Portugal becomes testbed for set-top strategies
By Paul Dempsey
Electronics Times
(04/12/01 10:13 a.m. GMT)
Some important pointers on the crucial issues of just how
much technology and how many functions a digital
set-top box should contain may soon emerge as
Portugal becomes one of the world's main testbed
markets.
The country's leading cable operator, TV Cabo, has
signed up with two suppliers to deliver boxes for its
broadband network — and those two operators
have radically different strategies.
The best known box supplier will be Pace Micro
Technology, Europe's leading supplier. Last year, it
signed with TV Cabo to supply a minimum of 55 000
boxes featuring the Microsoft TV ad-vanced interactive
platform, NagraVision conditional access and a Docsis
cable modem.
But this quarter TV Cabo will start deploying a box from
Octal TV, part of the Portuguese Nova-base technology group, that will feature the
world's first use of the latest Microsoft platform, the rare box deployment of an x86
architecture and also a potential level of functions stretching right up to the
integration of a DVD player.
The Octal-TV Cabo contract — worth an initial $25m will also use
equipment developed in conjunction with Samsung. The Korean conglomerate has
being looking to integrate more functions into a single consumer box and recently
launched the first combined VCR-DVD player.
The functions on the Octal box will include digital TV, interactive broadcasts for
pay-per-view and video-on-demand, broadband Internet access, e-mail, chat rooms,
home shopping, home banking, networked games using MMX technology and other
digital media services. E-commerce functions will be capable of using smartcard
security.
Rogério Carapuça, president of Octal, claims that his company's box is the first true
'end-to-end solution'.
"We believe that we are the first with a product that will allow an operator to take all
the digital services to market in one move," he added.
Carapuça says that Octal has adapted its all-in-one architecture so that it can be
deployed in Europe or north America and on any of the three leading digital TV
platforms: satellite, cable and terrestrial.
He accepts that this is "an expensive product" because of the range of functions it will
incorporate from the start. But Carapuça will not give an indication of the price range.
His argument is that, despite the higher charge, the Octal box will allow the operator
to extract maximum revenues from his existing customers at a higher level than from
a more restricted device.
If the Portuguese launch successfully demonstrates this, Carapuça says that Octal
hopes that it will be able to achieve economies of scale from orders in other markets.
The company is also counting heavily on its effective endorsement from a global
technology player of Microsoft's size — Octal says that, from the software and
middleware point of view, it is committed to the US giant as its sole partner.
Carapuça's company is tapping into a major concern in the cable industry where most
operators now believe that markets have been developed to such a point that lifting
average revenue per user is more important than signing up new subscribers.
But Pace says that, while it also advocates increasing levels of interactivity, the
question of how much subsidy a cable operator is willing to supply makes a simple
all-in-one approach hard to justify.
Andrew Wallace, Pace's marketing director, said: "Our approach is essentially
complementary with that of Octal. We both agree that the TV is the front-end and that
you need to raise the levels of interactivity.
"But our strategy is to optimise the system and gradually modify the existing
architecture because you are dealing with a very price- sensitive market [the platform
operators that buy the boxes].
"In time, maybe, a huge device that does everything will be it. But if you are going to
make money in this market, our success so far has been in doing that by building
what the market wants and can afford, and moving up the interactivity chain from
there."
Wallace says that Pace nevertheless remains committed to being the first set-top box
supplier to add new technologies as and when they emerged. The company is working
with Sega to use its Dreamcast games platform within boxes and has developed
digital hard disk re-corders with NDS which will be marketed through BSkyB later this
year.
Similar options could be added to the box supplied to TV Cabo, Wallace said. "Our
boxes carry an Ethernet port, so you can expand them by plugging in modules. I
think that you will see a lot of that happening — plugging in options rather
than loading everything at once."
Octal is taking a big risk. The debate in the cable industry over what applications
digital can deliver to greatly improve revenues is still raging. As with the 3G phone
market, the feeling is that a lot of possibilities will go to market trial before the
picture becomes clearer.
Similarly, as capital becomes more squeezed in telecoms, the price levels that cable
companies are prepared to pay for boxes are coming under pressure. Many
companies have directed funds towards network upgrades that would limit their
short-term ability to go for the Octal solution unless the price falls significantly.
