America’s most hated device: The cable box

America’s most hated device: The cable box

August 27, 2013: 5:00 AM ET

Why hasn’t the future arrived for one of consumers’ most used gadgets?

By John Patrick Pullen

FORTUNE — After a month of phone tech support, a month of wireless router reconfigurations, a month in which I restored my computer to a backup from six weeks before, and a month of spotty, poor Internet service, I finally yanked my high-speed modem out of the wall last Monday and hauled it into my local Comcast office for a replacement. And it was there, flanked by more than a dozen people with phone, television, and Internet problems similar to mine — all watching Night at the Museum in the waiting room, like we were stranded in a bus station at the side of the information superhighway — that I thought, “Hey, that’s a pretty cable box they’ve got there. I wonder how I can get that for myself?”The box is the X1 Platform, a device Comcast (CMCSA) bills as an “entertainment operating system.” Its slick, cloud-based interface has a search engine that scours Xfinity’s OnDemand catalog and the customer’s DVR, pulls up the last nine shows watched at the touch of a button, recommends programming based on your preferences, records up to four shows at once, has voice commands through an accompanying smartphone app, and even connects to services like Facebook (FB) and Pandora (P).

But perhaps the most amazing thing about X1 is that, despite its limited availability, Comcast already rendered it obsolete two months ago, when it unveiled the X2, a new set-top box (and software update to the X1) that offers cloud DVR functionality, is four times faster, three times smaller, and uses half the power. “The next generation of the X1 Platform will be even smarter and faster,” claims Comcast in an announcement. Think about that. Comcast’s future product is already better than the present-day service that you most likely don’t have and — spoiler ahead — likely cannot get.

If I sound frustrated, it’s because I am. I hate the cable box, specifically the junky Motorola models that Comcast and other cable companies continue to push on customers. You know the ones I’m talking about — they feature blue-screened menus with graphics that are poor even by Sega Genesis standards and a remote control that feels like a bottle of Prell with gumdrops for buttons. Amazingly, these 2004-era products and services are still being foisted on Comcast customers despite the fact that, according to Comcast representatives, 85% of the company’s service area will be X1-ready by the end of the third quarter.

(Oh, and here’s a curious aside: Google not only owned this set-top box division of Motorola, but they sold it to Arris (ARRS), convincing the telecom manufacturer to pay $2.4 billion for what is, more or less, the RealPlayer of television technology. Question for Mountain View: Why did you try going over-the-top with Google TV, when you could have been the bridge between Internet video and cable content?)

I am a happy TiVo Premiere user (at least I was until last week, when its new Roamio boxrendered my six-month-old setup obsolete), but I was so impressed by the X1 that I went to Comcast’s website to order it. After logging in with my account information and bouncing all over the site, I couldn’t find a place to order it. So I clicked on the customer service chat button, which for 10 minutes looked like this:


Eventually someone came on, and I asked if I could order the new box. Instead of answering my question, they told me to call a phone number.

I knew what was coming next. I dialed the digits anyway, reaching “the home of Xfinity and the future of awesome” (their words, not mine), only to be told that I was among the 47% of Comcast customers who currently cannot get the X1. And even if I could get it, the representative said, it would cost me $19.99 per month.

According to my local newspaper, The Oregonian, the X1 is here, but I just can’t have it. According to its report, Comcast is deploying the box free of charge to new Triple Play (cable, Internet, and phone) subscribers and telling existing customers that it’s coming soon. Well, it appears the House That Awesome Built must have its wires crossed, because I never received that message. (Also, with the installation and upgrade fees that cable companies charge, nothing they’re providing is “free.” Note to Comcast CEO Brian Roberts: When you charge consumers more than $150 per month for a service, installation fees are the cost of doing business — your business, not mine.)

I reached out to Comcast, and the company described its approach as a phased rollout. Coming out on the 10th anniversary of its on-demand video services — a timeframe in which they have served up 30 billion videos — X1 has been a huge initiative for the company, since it began development in 2010. But capital considerations and manufacturing concerns have constrained supplies of the new box. In other words: They can’t make these things fast enough.

And since the new boxes require a technician to install them, Comcast decided to give new Triple Play customers first dibs on the product, for free. They aim to have 100% of their service areas X1-ready by the end of 2013, and sometime after, will offer the new box to existing Triple Play customers, then Double Play (television, Internet) subscribers, and onward, down the line.

But consider the logic of this strategy: The company, which lost 159,000 television subscribers last quarter (but gained customers overall, buoyed by new Internet users), is using state-of-the-art services to lure new customers, instead of keeping existing ones from cutting their cable. A Comcast representative said they want X1 to be the first experience new subscribers have with their cable television service.

But it’s much easier to retain existing customers than to attract new ones — especially since almost every cable television company is a local monopoly franchise. So until Comcast can build enough boxes to roll X1 service out to their 21.8 million television subscribers, they continue to risk losing customers over poor user experiences.

Then again, as I read reviews of X1 on support forums, it sounds like the only thing I’m missing by sticking with TiVo is frustration. Slow remote response, glitchy behavior, freezing — these were all criticisms back when I dumped my cable box in 2006. How are they still around in an entirely new generation of set-top boxes?

Perhaps the problem isn’t with the cable box, but rather with the operator. While, technically, the cable box market is open, ask anyone who’s tried to cut deals with cable companies (like Boxee’s Avner Ronan before Samsung snatched him up, or Apple’s (AAPL) Tim Cook if you could get him to lower his guard) and you’ll hear all about how cable has fought to keep innovation out. After all, there’s a reason we’ve been hearing about the real Apple TV for years — the tech giant has been trying to crack the market for even longer.

Instead, the modern day set-top box market is like an alternate reality of the cellphone space, where people are stuck with Motorola StarTACs and Nokia (NOK) candy bars. It’s no wonder subscribers are cutting the cord; the user experience stinks. Sure, in rare instances, collaborations like TiVo-powered boxes have made their way to consumers, but the rollout has always been small, almost token-like. Earlier this summer, Time Warner Cable (TWCannounced an upcoming partnership with Xbox to offer a 300-channel app on the system. That’s a great step, but here’s a better one: Slap a contract on the service, give away the box for free, and promote the deal like you actually think it’s a good idea.

To stem the customer exodus, television providers need a savior device similar to what the iPhone was for mobile providers. Crazy, I know, maybe they could even call it Apple TV (or Google (GOOG) TV, I don’t care). Under this revolutionary plan, a cable provider could bundle television and Internet together, charge a simple yet still substantial fee, and let a third-party device provide a user experience that the cable company would no longer have to manage. The cable operator could do what it does best — maintain relationships with content providers and ensure that the pipes stay fat and clean — while device manufacturers like Apple, Google, Microsoft (MSFT), Samsung, Roku, and others could do what they excel at: make interfaces that consumers will enjoy using (and upgrade periodically by signing and renewing contracts with their cable provider). After all, these device manufacturers have no problem kicking out millions of devices; it’s what they do best.

Maybe when that day arrives, and my Internet slows to a halt because my modem has stopped working, I won’t be sitting in the Comcast office, wondering — like millions of others — if I need any of this anyway. I can probably survive on Hulu Plus and Netflix (NFLX), right?

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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