Charter Communications Inc. became the first major MSO to book a ride with Sony Corp.'s new scheme to breaking cable's traditional headend duopoly.
The St. Louis-based operator signed a licensing agreement with Sony to use the electronics giant's new Passage technology, introduced to the cable industry at the Western Show in December.
Passage would allow two or more conditional-access systems to coexist in a cable digital headend, and therefore could erode the market power of Scientific-Atlanta Inc. and Motorola Inc. without forcing MSOs to scrap their existing systems.
It also could lead to a more diverse lineup of cable set-tops and other devices, according to Charter executive vice president and chief technology officer Steve Silva.
"If we get our conditional-access freedom, we can bring in alternative CAs. That means we can more easily bring in new set-top manufacturers, new devices into the network," Silva said. "We can start to open up our networks for alternative services in a more innovative manner and quite honestly, bring competition into the marketplace."
Charter has been working with Sony on the technology for more than a year, Silva said. With the license agreement now signed, the MSO is looking to complete development and prepare for Passage's introduction this year, he said.
Passage takes digital video streams and duplicates the critical data within them, which constitutes between 3 percent and 10 percent of the total data payload.
Copies of the critical data are sent to each conditional-access system for encryption, and are then rejoined with the noncritical video signal for transmission to subscribers' digital set-tops. That does mean that a small percentage of the data is duplicated, and therefore requires more bandwidth. But so far, Silva said, testing has not produced a major bandwidth concern.
"We're very confident with the tools that Sony provides with Passage for us to manage bandwidth," he said. "Bottom line is: With the tools Passage provides we can ensure secure, quality transmissions to our customers without impacting adversely the capacity."
There are signs other cable operators are looking to book Passage, too. At a conference hosted by Salomon Smith Barney last week, Comcast Corp. CEO Brian Roberts said it could become "one of the most profound developments, if it works out."
Said Silva: "This isn't some press release. This is actually an honest attempt to bring choice into the industry and create a competitive environment that benefits the customers and the cable operator."
Also last week, Charter extended its content ties to Microsoft Corp., signing an agreement allowing the MSO to co-brand a beefed-up version of the MSN 8 Internet multimedia service for high-speed cable-modem customers.
Charter and Microsoft's MSN already co-brand the content portal for Charter Pipeline cable-modem customers, and this agreement extends the relationship.
Starting in the second quarter, Pipeline customers will receive the subscription MSN 8 content service free-of-charge for the first two months, and thereafter, they will have the option to sign up for $9.95 monthly.
The two companies will share the resulting revenue, but they are not releasing information on the exact split. Charter's chairman, Paul Allen, was a cofounder of Microsoft.
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