Cable companies have been driving their use for years. Building B, now called Sezmi, is pitching a unique flavor of their own. Vudu has an on-demand-only version.  Netflix (NFLX) just began offering a variant with Roku. Tivo’s (TIVO) got a few too. Still, for all the history, experimentation and evolution, despite the massive volume in use around the country, the days of the TV set-top box may be numbered. At least that’s the case for Cable TV decoding boxes, thanks to a new deal.

Tuesday, Sony (SNE) signed an agreement with the six largest cable operators in the U.S. (Comcast (CMCSA), Time Warner (TWX), Cox Communications, Charter (CHTR), Cablevision (CVC) and Bright House Networks) to standardize technology that will allow future TVs to receive “two-way” cable services without the need for a separate, decoding, cable box.

The deal will pave the way for more “interactive” TV features in the future. 

The deal also marks the beginning of the end to a longstanding fight. For more than a decade, cable companies and their trade group, the National Cable and Telecommunications Association, have been warring with consumer electronics makers over how to strike a balance between consumers' desire to buy devices of their own choosing against a cable network’s need to have network-compatible devices through which they can secure their content. 

It’s been a battle over whether or not to open markets. On one side, the cable companies have tried to push single branded boxes for use across their entire network. They’ve tried to stay in control and remain closed. On the other side, consumers and electronics companies have sought to expand choices; looked to make it possible for a consumer to watch cable TV through any set top box they might want.

The fight got big enough, the government got involved. A compromise reached to settle it, which stemmed from Congressional orders in 1996 (Section 629 of Telecommunications Act of 1996), was the “Cable Card.”  These are credit-card-like instruments which, effectively, act as digital keys. When inserted into competing boxes (as opposed to boxes leased by a cable company) or televisions, the Cable Cards unlock otherwise encrypted programming.

One of the big problems with Cable Cards is: working with existing boxes, they’ve only been unidirectional. They only decode data. They don’t allow it to be sent.  What that means is, if I went out tomorrow and bought a new cable box, inserting a card would only allow me to watch unscrambled programming. It wouldn’t allow me to use interactive program guides or order pay-per-view. It also won’t allow any other service that requires me to communicate back to the Cable company, testing and maintenance being one example.   

In a Cable Card era, the only way I’d get the benefit of full-featured service is if I used a cable company provided box or connected a phone line two allow two-way communication.

Under the new agreement that will finally change. By agreeing to incorporate the Cable Industries java-based interactive technology, called Tru2Way (previously OpenCable), and instead of pushing a competing software solution they’d previously backed (DCR+), Sony broke the stalemate. 

Now, in the near future, consumers who buy an equipped model Sony TV will be able to plug their cable straight in. No set top box nor phone connection will be necessary.  (Cable Cards will still likely be needed but now they will support two way communications).

In a statement, Sony called the deal good for consumers. With the six Cable companies involved serving more than 80% of U.S. cable's customers, that’s probably an understatement.

Expect other TV and electronics makers to follow Sony and sign similar deals. Expect one less clunky box to need space under your new flat-panel TV. 

Other Video Distribution News Flashes:
Amazon (AMZN) – coming from the All Things Digital’s D6 Conference, rumor has it Amazon will soon launch an on-demand streaming video service to compete as an alternative to iTunes rentals and Netflix Watch Now services. Nothing is confirmed but news is expected shortly.

Verizon (VZ)/Liberty Media (LINTA) – The telecom company and Liberty cut a deal to bring Liberty’s Starz Entertainment content to Verizon broadband customers.  For $5.99 a month subscribers will get access to an on-demand library of about 1,000 movies and another 2,500 videos. The programming can be downloaded to the viewer’s computer or watched in a live stream.

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Seth Gilbert

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