AT&T to buy Philips digital set-top boxes

Signs for 1 million units over 3-year period

AT&T Broadband has struck its first deal with Philips Electronics to buy at least 1 million advanced digital set-top boxes over three years beginning next year.

The companies have also formed an alliance to offer the boxes for sale in retail outlets.

The digital set-top boxes, which are capable of offering Internet, two-way interactive services, streaming media, video-on-demand and digital video recording services like TiVo and Replay, will be transportable to other systems so a customer can take the box with when moving to another location and use it with that locale’s cable system — as long as that system is compliant with the cable industry’s open cable standard.

AT&T and Philips hope the agreements will spur further and more rapid growth of the digital cable broadband market.

“Philips’ knowledge of retail distribution channels will be beneficial as we start to move into retail distribution,” AT&T Broadband chief technology officer Tony Werner said in a statement.

“The ultimate beneficiaries of this alliance will be AT&T Broadband customers, who will soon be able to purchase digital cable set-tops just as they do other consumer electronics products, allowing them to select the services that best suit their interests and needs,” said Philips Digital Networks CEO Rob van Oostenbrugge.

Philips struck its first set-top box deal with MediaOne last December for an undisclosed number of boxes. It’s the first supplier with which AT&T has aligned since its initial set-top box orders with Motorola (formerly Gen-eral Instrument).

No dollar value for the AT&T order was available, but AT&T set-top box VP and general manager Chuck Kaplan said the number of units in the deal can grow based on how well Philips markets them at the retail level. A per-box price will be announced next year, when Philips announces a date on which stores will begin selling the boxes.

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