If you spotted EPIX and Aol HD, congratulations. Neither of those have been previously announced – even at this show. After I spotted those I asked Jim Denney about them and he seemed a little surprised that they were on the wall too, but said that since they’re clearly visible they were fair game. He couldn’t tell me much, but did say that the EPIX deal would probably be tied to MSO-provided units as EPIX is similar to HBO Go in that your cable provider has to have a deal with EPIX to enable access. You can see the currently supported providers & devices on their site. I’ll note that Charter & Suddenlink, two MSOs distributing TiVo HW, are on the list. So I think we can guess those are the likely MSOs to receive EPIX on TiVo.

Aol HD on the other hand will be a retail play, joining Netflix, Hulu Plus, Amazon Instant Video, YouTube, et al. Aol HD is currently available on select Sony and Samsung devices, Roku, Google TV, Boxee, DivX TV, and Yahoo! Connected TV devices – and apparently coming soon to TiVo. As one of their recent press releases put it:

AOL HD features high-definition technology, lifestyle, celebrity and entertainment content updated daily from properties across the AOL Huffington Post Media Group, including Engadget, TechCrunch, Translogic, Moviefone and Huffington Post Celebrity.

Expect both of these to be on the TiVo Premiere family, and likely not on earlier models.

I also noticed that Cox is missing from the Operator Partners list, but I don’t read too much into that. TiVo said they’re still working on their VOD support, but since they haven’t launched anything yet I can understand why TiVo wouldn’t be touting them on their booth.

Though I did confirm with TiVo that the deal with Canal Digital in Europe has basically fizzled out, as I previously covered. Nothing official has been announced, and I don’t expect anything to be said – companies generally don’t announce when deals wither on the vine. Like I said before, it is a setback, but nothing earth shaking.

Here’s a gallery of a few photos I shot in and around TiVo’s booth today:

Again, if you have questions you want me to ask TiVo, or any other exhibitor at the show, let me know and I’ll see what I can do.

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.

I’ll tackle the second one first, Comcast. For this one I think people just aren’t paying attention. This was announced back in May, and ever since people have been asking when? Which doesn’t make much sense, as the announcement says when and where we’ll see it!

These statements by Comcast and TiVo relate to, among other things, the future integration, availability and promotion of Xfinity TV On Demand Service on TiVo Premiere set-top boxes in select markets with the first expected market to be San Francisco Bay Area early next year and availability in additional markets after that.

OK, so it is hidden in the fine print, but it is there. Elsewhere Comcast made statements that the first customers may see pilot deployments around the end of the year. So either way we shouldn’t expect anything until around the end of the year, and then it’ll be a limited deployment for a while I’d bet. Deploy to one area, shake things out, then expand. But as Comcast is bringing Xfinity TV On Demand to a number of platforms this isn’t an effort unique to TiVo. What’d be really interesting is if Comcast sold some kind of OTT subscription so non-Comcast customers could access Comcast OnDemand. That’d be radical.

And just in case you think Comcast might be backing out, they just mentioned this in a filing with the FCC:

We are working with TiVo on a solution to deliver Xfinity On Demand to TiVo CableCARD devices. We are aiming to start trialing the service later this year.

So be patient.

Now, what about Cox? The deal with Cox was announced way back in August, 2010 and since then both parties have been pretty much silent on the progress, if any. This has led to increasing speculation that the deal collapsed and both parties were just ignoring it. But that doesn’t appear to be the case. Thanks to a comment on InvestorVillage I was alerted to a comment posted on the DSL Reports Forums by a Cox employee in July:

As far as TiVo Premier goes, it is still an active project, but we don’t have a launch date to announce yet.

One comment from Cox in July not enough? Well on Tuesday TiVo responded to a comment on Facebook:

We are working with Cox to enable their VOD on the TiVo Premiere. As soon as we have more information on timing we will update the page!

It is certainly taking a while, but I’m not that surprised. IP-enabling OnDemand isn’t a trivial task. I wouldn’t be surprised if it turned out to be more work than Cox & TiVo expected. But I’m glad to see the work continues.

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.

Verizon had previously started allowing self-installs. With the August first deadline looming, will the other major players roll out self-install support on time? Will the rest of the MSOs wait until the last minute? Have you spotted any of them rolling out CableCARD self install support already? If so, let me know!

As a result Time Warner Cable Oceanic of Oahu and Kauai, HI and Cox in Fairfax County, VA were fined $40,000 and $20,000, respectively. I don’t think this is really going to change anything in the big picture. Cable MSOs aren’t going to back away from SDV, they’re not going to stop deploying it, let alone roll back existing deployments. Perhaps it may spur a quicker pace to Tuning Adapter deployments, but as those deployments, or plans for deployment, are already underway I suspect there won’t be any real world impact.

So the end result is maybe a little karmic payback for MSOs who rushed out SDV without consideration for the FCCs rules or their CableCARD users, and perhaps next time around they’ll give it more consideration. But even that would depend on the FCC levying fines in more territories, in my opinion. The current fines are just too small to have any real impact on the MSOs, the FCC needs to slap the MSOs for all the territories in which they deployed SDV before making Tuning Adapters available.

It does make me wonder, since Tuning Adapters don’t work with all CableCARD UDCP devices (either because they lack a USB port or the firmware to support a TA), is simply offering the TA enough to be compliant with the requirement to provide video to CableCARD devices? Personally I think the effort is there and it should be, it is up to CableCARD device makers to support the TA. Yes, it does mean some early adopters are out of luck, but with CableCARD in use in a very small number of 3rd party devices overall, and many of them capable of supporting a TA (like TiVo), it isn’t going to be a large number of users who are affected.

So, in the end, I don’t think these fines will really change anything, certainly not for end users today.

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.

- Adjusted EBITDA for the second quarter was $10.6 million compared to a loss of $(11.2) million in the year-ago quarter, exceeding guidance
- Net Income for the second quarter was $2.9 million compared to a loss of $(17.7) million in the year-ago quarter
- TiVo service on Comcast now available in Connecticut; Comcast will also continue to fund development work for the TiVo product to expand the feature set and add support for the Tru2way infrastructure
- TiVo and Entertainment Weekly join forces to connect TV viewers with their favorite shows on an automatic basis
- TiVo successfully launched in Australia by Seven Networks
- YouTube videos now available on the TiVo service; TiVo now provides access to more television and broadband content choices than any other offering in the world
- TiVo’s recent research deal with media marketing research firm TRA ties anonymous viewing behavior to product purchases in millions of homes; Significantly changing the quality of information available to marketers

TiVo is continuing to bleed subscribers, which was expected. With DirecTV continuing to push their in-house HR20/21 DVRs are upgrades for DirecTiVo users, even with additions from Comcast, Cox, and Cablevision Mexico, TiVo lost 136,000 net MSO/Broadcaster subscribers. And while TiVo added 36,000 gross TiVo-owned subscribers, they lost 78,000 gross TiVo-owned subs, for a net loss of 42,000 TiVo-owned subscribers. This is mainly due to legacy subscribers upgrading to HDTV and opting for cable or satellite DVRs. This leaves TiVo with 1.686 million TiVo-owned subscriptions and 3.623 total cumulative subscriptions.

This may sound bad, but it is also partly because TiVo has made massive cuts in their marketing efforts to focus on profitability instead of subscriber growth. For the quarter just ended their subscriber acquisition cost was only $135, a massive decrease from the $758 of a year ago, and only a slight up-tick from the $118 of last quarter. Instead of lots of marketing, subsidies, and rebates, which drive up SAC, TiVo is focusing on working with retailers and other vendors to bundle TiVo with HDTV purchases to capture those upgraders before they pick up another DVR. They’re also focusing on their partnerships with Cablevision Mexico, Comcast, Cox, and Seven Network in Australia.

And in that area things are looking good. The TiVo launch in Australia with Seven Network has been going well and TiVo is happy with it, though actual figures have not been released. And Comcast is finally ready to start a major marketing push and to announce more territories:

In regards to our mass distribution strategy, a top Comcast executive offered the following comments on the progress the TiVo on Comcast service has made to date: “We are pleased with the progress of the TiVo service and have broadened its footprint in our New England market to Connecticut. Refinements to optimize the product’s performance have been mostly completed, significantly improving the user experience. Importantly, we intend to light up a full marketing campaign around TiVo in September and, upon this occurring, we will be announcing multiple additional markets to which TiVo will be rolled out through next year. We will also continue to fund development work for the TiVo product, which will include expanding the feature set and adding support for Tru2way infrastructure.”

Rogers stated, “Additionally, the TiVo service on Cox, which is currently in trials, is on track for a launch in Cox’s New England market later this year.”

“On the international front, Seven and TiVo successfully launched the TiVo service in Australia and because of the significant consumer demand there, retailers chose to release the product early. We are also extremely pleased with the marketing shoulder Seven is putting behind this launch as they’ve prominently featured TiVo in their marketing and programming including the Olympic opening ceremonies, their top rated morning show, and a special advertising spot they developed, which includes dozens of Australian celebrities. International distribution is an increasingly important component of our business model and there continues to be tremendous interest from international distributors for the TiVo offering.”

During the Q&A session when asked if Comcast had gotten to the point where they don’t require a truck roll for the TiVo software install, Rogers answered that that issue was a dependency on non-TiVo software and that Comcast was close to deploying the solution. It sounded like that was the gating factor for Comcast to launch the marketing effort, and that also helps explain Comcast’s satisfaction despite the delays, it doesn’t sound like it was TiVo’s problem.

During the Q&A session at the end of the call, Rogers once again mentioned a tru2way TiVo box, what the user community has started calling a ‘Series4′. He didn’t offer any specifics (unsurprisingly), but his feeling is that it will take more time for the industry to establish a national tru2way playing field to make it viable to release such a product. Personally I think that they may show something, prototype perhaps, at CES in January with the release for later in 2009 as most of the cable MSOs have pledged to have tru2way in place by July, 2009. Just my speculation.

You can get more information from TiVo’s release and key metrics.

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/

As recently revealed, the new 9.4 TiVo update includes Tuning Adapter support, so TiVo users will be ready for the TAs as soon as the cable MSOs make them available. As Bright House, Cox, Time Warner, and others all implementing SDV, the TAs will be increasingly important. Pricing for customers is not yet known, except for Cox which announced plans to provide the TAs to their customers free of charge.

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.

Notice to TiVo Series 3 and TiVo HD owners: Cox, along with others in the cable industry, has worked with TiVo lnc to develop an external device called a Tuning Adapter that will allow TiVo Series 3 and TiVo HD devices using CableCARDs to access channels delivered via SDV. Availability of the Tuning Adapter is expected later this year. At that time additional information will be sent to you. The Tuning Adapter will be provided by Cox at no charge. In the interim, continued access to channels delivered via SDV is available with a Cox digital set top receiver.

I have to say that Cox’s letter is very clear overall and explains the issues around SDV clearly and without unnecessary drama, and other cable MSOs could take a lesson from this. There is no FUD, no attempt to spook customers into jumping onto a Cox STB – quite the opposite really. I think the letter is clear and concise, I wish more companies communicated in this fashion.

So, it sounds like there will be a period of time between July 1, 2008, when Cox begins using SDV, and a point later in the year when they begin offering the Tuning Adapter, where users may lose access to some of their channels, unless they get a Cox STB for the interim. Since the Tuning Adapters are scheduled to be certified by CableLabs at the end of June, hopefully the gap will be a short one. But in any case it is nice to know they’ll be offering the TA for free. Hopefully this will be across all of Cox’s systems and not limited to Phoenix.

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.

- Adjusted EBITDA for the fourth quarter was $1.0 million compared to a loss of $15.0 million in the year-ago quarter, exceeding guidance
- Fiscal year 2008 Adjusted EBITDA closes in on breakeven
- Net loss for the fourth quarter was $6.4 million compared to a loss of $19.5 million in the year ago quarter
- Fiscal year 2008 net loss significantly better than prior year
- Favorable ruling in EchoStar patent infringement case; damages and injunction upheld
- Announced today Cox tech trial underway; New England to be first market
- Comcast fully launched in New England; integrated marketing has begun
- Added Omnicom Media Group to list of major advertising agency research clients
- Added CBS to list of networks and advertisers signing on to TiVo audience research

So they far exceeded the street’s estimates. The net loss per share was $.06, while the consensus estimates were for $.11. Last year the loss was $.20 per share. For the full year of fiscal 2008 TiVo had a net loss of $31.5 million, or $.32 per share, compared to $47.8 million, or $.53 per share for fiscal 2007.

Some interesting bits. They’ve begun to recognize Product Lifetime revenue on units sold prior to November 1, 2007 over a period of 54 months instead of the 48 months they’ve used until now, and on units sold since then it is now spread over 60 months, in recognition of the boxes remaining in service longer on average.

But Roger’s statements are the most interesting to me:

“In terms of our mass distribution strategy, we continue to focus on increasing subscriptions through significant partnerships with leading MSOs in the U.S. and internationally. On that front, the TiVo service on Comcast is now operational in New England, Comcast’s largest market with almost two million subscribers. Comcast is marketing the services to these subscribers and we expect marketing of the product to increase as Comcast gains greater experience with the offering.

“In addition, we are announcing today that the TiVo service on Cox is currently in tech trials and we will be launching in Cox’s New England market. With both Comcast a reality and Cox in trial, our mass distribution strategy is making significant in-roads, effectively unleashing the power of TiVo beyond the confines of a dedicated hardware consumer electronic business.

“Along these lines, cable operators are beginning to realize the benefits of providing their customers with a feature set that goes beyond the applications that they have been offering to this point. In this regard, we are working in conjunction with CableLabs toward creating a standalone box that would be capable of providing the two way services provided by cable operators. In addition, we continue to stay ahead of the curve in this area, and have progressed on our work with the National Cable Television Association to make certain that not only will TiVo HD DVR users be able to access programming channels delivered using switched digital technology, but also that the cable industry is involved in making the TiVo installation process easier for consumers.

So two announcements in there. Cox is now officially in trials and will be deploying first in New England. That’s good news. But the big news is that TiVo just confirmed that they are developing the hybrid TiVo/OCAP box with two-way capabilities, which had been rumored earlier. And he effectively reiterated the focus on the Tuning Resolver to enable SDV support on today’s CableCARD TiVos.

I think I know why they’re doing that website survey too:“We are also in the process of re-launching TiVo.com so that we can more effectively market TiVo in the most efficient way possible.” So they’re probably gathering feedback as part of the relaunch effort.

See the full release for a lot more details.