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NTL Will Activate Its Cable-Box Modems

As one domestic MSO plots interactive-television plans for millions of legacy, thin-client set-tops, another operator across the pond will plow full steam ahead with a thicker box that includes an embedded cable modem.

U.K.-based MSO NTL Inc. said it plans to eventually offer high-speed Internet service via about 500,000 deployed Pace Micro Technology plc set-top boxes that feature on-board Data Over Cable Service Interface Specification-based cable-modems and Liberate Technologies' high-end TV Navigator Standard software.

Instead of merely using the modem for ITV applications embedded in the box, NTL customers will be able to link those set-tops to their PCs to surf the Web, download files and even stream videos. That service will essentially augment the stand-alone cable-modem service that NTL already offers to about 27,000 customers.

Meanwhile, U.S.-based Comcast Corp. will attempt to squeeze the most out of millions of Motorola Broadband Communications Sector DCT-2000 digital boxes already in its customers' homes, by integrating Liberate Technology's lower-end TV Navigator Compact software platform with an existing electronic-program guide from Gemstar-TV Guide International Inc.

Comcast's strategy closely mirrors that of AT&T Broadband, which is retreating from its originally aggressive ITV plans for the DCT-5000 and opting to relay applications to about 3 million deployed DCT-2000s and mid-range boxes that have yet to be built.

BROADBAND MANCHESTER

NTL is expected to go live today (July 2) with its set-top based broadband service for 24.99 pounds per month (about $35.20) to its DigitalPlus customers in Manchester. Customers who bundle the broadband service with NTL's video and telephony service will pay about 39.98 pounds per month (about $56.31).

The new service "is a very simple step to increase our broadband reach," an NTL spokeswoman said.

NTL said more than 8,000 subscribers there have pre-registered for the service, which will provide download speeds as high as 512 kilobits per second.

The MSO will also will give an installation-pricing break to customers who go with the $24.64 self-installation option. An NTL installation will run those subscribers about $140.84.

NTL, which is expected to have more than 1.25 million digital subscribers by the end of 2001, said it will also roll out the set-top broadband service in Leeds and London later this year, but wasn't more specific. A company spokeswoman wouldn't say when and if the advanced service would be deployed to NTL's other systems in Ireland, France, Switzerland, Germany and Sweden.

The spokeswoman noted that NTL's digital-box deployments are not exclusive to Pace. "We might use others in the future," she said.

NTL boasted that the Manchester launch marks the world's first broadband service via a digital set-top box.

While the definition of that claim could be considered tricky, The Carmel Group analyst Jim Stroud agreed with NTL's positioning.

"If you're talking about high-speed, one-way, you could argue that digital cable services are delivered at high-speed," he said. "If you're looking at broadband Internet services over a set-top where you can actually surf the 'Net at high-speed using a set-top box, then [NTL's deployment in Manchester] may indeed be the first."

Although PC-penetration rates in the U.K. aren't quite as high as they are in the U.S., NTL's aggressive stance on ITV and broadband set-top connections reflects a culture that has grown up with TV-based interactivity, Stroud said. He noted that viewers there have been using Teletext since the early 1970s.

Teletext delivers news, sports scores, stock quotes and entertainment listings by decoding data embedded in the TV signal's vertical blanking interval.

Mounting competition from DBS player British Sky Broadcasting Group plc and its interactive "Open" service also played a likely role in NTL's assertive moves involving ITV and set-top centric broadband services, Stroud said.

SKINNY ON COMCAST

Meanwhile, back in the U.S., Comcast is thinking thin — at least for now.

Those thoughts started with the integration of Liberate's thin-client Compact software with TV Guide Interactive and video-on-demand applications. Insight Communications Co. has already integrated Liberate's Compact platform with a portion of its deployed DCT-2000s.

Comcast said that strategy will give it a platform from which to migrate to the more advanced, standards-based OpenCable Application Platform (OCAP), which is being developed by Cable Television Laboratories Inc. and software authors such as Liberate, Microsoft Corp., Sun Microsystems, PowerTV Inc., OpenTV Corp. and Canal Plus U.S. Technologies.

Both Comcast and Liberate would not give specifics when asked whether the integration agreement is essentially a stepping stone to a mass deployment of Liberate's Compact software on legacy DCT-2000 boxes.

But Comcast — which reported 1.56 million digital subscribers as of March 31 and has had discussions with Motorola about an interim, beefed-up DCT-2000-class box — plans to at least try Liberate's thin-client platform in consumer homes by the end of this year, an MSO spokeswoman said.

"It's not a full-scale deployment of Liberate," she said, adding that Liberate's platform will be the first that Comcast will use to run multiple applications on the DCT-2000.

"This is a precursor to us getting a deployment agreement with Comcast sometime in the future," added Liberate vice president of marketing Charlie Tritschler.

Comcast's initial Liberate trials will likely feature an application "variety pack" from Liberate partner MetaTV, Tritschler said. Comcast also is testing Liberate's thicker software stack on DCT-5000s, but in a more limited laboratory setting.

Still missing in Comcast's set-top box puzzle is Liberate competitor Microsoft Corp., which in 1997 invested $1 billion in the MSO to fuel construction of its broadband infrastructure. That investment predated the Microsoft TV platform.

Microsoft TV director of marketing Ed Graczyk said his company does not have any deployment deals with Comcast.

"We're talking to all of the big [MSOs]," he said. "Comcast is a company we know pretty well."

Comcast vice president of digital television Mark Hess confirmed in an interview last month that the MSO has not brought the Microsoft TV platform into the lab. "We've seen demos, but we haven't taken that step yet," he said.

Though Microsoft TV's thin-client software has mostly focused on the international cable market, Graczyk said ITV talk in the U.S. involving the DCT-2000 is starting to heat up, and could open a window of opportunity for the company's low-end set-top software.

Microsoft's thin-client products are Microsoft TV Basic Digital, a host-based middleware application, and the Microsoft TV Access Channel Server, a headend-based approach that's the result of the software giant's acquisition of Peach Networks Inc.

Although Liberate appears to be racking up confidence among MSOs that want to launch limited ITV applications on legacy digital set-tops, time will tell if Microsoft's low-end software will present a strong enough differentiator for it to make an impact in the U.S., Allied Business Intelligence Inc. analyst Joshua Wise said.

"[Microsoft] might be down, but they're definitely not out," Wise said.