Trade organizations representing the two sides sent letters this week to the Federal Communications Commission stating that they will try to reach agreement on a number of outstanding technical issues by October 31, so that cable-ready DTVs and compatible digital cable TV set-tops will be on the market by the second half of 2000.
A vastly simplified TV connection, and control of a potentially huge convergence market, is at stake.
DTV sets now available can't directly receive digital signals from the cable TV set-top converter boxes now found in 65 percent of U.S. homes. Consumers have to hook up antennas to their TVs to get high-definition DTV signals from broadcasters in their original, digital form.
What the politely worded letters sent this week reveal is a significant struggle for the control over how convergence will play out in the family room. The issue of copy-protecting content as it passes from a cable set top to a DTV is still an issue, as is the matter of integrating cable system technologies into DTV sets so a separate TV set-top isn't needed.
Even something as seemingly simple as passing data from a TV set-top to the actual DTV set takes on a measure of importance many times the size of the zeroes and ones that make up a signal, because they all relate to deciding who will benefit most from the transition to a digital era.
It's all about the portal
Digital television promises to bring programs with movie-theater-like quality into homes. But many broadcasters will also use the digital broadcasting era to send as many as four programs in the same place where a consumer dialed in one channel before.
With the proliferation of content, the issue of finding what one wants to view becomes more complicated; thus, electronic program guides (EPGs) will be the equivalent of Web browsers for digital TV. As such, they also represent a significant piece of screen real estate to control, especially as cable companies start to use these guides to offer viewers the ability to buy merchandise related to ads or shows they've seen. That's something that participants in the commoditized TV market want to take part in by building cable-ready TV sets that bypass the cable set-top box.
"There's a frenzy about portals on the Internet, but the average person spends about an hour online. The average consumer spends seven hours a day watching TV, and TV is in 99 percent of U.S. homes," said Joshua Bernoff, principal television analyst with Forrester Research
"If you imagine that [with DTV] you can have the equivalent of a portal experience, that has the potential to be 10 times the value of an Internet portal," he thinks.
What's more, the TV and TV set-top will likely be connected to a growing array of digital devices such as digital VCRs, DVD players, handheld computers, digital cameras and camcorders, and even PCs. TV manufacturers are focused right now on controlling the TV viewing experience, but they have a chance to play host to convergence in the home, too, say some in the high-tech industry.
"TV can be king, but if they broaden their perspective, they can be king of a whole system of devices in the home," said Mark Bridgwater, vice president of marketing for Digital Harmony. "They can use that position (as intermediary between consumer and system) to control everything." Digital Harmony is an independent company hoping to become a Dolby Labs of sorts by charging fees for ensuring all kinds of digital devices actually work together, testing them, and licensing its logo to companies which pass muster.
The battle lines
The question of who benefits from the revenue potential of digital TV ultimately relates to who has control over technology standards.
The question of which device is controlling the TV experience--the TV or the cable set-top--is a subtle point, said Forrester's Bernoff. "A lot of these technical standards issues are about trying to figure out whose going to be in charge of experience," he said. TV manufacturers, in particular, are motivated to take control because "right now, the TV business stinks. There's no profit."
"The TV industry looks at digital television and sees they can sell TVs that have some margins and [generate] ongoing revenue streams. But they can't achieve that without help of people in distribution--the cable companies," said Bernoff.
Take one example: The Consumer Electronics Manufacturers Association said in its letter to the FCC that it wants to make sure that cable systems pass on data from their TV set-tops to a cable-ready DTV. This data can either be in the form of enhanced TV content that, for instance, links to a Web page, or data used to tell the EPG what shows are on at what times. So far, there is no standard way for a TV set to recognize this data.
Also, future cable set-tops due out next year will have removable security modules similar to a PC Card one can plug into a notebook computer. TV makers want users to plug these modules in to a TV set so that they can receive pay-per-view programming and premium services such as HBO. That also circumvents the control that the cable operators such as AT&T's cable division has over the EPG.
The National Cable Television Association said in its letter that CableLabs will develop an "incubator" for interoperability testing and has invited manufacturers to "work with the cable industry in a laboratory environment" to address technical issues, although apparently the ability to set standards may be out of manufacturer's reach for now.
Even once standards are reached, moving from a list of specifications to devices that work is still a long process.
There is an awful lot of posturing, said Richard Doherty, president of Envisioneering Group consultancy, but progress towards manufacturable systems hasn't occurred as fast as every party would like it to, he noted.
CEMA said it wants to have "build-to" standards ready by the end of the year in order to have cable-ready products available by the end of 2000.