“There’s no evidence at all to suggest” the FCC will grant cable’s various CableCARD waiver requests, NCTA Pres. Kyle McSlarrow told reporters in a Tues. teleconference. Months ago, McSlarrow told major cable operator CEOs to prepare to comply with a July 1, 2007, CableCARD deadline, he said. “Though while I thought we had a meritorious case to make to the FCC,” the cable operators “needed to proceed as if they're going to put CableCARDs in our boxes, and I believe they're doing that,” McSlarrow said: “I see no evidence we're going to get this resolved anytime soon. That’s not to say that it won’t get resolved later, but I think at this point, for July, I think most people frankly are assuming that there’s going to be CableCARDs in some boxes for some period of time” because cable operators need to place orders, he said. “There’s an irony that’s not lost on us” when the Commission wants to impose a 90-day “shot clock” on video franchising, but hasn’t acted on cable’s waiver requests in the 90 days it’s required to do so by law, McSlarrow said: “It’s ironic that the FCC presumes to tell anybody else in America that they have to get something done in 90 days, when by law they were supposed to rule on our waiver requests within 90 days.” The Commission hasn’t acted on a Comcast waiver request filed last spring, he said. And NCTA’s waiver request -- now 120 days old -- wasn’t even put out for public comment for 76 days, McSlarrow said.
Paul Gluckman
Paul Gluckman, Executive Senior Editor, is a 30-year Warren Communications News veteran having joined the company in May 1989 to launch its Audio Week publication. In his long career, Paul has chronicled the rise and fall of physical entertainment media like the CD, DVD and Blu-ray and the advent of ATSC 3.0 broadcast technology from its rudimentary standardization roots to its anticipated 2020 commercial launch.
“Inconsistent implementation” of HDMI makes it difficult for Best Buy customers “to trust the standard,” Senior Vp- Mdsg. Mike Vitelli told Consumer Electronics Daily. Vitelli confirmed Best Buy is the mystery CE retailer that’s warning vendors it will refuse next year to carry HDMI products that haven’t been tested and certified for compatibility with other HDMI devices (CED Dec 12 p1).
Sacrificing gross profit points to “match or beat” competitors’ Black Fri. prices (CED Dec 13 p1) wasn’t the only ominous note on Q3 as Best Buy emphasized that the business has many “healthy indicators.” Another possible problem area: Best Buy’s 20 stand-alone Magnolia stores, where same-store sales for the quarter plunged 10% vs. a 4.8% company gain.
Best Buy’s disclosure early Tues. that it had missed analysts’ Q3 profit target because of deep Black Fri. discounts sent its stock price tumbling 6% to $50.50 at the opening. Still, senior executives said they wouldn’t change the decision to meet or beat competitors’ post-Thanksgiving prices on flat-panel TVs and other bread & butter CE gear.
NCTA’s “objections” in its ex parte rebuttal to CEA’s Nov. 7 proposal at the FCC on 2-way plug & play (CED Dec 7 p3) “reveal a variety of misconceptions about what the proposal would and would not require,” CEA said in a reply filed Fri. at the Commission. “Most, if not all,” of NCTA misunderstandings “are capable of being resolved in a face- to-face meeting between the 2 sides,” CEA said. “The CE industry remains ready to engage in such discussions at any mutually convenient time and place. The status quo simply will not lead to the consumer choice envisioned by Section 629” of the Communications Act, CEA said: “This process must move forward.” CEA and NCTA told the FCC in their most recent regularly scheduled progress report Nov. 29 on the 2- way plug & play talks that the sides hadn’t met in over 2 months. Cable “of course” is ready “to engage in further discussions” with CE, “and to the extent any ‘misunderstandings’ can be resolved in such face-to-face meetings, the sooner they can be had the better,” an NCTA spokesman said. Even without meetings between the cable and CE business teams, their “tech teams” made “significant progress” in narrowing the differences between the sides, such as on resource-sharing in OCAP devices, the spokesman said: “But let there be no misunderstanding about why there have been no major meetings on 2-way issues in the recent past.” Cable had set an Aug. meeting date with CE, but was told “the CE side did not want to have a joint meeting and we should wait to hear from them about another meeting,” the spokesman said. “Apparently some CE companies were taken aback” by NCTA’s CableCARD waiver request at the Commission in Aug., the spokesman said. CE makers responded by walking away from the table, telling NCTA they're not sure there’s much that can be discussed rationally, he said: “Until that exchange, the 2 sides had tried to keep integration ban issues and 2-way issues separate. But CE’s thinking apparently was that if a waiver of the CableCARD requirement was granted, cable wouldn’t support 2-way CableCARD-enabled products.” He cited CE industry e-mails in which NCTA was told further talks would be pointless. Still, “we are ready to have discussions as we were then,” the spokesman said. CEA answered NCTA’s rebuttal in a 9-page, point-by-point rejoinder. For example, to NCTA’s argument that over a dozen CE makers, including LG, Panasonic and Samsung, have signed OCAP and CHILA licenses with CableLabs, CEA said: “Signing the only available license agreement should not be interpreted as tantamount to a policy position, or as exclusive of or inconsistent with improvements or other options.” Without mentioning them by name, CEA said industry leaders Sony, Microsoft and Intel were among the 12 CE and IT companies signing on to its Nov. 7 proposal. “CEA believes that consumers are best served by variety and choice,” which its Nov. 7 proposal “aims to provide,” it said.
Zoran is continuing work on an “all-format decoder” for bridging Blu-ray and HD DVD in a dual-format player, but the device likely won’t be ready to commercialize before summer, Vp-Corporate Mktg. Dave Pederson told Consumer Electronics Daily. Summer availability of such a device is consistent with Sonic Solutions predictions that dual-format players could begin arriving on retail shelves late 2007 (CED Dec 8 p1).
CEA and 12 allied CE and IT companies may claim a plan they back would speed retail sale of 2-way plug & play devices, but it really would mean an innovation-chilling govt. “quagmire,” violating Sec. 629 of the Communications Act, NCTA said in an ex parte filed at the agency. The proposal by CEA and the 12 companies reached the FCC Nov. 7 (CED Nov 9 p1).
XM won’t “chase a weak retail market with excessive discounting,” Chmn. Gary Parsons told a Wed. UBS conference in N.Y. That would raise subscriber acquisition costs (SACs) unnecessarily, he said: “We think we can keep control on that model while still growing at a positive, reasonable pace.” XM will rely more on automotive OEM for new subscribers, he said, calling OEM a far more efficient enrollment mechanism and far stronger in terms of customer satisfaction. “That does not mean by any means that we're going to abandon the retail marketplace,” he said: “There will always be a significant need for the retail marketplace. We just believe that in the future it will get somewhat less of our management attention, resources, marketing dollars and others. When it is going well, we will take advantage of it. When it is weak, we're not going to chase it for growth at any cost.” In Q&A, CFO Joe Eutenauer said XM has “plenty of flexibility” to raise rates, but has kept them intact to drive subscription growth. Even when XM raised pricing in mid-2005, it kept its $6.99 monthly “family plan” to reward its most loyal subscribers, Parsons said. Sirius this week cut its Q4 subscriber forecast due to an unexpected post- Thanksgiving lag in satellite radio sales at retail, Sirius CFO David Frear told the conference. “We felt fine about what we saw out of the Thanksgiving weekend,” he said: “Volume looked pretty good relative to last year. We didn’t like so much what we saw in the next several days after that.” Fewer expected aftermarket sales at Christmas mean fewer activations in Jan., when Sirius faces even harsher comparisons with Jan. 2006, when Howard Stern debuted on it, Frear said. Like XM, Sirius sees huge growth potential in OEM, Frear said, noting that 210 million cars in the U.S. have no satellite radio receiver. The OEM market “is absolutely enormous for us to penetrate,” he said. Responding to a questioner, Frear said he couldn’t think of reason that a Sirius merger with XM “wouldn’t be a good thing to do” from an investor outlook For listeners, a merger could bring “significant benefits in having a single brand and coordinated offering out to the marketplace, as opposed to overlapping product” and service offerings, he said: “There’s a far more diverse product offering you could put up there for consumers to serve them perhaps even better than they're served today.”
The increasing “complexity” of CE gear left Best Buy and Circuit City “no choice” but to launch their Geek Squad and Firedog services, Tweeter CEO Joe McGuire told analysts Wed. in a quarterly earnings call.
If ESPN “wanted to go 1080p, they could do it today,” Sony Electronics Pres. Stan Glasgow said in reply to our question Mon. about the sports network’s recent statements that lack of 1080p digital switchers and other broadcast gear is among the obstacles in migrating from 720p (CED Nov 16 p2). “Is it a big investment” for ESPN to move to 1080p? Glasgow asked. “It’s absolutely a substantial investment. What I'm suggesting is they've made a substantial investment in 720p. Case closed. They're not ready to go out and redo that again. And they probably broadcast as much if not more than anybody else in HD.” Bottom line: 720p “looks awful good, and until you get up to a bigger screen size and an understanding of what to look for, it’s hard to see the difference” from 1080p, Glasgow said. The 720p vs. 1080p debate is “almost like religion in the broadcast world,” so it’s “hard to pick sides with people,” he said. Bryan Burns, ESPN vp-strategic business planning & development, declined comment.