Will Sony's Cable Deal Kill the Set Top Box?

A deal allows Sony to build cable TV set top box capabilities into TVs and other products. But subsidies may keep the traditional set top box alive.

Twelve years after Congress gave consumers the right to ditch the set top box rented from their cable service, it may finally become practical to do so. A sweeping deal with members of the National Cable & Telecommunications Association gives Sony the right to incorporate a cable TV technology called tru2way into television sets and other products. Consumer electronics devices incorporating tru2way should have the full functionality of the STB, including the pay-per-view and on-demand content that has been missing from previous deals.

Sony isn't the first company to reach such an agreement. But previous deals with Samsung and Panasonic were thought to be intended mainly for their set top box businesses. Sony does not make STBs and the deal is clearly intended to incorporate cable TV technology directly into consumer prices. Gary Shapiro, president of the Consumer Electronics Association and a long-time critic of the cable operators' foot-dragging approach to enabling third-party access to cable, called the deal a significant breakthrough.

Still, obituaries for STBs, almost all of them in the U.S. from either Motorola or Cisco Systems, provided by cable operators may be premature. Ken Wirt, vice-president for consumer marketing at Cisco, thinks there's plenty of life left in the old model, and the reason is the willingness of cable operators to supply boxes at very low cost. "Digital video recorders are subsidized by service providers," Wirt says. "The question is do people want to buy them? So far , people have voted with their wallets for the rental model."

Of course, consumers' choices in the past have been very limited. Even the best of the cable-enabled consumer electronics products, such as the TiVo HD, have suffered from significant limitations, which have helped Cisco and Motorola hang on to their effective duopoly. In theory, devices incorporating tru2way will be much more capable. However this turns out, consumers can only win.

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