Comcast takes on TiVo

The cable giant is developing a digital video recording service in partnership with TV Guide that will be available by year's end.

Jim Hu Staff Writer, CNET News.com
Jim Hu
covers home broadband services and the Net's portal giants.
Jim Hu
3 min read
Comcast, the nation's largest cable company, plans to begin providing TiVo-like video recording features directly to its cable TV subscribers by year's end.

The company will offer digital video recording (DVR) services over Motorola set-top boxes and is developing its own digital video recording software with partner TV Guide, Comcast CEO Brian Roberts said Wednesday at the Western Cable Show in Anaheim, Calif.

"We are working on Motorola's platform, and we will be rolling it out this quarter," Roberts said. Comcast will launch DVR services "big time next year," he said, adding that he expects to be able to provide the service to 90 percent of the company's subscribers by the end of 2004.

Digital video recorders let people record TV programs onto a hard drive. Customers also can control live programs by rewinding or pausing their TV programs.

The move is a blow for TiVo, which pioneered DVR technology and is increasingly facing competition from set-top box makers. The company has sought refuge in partnerships and software licensing, a strategy that won't be helped by Comcast's decision to develop competing DVR software.

Other companies have decided to partner with TiVo to offer these features to customers, including satellite TV provider DirecTV and DVD makers Toshiba and Pioneer.

Analysts said Comcast's DVR moves signal a shift in industry sentiment, which has long backed video-on-demand (VOD) technology. VOD services typically store video files in central servers and stream them to the customer.

"Major cable executives are now showing unified support of (DVR) being a new revenue stream," said Richard Doherty, director at market researcher Envisioneering Group. "That's a big change from previous sentiment."

Cable companies charge people a monthly subscription fee to use DVR systems. Many Comcast set-top boxes already have hard drives built into them, but people have to upgrade to new boxes to take advantage of the feature.

Cable executives, however, are not tempering their enthusiasm for VOD. Some are taking a more cautious approach to DVR technology, viewing it more as a test bed rather than an established business.

"The video-on-demand platform is rich and potentially can do more than (DVR) boxes," said Glenn Britt, CEO of Time Warner Cable.

Different views on DSL
Executives discussed various issues that affect the industry during a roundtable at the Western Cable Show. Topics included the growth of high-definition television, wider deployment of Internet phone calling, and sports programming rights.

However, the panelists, including Roberts, Britt, Cablevision Systems CEO Tom Rutledge, Adelphia Communications CEO Bill Schleyer, and Charter Communications CEO Carl Vogel, did not address the issue of digital subscriber line (DSL) price drops. For the past year, Baby Bell phone companies, feeling the threat of cable broadband, have introduced price cuts and heavily discounted promotions in hopes of driving subscriber growth. Instead of lowering their own prices, cable companies responded by boosting their base download speeds to levels as high as 3mbps or more.

SBC Communications, for example, has lowered its price to $26.95 a month for the first year. Verizon Communications lowered its price to $34.95 after a three-month offer for $29.95. Qwest Communications is selling DSL for $29.95 a month for the first year, and then $34.99 thereafter.

In contrast, cable broadband services cost $45 to $55 a month but have greater download speeds than basic DSL service.

Cable companies remain divided about how best to approach DSL price cuts. After the panel, one executive expressed an interest in trying to beat the Bells at their own game and offer a competitively priced, albeit slower, broadband offering.

"I do believe we need to develop share in the $25 to $40 market," Adelphia's Schleyer said in an interview after the panel. "It's a market segment we as an industry need to go after. We cannot cede anything to the competition."

Comcast, on the other hand, is considering the opposite, offering an even faster service at a higher price instead of a slower, cheaper product. Comcast's Roberts said during the panel that higher bandwidth will become available as long as there are applications to drive demand.

After the panel, Roberts said Comcast is "very comfortable with prices right now" and that it's not planning to offer any lower-tier services.

"We are not planning for any price response," Roberts said.