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TCI CEO foresees new set-top box

Today at the cable industry's Western Show, CEO and chairman John Malone said the industry is working on digital "set-top boxes" that will become more computerlike and feature-rich.

ANAHEIM, California--Today at the cable industry's Western Show, TCI (TCOMA) chairman and CEO John Malone said the industry is working on next-generation digital "set-top boxes" that will become more computerlike and feature-rich, although Malone also maintained they won't serve as a replacement for PCs.

"The set-top box can be the much-heralded NC," said Malone in at a luncheon for cable industry executives. "This is WebTV squared or the NC cubed?These devices can offer PC-like functionality to a whole new demographic," he exclaimed.

Malone was referring to the low-cost, low-maintenance Network Computer, or NC, that Oracle CEO Larry Ellison has been hawking. Like cable TV converter boxes access broadcast programming, the NC relies on information from a central computer.

At a trade show once dominated by deals for distributing new TV programs, a new generation of high-tech hardware is generating tremendous interest from Malone, the cable industry, and the computer industry as well. The interest has been sparked in part by an initiative called the OpenCable project. The project is headed by the CableLabs, a research and development consortium of cable television system operators.

The initiative is an attempt to develop a set of hardware and software standards for digital set-top boxes that can allow for use of a variety of processors or operating systems. These devices would replace the converter boxes on top of television sets that now merely unscramble TV signals.

Malone said he envisions a variety of digital set-top box designs that offer different levels of performance and range in cost from $200 on up. In essence, the various models would start off with performance and features ranging from the "Chevy" model, he said, with a processor capable of 50 MIPS (millions of instructions per second) and the ability to offer email and basic Internet browsing. The "Cadillac" model might come with a processor capable of 200 MIPS and the ability to offer Internet telephony, voice services, and video on demand.

Cable companies, meanwhile, could offer a host of new services. "We can offer high- and slow-speed bidirectional Internet service," Malone said. "We can offer Internet services where someone can both watch [TV] and browse at the same time, or supply the PC in the home with a high-speed connection." Best of all for cable companies, they can charge varying prices depending on the services ordered.

The only way the industry will adopt devices affordable for deployment, however, is if it moves past the proprietary cable boxes used in the past.

"This could change the dynamics of our industry," Malone said, but first the industry needs to figure out how to mass produce these devices at low cost. OpenCable is the key, he said, because it mandates that all of the new set-top boxes will be interoperable. Eventually, consumers will buy them from retail outlets and would be able to use the devices wherever they reside, but Malone said that retail availability is at least two years down the road.

The end result of the OpenCable initiative for the cable industry is a major role in how the computer industry moves its technology into homes.

Microsoft (MSFT), Intel (INTC), Cisco (CSCO) , Sun Microsystems (SUNW), and Oracle affiliate NCI are all angling to have their technologies included in digital set-top boxes

Yet at the same time the set-top boxes are becoming PC-like and require technology developed in Silicon Valley, Malone and other top executives in the cable industry remain adamant that Microsoft and Intel's dominance in the desktop PC world won't be replicated in their industry.