FCC Votes to Change CableCARD Rules

Move meant to spur competition in cable digital set-tops

By John Eggerton -- Broadcasting & Cable, 10/14/2010 11:42:20 AM

The FCC voted unanimously Thursday to take another crack at promoting a competitive market for cable digital set-tops.

The commission is making changes to its CableCARD rules in an effort to "improve the consumer experience."

Those include ensuring that operators support accessing switched digital video by retail devices, prohibiting box price discrimination, requiring the option of consumer self-installation of the cards, giving consumers information on the cost of retail vs. leased boxes, making it easier to get retail devices to market by streamlining the testing and certification, modifying the firewire interface on leased set-top boxes to permit home networking, and allowing cable operators to provide basic HD boxes with integrated security functions.

That last change follows the FCC's decision to grant a number of waivers for those boxes because they could help drive a market in HD sets and spur cable's transition to digital.

Cable operators will also not be able to bundle a lease fee charge into the service of subscribers who buy a retail box.

The FCC established the CableCARD regime, which requires cable operators to separate the channel surfing and security functions of their set-tops, in order to spur a retail market in competition to cable's leasing model, but so far it has failed to do so, which the FCC and industry both concede.

The FCC's end game is to create a gateway device that unites multichannel video programming with online content, a point FCC Chairman Julius Genachowski made clear at the Thursday public meeting adopting the new rules. The CableCARD changes are an interim "fix."

"We commend the Commission for its constructive approach in adopting sensible, targeted fixes to the current CableCARD rules that provide cable operators the necessary flexibility to continue improving the CableCARD experience for all of our customers," said National Cable & Telecommunications Association President Kyle McSlarrow in a statement.

"We agree with the Commission that implementing these changes - including increasing options for self-installation, providing more transparency and properly equipping technicians - will assist customers who use retail devices that rely on CableCARDs. Our industry will work diligently to implement these changes," he said. "We also will continue working constructively with TiVo and other providers of retail ‘cable ready' products to assure that our mutual customers can seamlessly enjoy all of the cable services available to them."

TiVo had petitioned the FCC for switched digital video support for boxes, but that petition was mooted by the FCC's decision to make that a mandate in the new rules.

"TiVo applauds Chairman Genachowski and the FCC for ensuring that consumers using retail set-top boxes will have access to all cable programming delivered using switched digital techniques and removing pricing, installation, and other hurdles facing consumers who want a better box than is offered by their cable provider," said Tivo SVP and General Counsel Matthew Zinn in a statement. "Equal access to programming is critical to ensuring that retail boxes provide real choice to consumers. American consumers are the biggest beneficiaries of the FCC's strengthened rules requiring cable operators to accommodate subscribers using set top boxes purchased at retail and make sure that all consumers get all the channels that they have paid for. TiVo looks forward to continue working with the National Cable & Telecommunications Association and its members to assure that consumers can utilize retail products to access cable programming services as easily as using operator-supplied equipment."

NCTA also said it would work with the commission on the all-video proposal. Part of that work will likely be to try and convince the commission not to mandate any standard gateway, but instead to allow the marketplace to innovate.

Commissioner Michael Copps said he hoped the FCC would take up the all-video gateway proposal in short order, but in the meantime he was hoping the changes would "drag the poor old ox out of the ditch." Copps had wanted the FCC to require a line item on cable bills breaking out the cost of leased boxes, but noted that cable ops would have to make that information available online and in rate cards.

He said access to switched video channels should not be a privilege, but a certainty for those paying for a package of cable channels.

Picking up on the metaphorical comparisons of the CableCARD regime to a difficult situation, commissioner Robert McDowell likened it to Sisyphus, the king in Greek mythology doomed to endlessly push a boulder up a hill without reaching the summit. He called the FCC's changes a "workable compromise," but still left the suggestion that the boulder could yet roll back "to the valley of unattained goals."

While he generally supported the changes, he said he would have preferred a longer ramp-up for enforcement and was concerned about some of the hard deadlines for the changes.

Genachowski said that the ultimate goal was to spur innovation through the TV. He said there had been fewer innovative devices for DTV platforms than computer or mobile. He is looking to drive that DTV innovation as part of the longer-term strategy to unite online and traditional TV content to drive broadband adoption.

At the meeting, the commissioners also voted to propose requiring cellular carriers to provide usage alerts and other information to prevent so-called "bill shock," and to use recovered Universal Service Funds to create a Mobility Fund to support investment in 3G and next-generation mobile service in areas where it is currently not available.