These are important questions. The fact is that an ISP can provide enormous value to a gateway owner. Remote diagnostics and remote updating are valuable. Parental controls are often valuable. Services like VPNs and QoS (for gaming and videoconferencing) are valuable. When the ISP controls the gateway, they're a lot easier to sell -- and the ISP has control of the customer.

But that's apparently not the way in which the market is proceeding.

That DSL-compatible gateways are available through retail channels makes the equipment - and the service provider - more attractive," says Vamsi Sistla, ABI Research's Director of Broadband, "In the same way that the TV tuner will be migrating to the TV itself and thus the retail space over the next several years, the same may prove true of the cable modem, as pressure mounts to migrate this functionality to consumer CPE as well. The cable companies need to decide if they are in the equipment business or the content business. The game here is going to be one of retail access and consumer choice."

The cable operators in the US would be wise to learn a lesson taught them by the satellite providers: retail is key. In fact, the satellite service providers have publicly stated that the adoption of a retail distribution strategy was critical to their success. So it begs the question: what are the cable companies afraid of?