Plug-and-Play: ?A Good First Step?

BY ANTHONY CRUPI

For years they bickered like Ralph and Alice Kramden, although the arguments were never all that amusing and no one was ever threatened by the prospect of a fist-propelled moon launch. But with last month's landmark plug-and-play agreement, the National Cable and Telecommunications Association (NCTA) and the Consumer Electronics Association (CEA) seem to have kissed and made up.

Representatives on both sides of the bargaining table reached the critical accord on Dec. 20, laying down a new set of rules that should make it more convenient for consumers to access digital television. The agreement, which awaits the approval of the Federal Communications Commission (FCC), creates a plug-and-play standard between digital/HD sets and most of the nation's digital cable systems. It would allow a consumer to hook up an HDTV set directly to a digital cable system without requiring the mediation of a set-top box.

Observers of the subsequent press conference said the participants were visibly relieved that detente had been reached. ?The room was absolutely loaded with people who were in on the negotiations,? said Gary Arlen, president of Arlen Communications. ?You don't normally see people hanging around after drawn out negotiations?but I guess this was different.?

Arlen's observations were seconded by those signatories who spoke to the press that afternoon. ?These discussions were very difficult,? said Bob Perry, VP of marketing at Mitsubishi Digital Electronics America. ?They were emotionally charged. [There's] been years of baggage between these industries.?

The terms of the agreement were reached by representatives from 14 consumer electronics companies, representing the majority of HDTV sales in the United States, and seven major cable operators, including such biggies as Charter, Comcast, Cox and Time Warner Cable. The proposal now gets kicked over to the FCC, which will attempt to draft regulations based on the Memorandum of Understanding (MOU). If all goes as planned, cable-compatible HD sets could hit the market as early as 2004.

Of course, not everyone has been dancing in the aisles. Content providers, who were shaken to the core by what digital piracy hath wrought in the music industry, were guarded in their reactions to the news. Said Motion Picture Association of America (MPAA) CEO Jack Valenti in a carefully worded statement: ?Although we question the wisdom of mandatory encoding rules, we are pleased that the CE industry agrees that the FCC has jurisdiction in this area, which, contrary to opinions voiced by that sector less than two weeks ago, would certainly encompass the broadcast flag.?

While the adoption of the new spec seems to suggest that digital set-tops might become a thing of the past, vendors say they aren't worried about losing any business to plug-and-play. ?We're all very excited about this latest development,? said Scientific-Atlanta director of strategic marketing for subscriber networks David Davies. ?If anything, the deal will help to increase awareness of digital cable as a category.?

Besides, Davies contends, other newly emerging interactive services won't be affected by a plug-and-play fix. ?There will always be a need for higher-end set-tops with advanced functionality,? he said. ?And that's where our core competency lies.?

Looking further down the road, if a set-top box is desired by the consumer, say for ITV functionality, it will be attached to the HDTV with a DVI connector. If the viewer also wishes to record a digital program, he or she will also need an IEEE 1394, or FireWire, plug to connect the TV and the recorder.

Furthermore, if a legacy set-top has both analog and digital connectors, the signal must be sent through both, so that owners of current HDTVs with the older connectors will still be able to receive the signals.

The FireWire connection will also allow program providers to restrict the number of times that a program can be recorded, which may ease Hollywood's concerns a bit.

Arlen said no major decisions would be made any time soon. ?Look, the only people not involved at all in the current discussions are the people who control what goes through that pipe,? Arlen said. ?And they're going to put up a fight.?

Indeed, the MPAA said it would need time to review the fine print. ?It is important that the FCC and Congress act to provide incentives, the most important of which is protection against theft and unauthorized redistribution, to entice the highest quality programs in digital form,? Valenti said. In other words, the proposed encoding rules may not be up to snuff.

?This is a great move, a benchmark. But it's only the first step,? Arlen said. ?We're just going to have to stay tuned.?