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The future of the seperate set top box is now being questioned as vendors start bundling features normally found in a STB into large display screens.

 Michael Arden, principal analyst of residential entertainment technologies at ABI Research, says there are three possible futures for the set-top box.

One vision is that as manufacturers add more and more features to the boxes, they will eventually become the primary gateway for the home and will be both the main receiver of Internet, phone and cable services for the home and the key point of distribution of content throughout the home. Another vision is that as telcos and cable companies increasingly target the home market, they will install independent broadband gateways to be the main point of entry in each home. As the gateways become more advanced they may also become the home’s main server and stream content to other connected devices. In this scenario, the set-top box will become less intelligent, eventually becoming a simple tool that just receives content from the main gateway. A big supporter of this approach is Telstra who plan to launch a home gateway STB soon.

The third possibility is that manufacturers will include set-top box capabilities directly in TVs and media-focused computers. If the TV can receive and decode the content directly, it means one less device is needed for the home. Arden expects any of these scenarios to take five to ten years to fully come to fruition in the U.S., but some vendors are hoping to speed things along. Later this quarter, LG Electronics expects to start shipping plasma HDTV displays that include built-in DVRs and the ability to receive and decode digital cable signals without an external set-top box.

In addition, Microsoft’s recent announcement that Media Center PCs will soon support CableCards from the industry consortium Cable Television Laboratories will allow the PCs to receive and decode content directly without a set-top box.

In the opposite direction, other players are predicting increasingly important roles for set-top boxes. As the telcos and cable companies step up their focus on the connected home and IPTV markets, set-top boxes play vital roles in their plans.

Telstra is testing various options however they will launch a gatway that delivers phone, broadband and entertainment services by year end. What they are looking at is content will come to the home via next-generation DSL lines or the new Telstra wireless network due in 2008. In the homes, the content will be received by residential gateways from 2Wire and streamed via MoCA or HPNA technology to set-top boxes from a yet to be chosen supplier.

Experts say that since set-top boxes are customised for a particular provider like Foxtel, consumers would either have to be locked into the provider for the life of the TV, or manufacturers would have to install a variety of different boxes as standard features in their displays, which would significantly inflate the price.

Jeff Weber, AT&T’s vice president of product and strategy in the USA said recently “The reason set top [boxes] evolved in the first place is to allow the operator to make technology improvements in the network and not require consumers to throw away the TV every time. By putting it back into the TV, you don’t have a modular way to upgrade your infrastructure, so I think a separate set top will be necessity for some time to come,” says Nick Chakalos, senior director of product management in Motorola’s Connected Home Solutions division. “A TV with a built-in decode capability will suit some part of population. But a separate set-top box gives you higher capability for applications and services and higher revenue potential.”

It’s the last angle which has the most importance for integrators. Installing separate set-top boxes throughout a home allows integrators to offer a variety of revenue-rich add-on services. For example, this week saw the official rollout in the USA of the MovieBeam video-on-demand service. Backed by Walt Disney, Intel, Cisco and others, the service allows consumers to download standard or HD videos from the Internet, which are then stored on a custom set-top box from Cisco. Next week we will see Telstra roll out an IPTV service in Australia. In March Intel are tipped to roll out a Viiv content program witth partners including a full EPG service from Ice TV.

With video on demand in high demand, integrators can step into the market and get a piece of the action by being the ones installing and setting up the boxes and service. Such services could help the set-top box continue to reign supreme.

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