By Jeff Karoub
Small Times Staff Writer

July 10, 2001 — If Comcast succeeds in buying AT&T Broadband, it might do more than create the nation’s largest cable company: The sale could accelerate the spread of small technology.

Comcast, the nation’s third-largest cable provider with 8.5 million subscribers, made an unsolicited offer Sunday worth $44.5 billion to buy AT&T Broadband, now the largest, with 13.5 million customers. AT&T said it’s not interested, but Comcast is going around the telephone company’s management to the shareholders with the offer.

If the deal goes through, it could help spread MEMS-based technology into cable boxes within two years, one analyst said. The technology could come in the form of DCT 5000, a next-generation digital cable terminal made by Motorola Inc.

“AT&T announced a plan (last year) to deploy the DCT 5000 set-top box … but they backed off that,” said Gerry Kaufhold, principal analyst of multimedia and broadband for Cahners In-Stat Group.

“Comcast is actually one of the leading cable companies as far as deploying all these new services. If Comcast gets a hold of these AT&T properties, DCT 5000 could be back on line.”

DCT 5000 units have high-capacity hard disk drives that allow consumers to watch video, surf the Internet and use the phone at the same time.

That’s made possible by a MEMS-based micromotor on the head of the disk drive, which dramatically boosts the packing density of the disk.

Such technology already exists in digital satellite services, Kaufhold said, and it won’t be long before cable follows to remain competitive.

“The cable industry is about two steps behind the satellite industry,” he said. “Within the next two years, we’ll see cable set-top boxes with a hard disk drive built in as well.”

David Nagel, a research professor of MEMS and microsystems at George Washington University, called MEMS-enabled disk drives a “potentially gigantic application” for cable set-top boxes as well as cameras, personal computers and other consumer electronics.

Comcast could not be reached for comment. An AT&T specialist in set-top boxes was unavailable, but another company spokesman said that AT&T has not sacrificed technological advancements by shelving the DCT 5000 plan.

“There are 3 million DCT 2000 boxes out there,” said AT&T’s Steve Lang, referring to the current digital cable terminal models in use. “It’s on those DCT 2000s that we’re going to get the services deployed on.”

AT&T and other cable companies have retrofitted existing DCTs to handle video-on-demand, one of the primary emerging services. This service allows customers who pay an additional charge to set the times they wish to view movies and other programming.

“The cable industry is using intelligent engineering to increase services at the minimum cost (to themselves),” Kaufhold said. “They can deliver these cool services without having to upgrade all their set-top boxes.”

Ultimately, it comes down to the price: He said the DCT 2000 costs the cable companies about $200 a box, and a DCT 5000 is about $350. And, he said, there are at least 10 million existing digital boxes made by Motorola and other companies.

Eventually, however, consumers will seek the next innovation, such as a personal video recorder. Plus, MEMS-enabled drives can store significantly more data, he said.

A Motorola spokeswoman declined comment, saying that AT&T and Comcast are two of the company’s largest customers.

Nagel said a Comcast takeover of AT&T Broadband certainly could have small tech implications, but it likely would not be the primary driver of MEMS into the electronic marketplace.

“The use of MEMS to increase storage density of magnetic disk drives has been worked on for years,” he said. “It has its own timetable and is independent of the news of the moment.”


Jeff Karoub at [email protected] or call 734-994-1106.


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