While an International Trade Commission ruling that bars Comcast’s from importing pay TV set-tops with unlicensed technology would seem to be a blow to the cable company’s thriving X1 deployment business, Raymond James analyst Simon Leopold downplays the concern for investors.
In notes to investors, first reported on by Multichannel News. Leopold noted that there a lot of mitigating factors before Comcast would face an outright ban to importing set-tops from Asia and Mexico.
Last week, the ITC ruled that Comcast must stop importing set-tops from those regions that violate patents from TiVo/Rovi, which enable users to set DVR recordings remotely from mobile devices.
For one, Leopold noted, the ruling doesn’t take affect for 60 days, giving Comcast time to negotiate a deal with TiVo. (Leopold also noted that AT&T already has a most-favored-nation clause in its contract for the two specific TiVo patents, creating a price floor for the negotiation.)
Other options for Comcast: It could choose to import set-tops from Arris and Technicolor without software, then upload software once the devices arrive in the U.S.; Comcast could modify the software code somehow so that it doesn’t violate TiVo’s patents; Comcast could also remove the feature altogether, which would add leverage in negotiations with TiVo.
In any event, shares in leading set-top vendor Arris have been largely flat since the ITC announcement affecting its largest client last week, indicating a lack of investor concern.
“Comcast will buy video equipment based on its deployment plans, which are unlikely to change, so what doesn’t get ordered during a period where the product is unavailable, should likely be ordered later,” Leopold said.