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Aiming to sell set-top boxes to the masses

Cable companies will be required to give consumers the option of buying their own set-top box. Digeo hopes consumers will bite.

Are cable TV customers willing to go to an electronics store and buy a set-top box? Digeo, an interactive TV services company, hopes so.

The company is lining up manufacturers to make and market set-top boxes built around its software and hardware designs, said CEO Mike Fidler in an interview ahead of the Consumer Electronics Show. Digeo, which merged with Moxi Digital in 2002, provided details on its plans at the show.

Currently, cable TV customers use the set-top box installed by the cable provider and pay a monthly rental fee. But later this year, federal regulations will require cable companies to give consumers the option of taking a box from their carrier or buying their own.

"The market changes pretty dramatically by July," Fidler said.

But will consumers buy a set-top box? The boxes based around Digeo's technology sport a programming guide that's easier and more intuitive than the one offered by most cable TV providers, Fidler said. The Digeo boxes can also serve as DVRs and can be used with more than one TV at a time.

The Digeo boxes, which will come out around the second half of the year, over the long-term will also cost less than renting a set-top, he added. Ideally, manufacturing partners will make their money off selling the box, though some may also charge small monthly service fees, he said.

"Our goal would be not to have a service fee," Fidler said.

History, though, has not been kind to set-top box specialists. Many start-ups and established companies have laid out plans to develop sophisticated set-top boxes that could one day rival the PC as the nerve center for a home network. Most have flopped. Liberate, formed back in the '90s at Oracle, filed for Chapter 11 bankruptcy protection in 2004. WebTV and other TV experiments at Microsoft have wooed few consumers.

Sun Microsystems Chairman Scott McNealy once described his company's purchase of set-top specialist Diba this way: "About four minutes into the acquisition we said, 'Whoops!'"

Six years ago, Moxi, founded by Steve Perlman, was one of the market's big stars. In 2001, venture investors plunked $67 million into Moxi (then called Rearden Steel). At the time, it was one of the largest first-round investments to date. The investment also came after the Internet bubble had burst.

The company then changed its named to Moxi Digital and unveiled a prototype set-top at CES in 2002.

Motorola has made and shipped set-top boxes based on the company's designs, and cable carriers like Time Warner and Charter Communications have put them in certain markets. But Digeo's footprint is still moderately sized. Through cable providers, about 400,000 units have been installed in about 100 cities in the U.S., said Fidler.