Analyst Report: The Paradox of Thinking Outside the (Set-Top) Box


The FCC issued its keenly anticipated National Broadband Plan this week, and the biggest immediate impact of the plan could come from its proposal to replace traditional cable set-top boxes within two years with simple “gateway” devices that handle conditional access and tuning but leave all other functionality to other devices or services. One of the paradoxes inherent to the FCC’s set-top plans is that the Internet will actually make it easier for cable and satellite providers to deploy scalable new services and functionality without incurring the capital costs involved in upgraded equipment already in subscribers’ homes. Combined with their existing relationships with subscribers, that will allow cable operators to quickly erase any competitive advantage gained by third-party STB makers from introducing new features or functionality.

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