TiVo Series 3 spotted in the wild- why this matters

Engadget is reporting pictures have been snapped of a TiVo Series 3 being tested in the wild. Few new details are available other than the confirmed dual-cable card slots on the back confirming two HD-quality signals can be recorded on the unit.

Other than the gadget-coolness of this announce, why does this matter? Today TiVo units (other than DirecTivos) have to recompress an analog cable signal. With the Series 3, you’ll save the actual digital stream, bit for bit, from your cable operator (think Comcast) and unchained from the watered-down set-top-boxes for the masses we’ve all had to deal with for the better part of a quarter century. I was a first-adopter of TiVo, and love my TiVo Series 2 unit despite a few quirks.

Understanding CableCARD and On-Demand Services
Cablecards are similar to conditional access cards in Satellite TV boxes; heavy DRM is used to manage the authorization of your box on their network, and to decrypt the video stream.The main drawback that consumers often don’t know is that even with CableCard, you will not be able to enjoy on-demand services. Today CableCard support is unidirectional*, meaning you can decode and watch what is sent down the pipe, but the standard doesn’t facilitate for communicating back up, key for on-demand offerings and interactivity. So as a consumer you may be asked to make a tradeoff in service offering – do you want the high-quality, high-performance TiVo Series 3 experience and no on-demand, or a slow performing DVR from your cable company. This is a reason why the cable operators will spend hundreds of dollars per household in on-demand coupons such as “Free Movie every Month” books given to new digital-tier customers. Once you’re conditioned to see on-demand as an indispensible part of the TV viewing experience, you’re set. But wait- it could get more confusing, because there may be an in-between offering as well!

TiVo + Cable Company = TiVo Premium?
Cable operators make big capital investments in set-top box equipment and extract an annuity stream from it. So the question becomes, is there space for a solution that combines the best of Cable & TiVo? I believe so. This is why TiVo’s strategy of licensing deal to cable operators is potentially a Good Thing(tm). A new “TiVo Premium” tiered box from the Cable company that offers TiVo + CableCard + On-demand that costs ~$10-15 more per month is what we’re likely to see in the future from some operators and according to some reports, may already be in testing.

Even with this “Premium” box offering though, we could be concerned about in-home interoperability. Today, two TiVo units can communicate and stream media from one room to another (similar to recording TV on a Media Center PC and stream to an Xbox 360 which you can do today). But will i be able to “rent” a TiVo-enabled Cable Box from Comcast for the TV in the family room, and watch recorded content on a purchased TiVo Series 3 streamed to the bedroom? Somehow I doubt it.

So why is this all so hard? Is it really in the Cable operator’s interest to open their networks? The federal government mandated almost a decade ago that the cable operators create an interoperability standard so that other hardware can play back televised content. The federal deadline for supporting CableCard has been pushed back multiple times due in part to foot dragging. Now there are rumblings from the Cable operators that they’ll have to upgrade their network infrastructure to compete with Fiber-based services coming from the telcos, possibly making CableCard obsolete… again.

*OCUR or OpenCable Unidirectional Receiver or OCUR is another acronym used to describe the current standard.