An Early Independence Day

(page 2 of 2)

But cable operators are still doing what they can to discourage a third-party market. The biggest issue is that only products supplied by the operators will be able to get the full range of services, including on-demand and pay-per-view programming. In most places, that limits your choice to a standard set-top box, with or without a video recorder, although Time Warner Cable customers in New York and Milwaukee may be able to get a CableCARD-ready Samsung TV.

A Boon for Consumers

The FCC is pushing CableLabs, the industry's research and development arm, to certify the "two-way" systems needed for on-demand and other services. Microsoft (MSFT) and CableLabs, for example, are working together to provide two-way services for Media Center PCs. CableLabs says this will be available "somewhere in the future," while a Microsoft executive refuses to speculate on the timing.

There are enormous potential benefits for consumers from a competitive retail market in set-top boxes. I currently have a Motorola set-top box from Comcast with digital video recording capabilities, a separate DVD player, and an Apple TV. The Motorola box is dreadful, a condition Motorola blames on poor choices of software by Comcast. Changing channels with the remote is an adventure. Sometimes the box will just sit there for a minute or so, then execute a flurry of frustrated button presses all at once. It seems to be incapable of playing back a recorded high-definition program without part of the image sporadically breaking up into blocks of pixels.

An alternative system, on loan from Microsoft, uses a Dell (DELL) XPS desktop PC and an ATI digital cable tuner with CableCARD, It does everything the Motorola box and DVD player do, adds most of what Apple TV provides, and gives access to a variety of Internet TV programming. The downside is that it would cost more than $2,500 and it still can't get on-demand or pay-per-view programming. The development of mass-market retail products will enable the development of products with all this functionality at much lower prices, and certification of two-way CableCARD systems will take care of the rest.

This will happen, but I can't say when. The CEA's Oxman says manufacturers have been "burned" by "lack of support from cable companies" and need some certainty that a market will be there before they are prepared to jump in. Samsung says it expects to have a significant presence in the CableCARD market by late 2008 or 2009. So independence is here, but we may have to wait a while to enjoy its fruits.

Wildstrom is Technology & You columnist for BusinessWeek. You can contact him at techandyou@businessweek.com.