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Doherty of Envisioneering. The rest are receiving digital cable and HDTV programming the more familiar way, through the cable company's rented set-top box. One factor may be a lack of incentives for cable companies to encourage CableCard use, since the companies collect monthly rental fees for set-top boxes and can also count each box as an asset on their balance sheets. Two-way card technology that would work with advanced services is being developed, but the specifications are still being debated. LG Electronics, Panasonic and Samsung have begun developing products that will work with two-way cable access cards, even though all specifications have not been set. The system allows one-way communications only, meaning that advanced services — such as video-on-demand, pay-per-view and the cable operator's interactive program guide — still require a set-top box. Ian Olgeirson, an analyst with Kagan Research, said that 45 percent of the nation's cable customers used set-top boxes that enabled them to receive such digital services. According to Richard Doherty, an analyst with the market research firm the Envisioneering Group, 80 percent fewer television models with CableCard are available this year than in Royal Philips Electronics offered seven CableCard models in but just three this year. Once consumers learn that they will not be able to get pay-per-view and video-on-demand with a CableCard, he said, many opt for a set-top box. One problem with the current CableCard technology is its limitations. Yet with fewer and fewer CableCard-ready TV's, that choice may become moot. Samsung expects to have the nation's first digital TV capable of receiving two-way services without a set-top box — a inch rear projection model — on the market by the end of this year. Frustrated by the lack of consumer interest, many television manufacturers have sharply cut the number of CableCard-ready models. Goldberg said, and the cable industry is following that mandate by posting information on its Web sites and supplying it when consumers request a card. Abram said. While six million CableCard-ready digital TV's have been sold to consumers, only , sets, less than 3 percent, are actually using a CableCard device.

To spur the adoption of digital television and HDTV and rid the home of one more bulky consumer electronics component, cable TV operators and the consumer electronics industry agreed on a compelling concept: new digital televisions, like their analog predecessors, would be "cable ready," able to receive programming without a set-top box.

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While the cable industry acknowledges that CableCard deployment has been low, it sees the lack of interest as an indication of consumer choice. Other manufacturers are holding off until all technical details are worked out. Consumers would simply plug the cable into the back of the set and insert an authenticating card in a special slot. Meanwhile, the one-way technology languishes, with some manufacturers faulting the cable industry for failing to promote and offer the product adequately. Two years after the introduction of this technology, known as CableCard, the effort has stalled, the victim of conflicting business interests, manufacturing costs and a lack of consumer response.