Facing pressure from regulators, the cable TV industry plans to make good on a promise to standardize its technology and open the door to televisions and other gadgets that don't need cable boxes to receive video-on-demand programs and other interactive services.
An industry initiative, to be renamed "tru2way" after a decade in the works, is expected to allow electronics manufacturers to make TVs and other gear that will work regardless of cable provider. By making devices compatible, the standard also could encourage the development of new services and features that rely on two-way communication over the cable network.
Comcast Corp., the nation's largest cable provider, will roll out the platform in all its markets by the end of 2008, Chief Executive Brian Roberts said in an interview with The Associated Press ahead of a speech Tuesday at the International Consumer Electronics Show.
Time Warner Cable Inc. is even closer to completion, Comcast executives said. A spokesman for No. 3 provider Cox Communications Inc. said the company will have "widespread deployment" this year.
"Our business model has changed completely, from a closed, proprietary model to an open architecture that will work across cable companies — not just across Comcast," Roberts said. "That was a Herculean job to accomplish."
Craig Moffett, senior analyst at Sanford Bernstein, said the industry is sending a hands-off signal to the Federal Communications Commission. Last summer, FCC officials said they would soon take on the issue of two-way compatibility between consumer electronics and cable systems.
"They don't have a lot of friends at the FCC right now. The cable industry has every reason to be nervous," Moffett said. "I suspect a lot of this is trying to beat the FCC to the punch."
CableLabs, the cable industry's research and development arm, which Roberts leads, was to announce Monday that its OpenCable platform, which began development in 1997, will now be branded as "tru2way."
Cable providers and device manufacturers have long disagreed over the technical specifications for two-way communication among their devices. There are TVs and set-top boxes in the market that can receive digital programming, but they can't talk back to the network, which would allow advanced interactive services. That leaves consumers with having to rent a box from the cable company.
And even with the new standards some discord remains.
Though the cable industry has inked separate deals with electronics companies, including Panasonic, Samsung and LG, consumer electronics giant Sony isn't on board.
The FCC — where Chairman Kevin Martin supports a more open and competitive environment — is also considering a different standard put forward by a group of consumer electronics companies.
CableLabs said it has inked licensing agreements with Intel Corp. and Broadcom Corp. to develop chips to run the software. And Microsoft Corp. is expected to integrate the standard into future versions of its Windows operating system for personal computers.
Comcast foresees "tru2way" branding on TVs, set-top boxes, PCs and other devices to signal their compatibility with cable systems.
On Monday, Panasonic and Comcast plan to unveil a slew of products that will be compatible with "tru2way," including a plasma high-definition television, high-definition digital video recorders and a portable DVR.
"You'll see a number of new 'tru2way' devices, and this is just the beginning," Roberts said. "This is Day One."
The Panasonic Viera Plasma HDTV with "tru2way" will go on sale this year. Panasonic's portable DVD player and recorder, called "AnyPlay," lifts off a docking station and allows consumers to watch the programs they've recorded anywhere they like, on its 8.5-inch LCD screen. It is to go on sale in early 2009.
Other products are expected to reach retail stores as early as the end of 2008. The timeframe gives cable leverage over the competing standard proposed by consumer electronics makers, whose devices might not make it to retail until 2009 at the earliest.
Moffett said cable operators are telling the FCC that the industry can work with consumer electronics makers on two-way cable-compatible products.
"That could tip the scales in their favor," Moffett said.
Cable's consumer electronics makeover
Historically, cable has been left out of the gadget circus. But at this year's CES, Comcast's Brian Roberts is trying to boost the business's presence.
NEW YORK (Fortune) -- Comcast CEO Brian Roberts says he remembers walking around the Consumer Electronics Show five years ago with Time Warner Cable CEO Glenn Britt. He recalls seeing a big presence from his rivals in the satellite-television business. His own industry, by contrast, was nowhere to be found.
"So we met with the board of [industry research arm] CableLabs and decided to go to Japan and Korea to visit the CEOs of the major [consumer electronics] companies," Roberts told me in a conversation over the weekend. "And we asked them, 'What do we need to do to work better with your industry'?"
This week, at CES 2008 in Las Vegas, Roberts is unveiling some of the fruits of those discussions - and, in so doing, he hopes to generate some much-needed positive buzz for the cable industry. In a joint announcement Monday with electronics maker Panasonic (MC), Roberts presented a cable-ready plasma television set (i.e., no set-top box) and a portable Digital Video Recorder that lets consumers take their stored cable programs with them on the go.
Both products are powered by technology called "tru2way," which cable companies are adopting; Roberts describes it as an open platform that will allow developers and electronics companies to write applications that can be widely deployed across the entire footprint of cable companies supporting tru2way. The biggest consumer benefit of tru2way is that it can be built into television sets, eliminating the need for discreet set-top boxes - an aesthetic benefit to consumers trying to avoid clutter as they upgrade to sleek flat-panel sets.
Roberts, who also will give his first-ever CES keynote address on Tuesday (and will reveal a few more new products at that time), says of his CES appearance: "I think it is a way for us to tell our employees and our customers how excited we are about what is happening at Comcast."
He says his speech Tuesday won't be aimed at investors, but it wouldn't hurt to get Wall Street excited about the sector. Cable stocks performed miserably in 2007: Comcast (CMCSA) shares, trading at about $17, were down about 40% last year. Shares of Time Warner Cable (TWC), which is controlled by FORTUNE and CNN/Money parent Time Warner (TWX, Fortune 500), were also down 40%. Investors are concerned about fresh competition from telephone companies such as Verizon (VZ, Fortune 500) and AT&T (T, Fortune 500) now offering video services, and stepped-up pressure from DirecTV and Echostar, which boast broad high-definition lineups.
And indeed, the satellite industry has done a good job of partnering with the consumer electronics industry. In recent years, DirecTV, for example, has worked with some electronics makers and retailers to encourage consumers to switch to satellite from cable when buying a new plasma television. TV makers had found some consumers returning their sets complaining of poor picture quality; the buyers didn't realize they needed a new cable box in order to get channels in high-definition.
The cable industry's new open platform should solve some of those problems. Now a cable operator can remotely upgrade a customer's channel line-up, say, or deliver new applications, without the customer needing to acquire a new in-home device.
Roberts says he hopes 2008 marks the start of an important partnership with the likes of Panasonic, LG, Samsung and others. "Our presence at CES is a chance to tell CE companies and software applications developers that we are here, we are open and we need your innovation to help us win," he says.
Roberts, 48, talks a lot about winning these days. The competitive playing field, which once seemed stacked in cable's favor (it was first with broadband Internet access and first with the "triple play" of voice, video and data), now looks remarkably level. To beat back phone and satellite insurgents, the historically insular cable industry is going to need help. "We have to innovate, have an open architecture and interoperate between cable companies, and our customer service has got to continue to reach new levels of excellence," Roberts says. "We also have to have the most content, which we clearly do. Put together, we have a winning strategy."
