Cable execs wary as Google acquires Motorola boxes

While the mobile device business of Motorola Mobility has intrinsically attracted most of the attention, cable executives on the spur of the moment noticed that for them the deal means working with a company they have clashed with in the past on a range of issues from so-called net neutrality to piracy.

Cable and phone companies have viewed Google suspiciously ever since the No. 1 search engine used its muscle to get regulators to back 'net neutrality' rules that would prevent Internet service providers from rationing access to their networks. The cable and ISPs wanted to be able to manage congestion by blocking certain traffic or charging for passing through their pipes, for instance.

Afterthought

Though many analysts described Motorola's set-top box business as an afterthought, Google has shown its desire to enter the pay-TV business through last fall's launch of the underwhelming Google TV set-top box made by Logitech. The company as well acquired a small Web DVR software company called Sage TV.

The proposing of business models on the part of innovation companies like Google, Apple Inc and Amazon.com that could potentially unravel the cable's industry's cozy $100 billion relationship with programmers is another concern.

If Google's innovation ends up inside pay-TV clients' living rooms that could give the innovation giant some much needed leverage in negotiations.

"They are highly scared of folks coming in and developing a direct relationship with their subscribers and driving ad and application revenue where the operator is not at the center of that subscriber relationship," said a senior executive at another supplier to the cable industry.

Not all cable insiders view Google's potential arrival as a bad thing, nevertheless. Some insiders told Reuters that the search giant's research prowess could help accelerate updates to the set-top box for a fast-changing pay-TV world which faces competition from numerous online video rivals just as Netflix Inc and Hulu.

The cable industry's biggest hope --

But the cable industry's biggest hope -- and defense -- is that the set-top box will in the long run lose its relevance as more functions are shifted online or into the computing "cloud".

Iain Wood spent up to 18 hours a day online scrutinizing his neighbor's social network profiles which he used to liberate $57,000 from their bank accounts. Could it happen to you?