Analysis: Is IPTV finally the key to convergence?

A world of choice and opportunity in televised media was offered up last week at CES, with the Internet enabling new channels and greater viewer choices. Of course, that world won't get here on its own.

If you ask ordinary Americans what bothers them most about the ongoing DTV transition, it's the notion that there doesn't seem to be a clear resolution to the problem of attaching another old-style dongle-like device to their televisions. It's not so much that older analog TVs have to be retrofitted; that much they can handle. It's that the cable, satellite, and now the phone/fiberoptic companies as well are all compelling or forcing customers to attach an even bigger set-top box (STB) to their existing displays, even if those displays are brand-new 1080p HDTV receivers.

Convergence shouldn't look like this. As current service subscribers are already keenly aware, cable and other content providers typically outfit their customers with STBs that they must lease, and that are then connected to the display via HDMI or composite cables -- one way to keep the cable companies and content providers in control of the content stream.

Last week at CES, the CE manufacturers appeared to understand that fact. Already, their HDTVs have been "digital cable ready," or essentially ready to tune the signals from digital boxes that come in from coaxial input lines. This year, every major HDTV maker had some plan to integrate IPTV functionality as well -- some way to integrate a different, alternative realm of content being fed from the Internet, directly into exclusive channels, bypassing the STB.

And many companies -- more than anticipated -- announced deals with Yahoo to integrate interactive Widgets into all programming, which would let some IPTV content literally overlay feeds coming in from CATV and elsewhere. That could give customers a "value-added" incentive to duck the STB altogether.

In 2008, it was Comcast that had the leading announcement on content for HDTVs; this year, the CE makers and Yahoo took the lead. But cable isn't giving up without a fight.

"Television vendors can integrate all the fancy hardware they want directly into their offerings, but it's all ultimately for naught unless said hardware can work directly with underlying services," as frequent Betanews contributor and AR Communications Senior Vice President Carmi Levy told us. "As we're already seeing, it's a market the carriers won't willingly cede, for closed networks and tight control over set-top boxes have long been their basis for locking technophobic consumer in over the long-term. So for now, the carriers often have final say over whether or not a consumer needs a set top box."

We've heard the "three screens" metaphor now until we're blue in the face: this notion that people's lives are essentially played out as one-person audiences before the TV screen, the PC screen, and the phone screen, and eventually people will move effortlessly between them the same way folks today switch between CSI on one channel and CSI on all the others. We heard it last week once again from Microsoft, which still wants to keep its toe in the door with its Mediaroom software for STBs, a non-Windows-branded service that would also bring in IPTV, but that would integrate it into services that CATV providers could offer.

Under current US regulations -- or the lack of them -- CATV and satellite providers are free to dictate their own terms of service; and if that means customers must rent their STBs, it's perceived as the role of government to stand clear of the way of private enterprise. But as long as "live and let live" is the law of the land, then there may be nothing stopping the technology providers from doing an "end-around."

"It may be a short-lived victory for the STB-loving cable and satellite companies, though," remarked Levy, "as IP-based distribution -- as evidenced by players like Vizio, Yahoo and Intel -- will ultimately bypass conventional television distribution models entirely. Consumers would jump for joy at the prospect of a standards-friendly, IP-capable television that gets all its content from the Internet and is easily controllable through a straightforward, mother-in-law-friendly UI. The prospect of ditching conventional cable and satellite subscriptions for good is almost too good to be true for most of them."

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