Set-top box may join electric meter outside By RICK ROTHACKER A Charlotte company is developing equipment that could replace the nemesis of many cable television viewers: the set-top box. Convacent Corp.'s "residential gateway" device could allow all of a home's telecommunications services - cable, telephone, Internet and even meter-reading - to be controlled by a panel attached to the outside of the house. The goal is to eliminate the need for in-home equipment such as set-top TV boxes and cable computer modems. Instead, gateway users would click their own remote controls to watch pay-per-view channels or to restrict children from watching certain channels on TV sets throughout a home. "We want to do for cable what phone companies have done," said Larry Moore, Convacent's chief executive officer and president. "They keep all the smarts outside." Unlike many technology companies, Convacent touts its gray-haired leaders, its refusal to take venture capital funding and its revenue-producing operations. Started in 1996, the privately held company sells cable network equipment to corporate customers but doesn't give out numbers. Convacent, formerly MacroDyne Power LLC, mostly stocks other companies' equipment but has recently started developing its own products. The company offers its own power-supply equipment, which provides back-up power in case of electricity outages, and now is developing its gateway device for sale next year. "We've been a very quiet little company," said Moore, 43. "Now we're trying to raise our profile." Residential gateway is a term that describes a broad category of devices that direct voice, video and Internet traffic into a home. Since Congress opened up competition in 1996, telephone and cable companies increasingly are vying to offer customers all of these services. Gateway products have been in development since the late 1990s but are just starting to hit the market, said Mike Wolf, director of networking for research firm Cahners In-Stat Group. They accounted for $112 million in sales last year but that is expected to grow to $5 billion worldwide in 2005. "The timing is right to come to market in the next 12 months," Wolf said. Cable and phone companies "are getting interested in them." Convacent faces a thicket of competitors, including major electronics firms such as Scientific-Atlanta Inc., Motorola Inc., Pioneer Corp. and Sony Corp., some of which already manufacture set-top TV boxes. Plenty of start-ups are also entering the business. For example, Research Triangle Park's Hatteras Networks Inc., which recently received $28 million in venture funding, is developing a gateway that would allow phone companies to provide speed-of-light fiber-optic connections to the home. Moore said the advantage of Convacent's device, which looks like the gray utility boxes on the outside of many homes, is that it can control so many different technologies: cable, telephone and fiber-optics. Cable and phone companies want the technology because they can do away with expensive set-top boxes, access equipment outside the home and offer new services, he said. Last year, HunTel Systems, a Nebraska-based operator of cable and telephone companies, invested an undisclosed amount in Convacent because of its desire to provide fiber-to-the-home connections. Convacent now has 16 employees but is poised to grow more, possibly through the acquisition of other firms, Moore said. The company recently hired chief technology officer John Linebarger, who was lured from a top technology development post at telecommunications giant Sprint Corp. Convacent is "on the edge of doing things that will change the way telephone and cable companies do business," Linebarger said. "The promise of this technology is that it could end up in a lot of homes."