In a filing yesterday with the FCC on the current status on CableCARD deployments the NCTA revealed that there have been a total of over 374,000 CableCARDs deployed for use in Unidirectional Digital Cable Products (UDCPs), such as the TiVo HD, by the ten largest cable MSOs, which cover roughly 90% of US cable subscribers. That may sound like a lot, but in their last filing 90 days ago in June, they reported over 372,000 CableCARDs for the same ten MSOs and 90% subscriber base. That implies that only 2,000 CableCARDs have been deployed to UDCPs in the past three months by the top 10 cable MSOs - combined. That’s nothing. It would also make me wonder a bit about the sales of the TiVo HD, since I’d expect nearly all of those to have at least one M-Card CableCARD.

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.

Recently ZDNet’s Ed Burnette lost a TiVo in a lightning storm. When that happened he decided to give Time Warner’s Scientific Atlanta Explorer 8340HDC DVR a try rather than having his old TiVo, which had lifetime but was not HD, repaired. Ed thought he’d try this because, as he puts it:

The Time Warner DVR box model was free, and the service cost $7.95/month. Also I was excited at the possibility of finally getting high definition content on my Sony HDTV. I asked some friends who used it and they seemed happy with it.

But the reality of the situation was not so rosy:

I can sum up my experiences with the Time Warner DVR in one word: Argh!

Ed enumerates the myriad of issues he experienced with the cable DVR in his article at ZDNet. From the terrible button-farm remote with unintuitive controls, to the lack of a priority list for the DVR’s version of Season Passes, to odd quirks during normal use (like the screen blacking when you pause playback and having trouble resuming playback), and more. And it sounds like his family agreed:

After two weeks of this I decided enough was enough. The family all agreed. We wanted TiVo!

Ed considered paying the $150 repair fee, which would really see him upgraded to a Series2DT with his lifetime transferred. But he’d had a taste of HD and native digital cable support, so he instead opted for the TiVo HD. After ordering his new TiVo HD, but before it shipped, TiVo announced the TiVo HD XL.

Knowing a good thing when he sees it, Ed canceled the TiVo HD and ordered a TiVo HD XL.

I think TiVo should send a nice thank you gift to Time Warner and Cisco/Scientific Atlanta for providing such a crappy DVR. The bad experience helped turn a potential lost customer with a dead TiVo into a high-end customer with the latest and greatest TiVo. Cisco’s bad DVR was good for TiVo.

I posted this morning about LG Electronics signing the cable MOU on tru2way. Well, it looks like Funai Electric has also signed it. You may not be familiar with the Funai name, but Funai markets their products under the Philips, Magnavox, Sylvania, and Emerson brand names and also provides ’store brand’ units such as Insignia for Best Buy and Pye for Circuit City.

Picked up from TWICE.

Originally announced as an agreement between Sony and the cable industry, and then signed by additional CE vendors, the tru2way MOU has now been signed by LG Electronics. They’re planning to release tru2way-enabled HDTVs starting in 2009.

Press release below:
Read the rest of this entry »

The Motorola MTR700 and the Cisco STA1520, which we knew were slated for Wave 60 certification testing at the end of June, have both passed, as reported by Multichannel News. With both major vendors’ Tuning Adapters certified, cable MSOs should be able to soon begin offering them to customers soon to support Switched Digital Video (SDV). This is a little bit behind schedule, the Tuning Resolver (as the Tuning Adapter was then known) was expected in 2Q08. But even coming in a few months late it has been an impressively quick development cycle for the cable industry. It is known that Motorola started working on their unit last July, and they were revealed to the public last August. So it has been just about a year from the start of work to certification, which is really not a lot of time to develop, test, and certify a new product.

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 TV Barn blog has posted a letter Time Warner Cable sent out to customers in Kansas City, MO. It announces that they intend to begin migrating “lesser-viewed channels” to SDV beginning August 20, 2008. They’ve done a fairly decent job providing information and being non-alarmist, it looks like they’ve cribbed from a recent letter sent out by Cox. The TWC letter reads, in part:

The current generation of CableCARD-compatible devices sold at retail are only capable of accessing our one-way services. They were not designed to be compatible with SDV, which is a two-way service. As a result, once the channels listed above are migrated to SDV, they no longer will be available to UDCPs. However, Time Warner Cable has worked with the rest of the cable industry and TiVo Inc. to develop an external device called a Tuning Adapter that will allow certain UDCPs, including TiVo Series 3 and TiVo HD digital video recorders, to access channels delivered using SDV.

We expect to be able to offer Tuning Adapters to customers with compatible UDCPs later this year. At that time we will provide you with additional information on availability and device compatibility. It is currently contemplated that the Tuning Adapter will be provided at no additional charge. Until the Tuning Adapter becomes available, however, a Time Warner Cable digital cable set-top box will be required to view channels migrated to SDV – even if you own a Tuning Adapter-compatible UDCP. In addition, certain non-TiVo UDCP models may not work with the Tuning Adapter.

Since The Tuning Adapter is expected to be available starting in July, perhaps they’ll have them available before the August 20th SDV migration. Though one has to wonder, with the Tuning Adapter planned to be available soon, why not just wait to perform the SDV migration until they have them available? Why risk inconveniencing and possibly alienating customers? Corporations move in mysterious ways.

Expect to see more and more of these letters over he coming months as more cable MSOs turn to SDV to add capacity for the growing volume of HD content, as well as additional channels.