-growing consumer electronics brands in the United States. A long-time supporter of the CableLabs OpenCable™ initiative, LG Electronics is a leading manufacturer of digital flat-panel displays, digital HDTVs and related digital video products.

Dr. Richard R. Green, president and chief executive officer of CableLabs, said, “With the addition of LG — the latest in a series of MOUs our industry has entered into with leading consumer electronics companies — this again validates our tru2way technology, which employs the same Java-based platform used in mobile phones, interactive broadcasting and Blu-ray HD digital video recorders. Tru2way will allow cable operators, consumer electronics manufacturers, content owners and others to work together to provide creative interactive services directly to the consumer.”

Tru2way technology allows consumers to receive interactive cable services, including video-on-demand, voting and polling, games, and e-commerce in integrated retail DTVs without the need for a separate set-top box.

About LG Electronics

LG Electronics, Inc. is a global leader and technology innovator in consumer electronics, home appliances and mobile communications, employing more than 82,000 people working in 114 operations including 82 subsidiaries around the world. With 2007 global sales of $44 billion, LG comprises four business units — Digital Appliance, Mobile Communications, Digital Display and Digital Media. LG Electronics USA, Inc., based in Englewood Cliffs, N.J., is the North American subsidiary of LG Electronics, Inc. In the United States, LG Electronics sells a wide range of digital appliances, consumer electronics products and mobile phones under LG’s “Life’s Good” marketing theme. For more information, please visit http://www.lgusa.com/.

CableLabs and tru2way are trademarks of Cable Television Laboratories Inc.

Source: LG Electronics, Inc.

CONTACT: John I. Taylor of LG Electronics USA, +1-847-941-8181,
jtaylor@lge.com; or Nathan Friedman of Ogilvy Public Relations,
+1-312-397-6009, nathan.friedman@ogilvypr.com, for LG Electronics, Inc.

Web site: http://www.lgusa.com/

The MOU refers to the ‘Founders’ repeatedly – these are the cable MSOs: Comcast Cable, Time Warner Cable, Cox Communications, Bright House Networks, Charter Communications, and Cablevision. New two-way devices are referred to as Interactive Digital Cable Products (IDCP), in contrast to the one-way Unidirectional Digital Cable Products (UDCP). Under the terms of the MOU, the Founders agree to support tru2way on all of their digital cable networks by July 1, 2009 – except for Charter which has until July 1, 2010 to complete their roll-out. The MOU also codifies that the tru2way specifications will be the sole means for IDCPs to access interactive cable services.

While consumer electronics adopters must adhere to the tru2way specifications and license, innovative features that are not specified but that are consistent with the specs and license ‘are allowed and encouraged’. That seems to leave room for innovation, but it remains to be seen how narrowly ‘consistent’ is evaluated. To help ensure solid support for tru2way the cable MSOs have to eat their own dog food, as it were. After July 1, 2009 (again, July 1, 2010 for Charter) the Founders agree that at least 20% of their STBs will support tru2way. That holds until they’ve deployed at least ten million tru2way-enabled STBs. This is to ensure a sufficient install base that the Founders will have a vested interest in ensuring solid support.

Since tru2way is largely a firmware specification, and specifications can evolve, the Founders agree to support any given version of the tru2way Middleware used by an Adopter’s product for five years from the date of that version’s first certification. So, in effect, that should guarantee a minimum product life of five years. Of course, it could easily be longer as Adopter’s products could receive firmware updates, and the Founders could support a Middleware version for longer than five years. Clearly it would be up to the Adopter, the CE vendor, to provide updates to newer tru2way Middleware versions, which is only fair. And to help ensure that is possible, there is an equal access provision in the MOU. Any given tru2way Middleware revision will be available to Adopters at the same time it is available to Founders. So the MSO’s won’t have any unfair advantage in being able to bring newer features to market first.

As for guide data, which was long a bone of contention over OCAP, any Founder’s digital cable system which carriers a CBS broadcast signal (which is pretty much all of them) which contains the Gemstar-TV Guide EPG data and where that Founder has an agreement covering the Gemstar data, must not block or remove said data from the CBS signal. In English? Well, Gemstar-TV Guide has an agreement with CBS to carry their EPG data. This data is used by a number of TVs, VCRs, DVRs, DVD Recorders, etc, to provide a simple on-screen EPG. The data is carried in the VBI, the vertical blanking interval, and are not part of the video itself. This has been an issue in the past as some cable MSOs have stripped out this data from the broadcast when processing the network feed for redistribution, hence making it inaccessible to CE devices that rely on it for their EPG.

So this agreement means that the Founder agree to not block or strip the data, when it is carried by the local CBS affiliate and they can legally do so, of course. This provides CE vendors with a data source for a ‘native’ EPG, as opposed to relying on the tru2way MSO-provided EPG, or a out-of-band EPG downloaded separately, as in a TiVo. The broadcast EPG does generally lack the full level of detail found in a downloaded EPG, or even the MSOs EPG, but it has the advantage of being readily available in the received signal and gives the CE vendor the ability to process and use the data as they wish, unlike the tru2way guide which comes as-is.

While the agreement seems to treat tru2way as the primary means of navigation, Adopters are free to overlay their own ‘native’ navigation with four prerequisites: 1. It must be initiated by the user each time (such as through a remote action), 2. it must be only for navigation (no ads, etc), 3. It must be transitory (sounds like once the action is complete it should return to tru2way-mode), and 4. it must appear the same on all channels. So no special ABC navigation screen that isn’t used on NBC, etc.

There is a ‘sunset’, or exit clause for the MOU. Starting July 1, 2009, if fewer than 500,000 new retail IDCPs are connected to the Founders’ networks within any given 24 month period then the Founders are no longer bound by the MOU. Basically, if the Adopters, the CE vendors, don’t hold up their end of the bargin and produce enough IDCP devices, then the cable MSOs are no longer bound to spend their money supporting tru2way on their networks and they’re free to stop, try something else, etc. Considering the number of TVs, DVRs, etc, sold at retail in this country each year, this shouldn’t be a problem – if and only if the CE vendors step up and start tru2way-enabling a sufficient number of device models. So the ball is in their court.

Licensing for the IDCPs will be under the existing CableLabs licenses, with some amendments. Certification of devices will be through CableLabs IDCP testing. Once a vendor has had five mutually agreed upon devices certified by CableLabs, then they are eligible to self-certify future devices. This is one of the compromises in the agreement. CE vendors didn’t want the expense and hassle of going through CableLabs for each new product, while the cable industry didn’t want the potential havoc caused by bad devices being connected to their networks. So now once a vendor has proven their competence level through CableLabs certification, they can be free of that requirement.

Under the MOU CableLabs will establish a Founders Advisory Board (FAB) which will apparently serve as a kind of arbitration group when changes to the tru2way hardware specification are proposed. As the board is currently specified there are nine votes – one for each of the Founders, and one for the CE Adopters as a block, one for the IT Adopters as a block, and one for the content providers as a block. That means that, should they vote in unison, the cable MSOs would always carry a majority. And you’d actually need two MSOs to break ranks and vote with the other blocks to swing the majority. But the vote is also only advisory and non-binding, so I’m not sure what it is in aid of other than as an opinion poll for the parties involved. And, of course, the FCC still has final say in the end.

CableLabs also agrees to approve or disapprove any new digital output system or content protection system within 180 days of the proposal being submitted by an Adopter, on a ‘reasonable and nondiscriminatory basis’. This will probably come into play with technologies akin to TiVo’s TiVoGuard, which protects TiVoToGo transfers. As CE vendors look to innovate and develop whole home distribution systems, etc, there may be new technologies developed to satisfy the rights holders that their content is being protected. And if CableLabs disapproves the technology, or simply fails to act within 180 days, then the Adopter can appeal to the FCC which is expected to handle the appeal in a 90-day process. Remember that a while back the NFL and MPAA tried to block TiVoGuard and TivoToGo, but the FCC approved it.

But there’s another way to get a new technology approved. If four members of the MPAA agree that the new system provides adequate content protection, then that technology will be automatically approved by CableLabs.

If tru2way is sunset and CableLabs defines a successor to CableCARD or tru2way (such as DCAS) then Adopters who are party to the MOU may participate in the development of the successor.

The definitions have some interesting tidbits. Under the MOU, ‘Digital Cable System’ only covers systems with one or more QAM channels, operating with a capacity of 750MHz or higher and with a minimum of 5,000 basic cable subscribers.

Not a lot of information, really, but it is clearly a compromise with some give and take by both the cable MSOs and the consumer electronics vendors, which is what we needed to un-roadblock two-way cable development. It is interesting that Charter gets an extra year to complete their tru2way roll-out, compared to the other five Founder MSOs. I guess Charter must be further behind in their progress than the others. Of course, I just happen to currently reside in Charter territory. Note though that the dates are for completion of deployment, some areas already have tru2way support and many more will before the year is out.

Their press release:

Contact:
Mike Schwartz
CableLabs
303-661-9100
m.schwartz@cablelabs.com

FOR IMMEDIATE RELEASE

Cable Tru2way™ Platform Gains Endorsements from Major CE and IT Companies

ADB, Digeo, Intel, Panasonic, Samsung, and Sony sign Accord with Cable Industry

Louisville, Colorado, June 9, 2008 — Major consumer electronics (CE) and information technology (IT) companies have signed binding memorandums of understanding (MOU) on tru2way™ technology with the top six cable operators in the United States.

Companies that have signed to date now include consumer electronics manufacturers Panasonic Corporation of North America, Samsung Electronics America, and Sony Electronics. Other companies signing include set-top makers ADB and Digeo, and chip manufacturer Intel Corporation.

As previously announced, Intel plans to build a system-on-a-chip (SoC) that will support a variety of tru2way devices, including DTVs, set-top-boxes, DVRs, and other devices.

The cable operators that have announced support for the tru2way platform on their networks are Comcast, Time Warner, Cox, Cablevision, Charter and Bright House Networks, together representing over 80 percent of all cable subscribers and 105 million homes passed.

Glenn Britt, President of Time Warner Cable said, “Tru2way technology will allow the industry to continually enhance the customer experience, ensuring that the latest features and technology are available to our customers nation-wide. Time Warner Cable has already distributed nearly a million tru2way devices, and this agreement further supports the industry’s efforts.”

Dr. Richard R. Green, President and CEO of CableLabs, said: “This is a momentous achievement that again validates the tru2way technology platform for delivering interactive digital cable services to wide variety of devices. We stand ready to support the cable operators and the manufacturers in the rollout of tru2way devices for the benefit of our mutual customers,” he added.

The multi-industry agreement is embodied in a joint MOU that supports and endorses the tru2way technology platform developed by CableLabs® for delivering 2-way interactive digital cable video services. Detailed terms of the MOU have not yet been released while other potential signatories complete their review of the document.

Tru2way technology creates a national footprint for the creators of interactive services to develop products that work on cable systems in nearly every U.S. market so that consumers who purchase digital cable ready devices will be able to receive new and innovative interactive cable services now and in the future. The platform uses the same popular Java-based technology that is used in cell phones, interactive broadcasting and high-definition Blu-ray Disc players, and brings a large developer community that allows networks, content owners, cable operators, and manufacturers to develop creative interactive services that can be provided directly to cable customers.

About CableLabs

Founded in 1988 by members of the cable television industry, Cable Television Laboratories is a non-profit research and development consortium that is dedicated to pursuing new cable telecommunications technologies and to helping its cable operator members integrate those advancements into their business objectives. Cable operators from around the world are members. CableLabs maintains web sites at www.cablelabs.com; www.packetcable.com; www.cablemodem.com; www.cablenet.org; and www.opencable.com.

So it looks like OCAP/tru2way will end up the industry standard, and the DCR+ push is likely to fade away now. The full terms of the Memorandum of Understanding that covers the agreement have not yet been released, giving other potential signatories time to review it. I’ll keep an eye out for those terms once they’ve been released.

I’m just glad to see an apparent end to the stalemate. If the CE industry in general embraces tru2way then it opens the floodgates for more advanced cable products for consumers, which is a good thing.

The press release announcing the agreement is below.

FOR IMMEDIATE RELEASE

Sony Electronics and Major U.S. Cable Operators Negotiate National “Two-Way” Plug and Play Solution

Agreement Establishes Platform for Retail Devices to Receive Interactive Cable Services

WASHINGTON, DC, May 27, 2008 – Sony Electronics and major cable operators which together pass over 105 million U.S. homes have negotiated and signed an agreement that will enable consumers to purchase innovative “two-way” digital televisions and other devices that can receive interactive digital and high-definition video services without a set-top box, Sony and the National Cable & Telecommunications Association (NCTA) announced today. The terms of the agreement are embodied in a binding Memorandum of Understanding (MOU) negotiated by Sony Electronics and the six largest cable companies – Comcast, Time Warner Cable, Cox, Charter, Cablevision and Bright House Networks – which serve more than 82 percent of all U.S. cable subscribers.

Other consumer electronics companies will be beneficiaries of this new national two-way “plug-and-play” platform and have also been invited to formally join the MOU.

This negotiated industry agreement establishes the fundamentals for a competitive retail market for “two-way” digital cable-ready devices. It addresses how such products will be brought to market with interactive services like video-on-demand, digital video recording and interactive programming guides.

In addition, the agreement makes it clear that consumers will be able to enjoy a choice of differentiated two-way products at retail and through cable operators from a variety of consumer electronics and information technology manufacturers. The agreement includes safeguards to facilitate the development of a robust, two-way retail market and to ensure that cable operators can continue to develop and offer new competitive services.

Representative Rick Boucher (D-VA), a senior Member of the House Energy and Commerce Committee and one of the leading advocates in Congress for new technology and consumer freedoms said: “I congratulate Sony and the major cable operators for achieving consensus on a set of core principles that will speed the introduction of new two-way plug-and-play devices.” Representative Boucher added: “With this groundbreaking compromise, these industry-leading companies and other major cable companies will ensure that consumers will have broader access to innovative competitive cable ready navigation devices from commercial retailers and will have expanded options to enjoy cable programming, including video on demand and other interactive programming options.”

As part of the agreement, the parties will adopt: the Java-based “tru2way” solution as the national interactive “plug-and-play” standard; new streamlined technology licenses; and new ways for content providers, consumer electronics manufacturers, information technology companies and cable operators to cooperate in evolving the tru2way technology at Cable Television Laboratories (CableLabs), the cable industry’s research and development consortium.

The agreement will encourage the development and distribution of interactive and high-value digital content. Key elements of the agreement relate to the deployment of a platform for “write once, run anywhere” applications, and to the incorporation of secure digital interfaces that protect consumers’ home recording rights along with copyright owners’ rights to secure their digital content. Detailed terms of the MOU have not yet been released, while other potential signatories complete their review of the document.

“This marketplace agreement is good news for consumers,” said Edgar Tu, Sony Electronics’ Senior Vice President of TV Operations of America. “A national plug-and-play digital cable standard for interactive TV receivers, recorders and other products that is transferable and viable wherever you live is ideal for today’s mobile society.”

“This is a landmark agreement which will provide a national, open and interactive platform resulting in more choices of services and products for consumers,” said Kyle McSlarrow, NCTA President & CEO.

“We are pleased that this technical challenge has been addressed through a voluntary, private-sector solution,” said Consumer Electronics Association President and CEO Gary Shapiro. “We look forward to working with our cable colleagues to ensure Americans across the country have access to high value cable content while using the equipment of their choosing.”

###

NCTA is the principal trade association for the U.S. cable industry, representing cable operators serving more than 90 percent of the nation’s cable television households and more than 200 cable program networks. The cable industry is the nation’s largest broadband provider of high-speed Internet access after investing more than $130 billion to build a two-way interactive network with fiber optic technology. Cable companies also provide state-of-the-art digital telephone service to millions of American consumers.

The first is “Play nice with cable providers“, and he mentions the work with Comcast and Cox, and that TiVo shouldn’t compete with cable companies. But he doesn’t mention the development of the Tru2Way-enabled TiVo which could be offered to both consumers and cable MSOs and support all of the advanced services. So I think TiVo is already doing this quite nicely.

Next is “Be a software vendor” where he tells TiVo to focus on software and forget the hardware. This has come up repeatedly, and TiVo has repeatedly explained why they need the hardware. Controlling the hardware allows them to innovate and offer new features. Note that neither the DirecTiVo nor the Comcast OCAP software support most of the features available on the standalone boxes. TiVo would be a much, much more limited product if they only produced software for other vendors’ hardware. Having the standalone hardware allows TiVo to innovate and to drag the competition, kicking and screaming, forward. It provides competitive pressure.

Third is “Don’t just watch TV“, in which he extols TiVo to go beyond TV with more deals like Rhapsody and YouTube. I don’t think that’s a problem, since he’s basically telling TiVo to do something they’ve repeatedly stated will be a cornerstone of their plans.

And last is “Be social“. This one I think is worth partially quoting, because I have said TiVo should do the same things:

Be social. With nearly four million very engaged subscribers, TiVo has one of the most active social networks around. The company already lets users make recommendations and share videos. TiVo should evolve as a platform for members to talk about programs, create their own content, and share media.

Yes, please! I started suggesting similar things a few years ago. Let friends setup TiVo-based social networks to share recordings. And if that’s too daring to start, how about letting us share Suggestions – let me Suggest that my friend’s TiVo record a specific show. “Hey, check this out.” Setup discussion boards where users can share ratings and discuss shows. Let us upload the Thumb Ratings from our TiVos and match us with others who have similar tastes. There is really so much TiVo could do to foster community involvement that it is overwhelming – but right now they aren’t really doing anything. And that’s really frustrating.

Oh, and in case Dan reads this:

I do have an ulterior motive for writing this column. Right now, using a TiVo box—assuming I can get CableCard to work—means losing about half of my high-definition channels. That isn’t a trade-off I am willing to make. If TiVo could make nice with Cablevision, I could have my high-definition Dwell and watch it, too.

I presume that’s due to Switched Digital Video (SDV). Two words: Tuning Resolver. The solution is already in the works.