well almost, and it's telling advertisers what its seeing

seriously, tho, this stuff is kinda alarming, read for urself

May 8, 2003 | Several years ago, Predictive Networks, a software company based in Cambridge, Mass., set out to determine what it could tell about a person based on how he or she used a television remote control.

Predictive discovered that by recording every button-press on a remote and analyzing the resulting data, the company could pick out distinct "channel surfing patterns." After learning these patterns, Predictive's software could determine which one of several members of a household has control of the TV at any particular time. Predictive found that men and women use the TV remote control quite differently; during commercial breaks, men engage in a kind of rapid-fire channel surfing, while women tend to switch to only one or two other channels, if they surf at all.

When the company combines this remote-usage data with information on the shows and ads that the person using the remote has watched, its software can guess whether a viewer is male or female. And, because your channel-surfing behavior is significantly affected by others in the room, Predictive can also tell whether there is more than one person watching the television.

read the rest of the article here:

http://salon.com/tech/feature/2003/...v/index_np.html (you can get the free day pass)

basically it sends the info it collects back to your cable provider thru the set-top box...