Set-Top Makers Move to Split Out Security
Cable Operators Still Lobbying FCC To Avert a Ban
By Todd Spangler -- Multichannel News, 12/3/2006 7:00:00 PM EST
The cable industry is aggressively lobbying the Federal Communications Commission to try and head off a rule that would not allow security features be built directly into digital set-top boxes.
But with a mid-2007 deadline to comply nearing, the two biggest set-top box manufacturers — Motorola and Scientific Atlanta — are proceeding as if the ban will go into effect, shifting manufacturing to favor models in which security features are separated through add-on CableCard hardware.
The FCC’s rule would require any new set-top boxes deployed by cable operators as of July 1, 2007, to carve out the means by which the boxes control access to the TV services that the box negotiates. The cable industry views this separation as imposing additional costs without providing any benefit.
| Getting Set | |
|---|---|
| Digital set-top shipments, North America: | |
| SOURCE: In-Stat |
|
| 2005 | 9.35M |
| 2006* | 9.42M |
| 2007* | 8.97M |
The purpose of the FCC ban, enacted via the 1996 Telecom Act, is to ensure third-party consumer-electronics devices work within cable networks by requiring cable operators to use the same standards themselves.
The National Cable and Telecommunications Association (NCTA) estimated that the process of enabling set-tops to work with CableCards would add between $72 and $93 per box, in its Aug. 16 petition to the FCC requesting a waiver to the ban. It claimed that would result in direct costs to the cable industry of more than $500 million per year.
The cable industry continues to petition the FCC to grant full or partial waivers on the regulation, dubbed by some as “Seven Oh Seven” after the ban’s date. Last week, three high-ranking Republican congressional leaders backed the industry on the issue, asking the agency to extend the deadline for the ban (see story, below).
The FCC has not issued a ruling on the waiver requests, which have been filed by the NCTA, along with requests by operators including Comcast, Charter Communications and Verizon Communications.
CHANGING SUPPLY LINES
In the absence of a political breakthrough, set-top box makers are revamping their manufacturing supply chains to meet the FCC’s mandate.
In an October letter, Motorola told cable operators that it could not “guarantee product availability” for its low-end DCT-700 set-top boxes after Nov. 15. The DCT-700 wouldn’t be allowed under the FCC ban.
Paul Alfieri, senior manager of communications for Motorola’s Connected Home Solutions business, said the letter was a “last call for orders” for the DCT-700 and that the company is ramping down production of that unit as it shifts to boxes that support separable security.
Scientific Atlanta’s Explorer 940, a similar low-end model, may “stop shipping in the United States” early next year if the FCC enforces a complete ban on integrated-security devices, said Dave Clark, director of home entertainment products for Scientific Atlanta.
To help consumer-electronics makers, CableLabs developed the CableCard, a removable, credit card-size unit that plugs into TV sets or other devices to control the supply of services from cable operators. The security function is known as conditional access.
Set-top makers are producing devices with CableCard slots to let operators comply with the ban. They’re also working on devices that provide for security through a software download, thereby meeting the FCC regulation, but this technology isn’t expected to be ready until 2008.
Motorola plans to have full production of CableCard-compliant set-tops by early April. “Our products are ready to go,” Alfieri said. “Right now, it’s a factor of the manufacturing line.”
Scientific Atlanta also aims to have completed all testing of CableCard devices with operators and to start shipping them in quantity by then. “By April, you’d like to have this buttoned up,” Clark said.
Meanwhile, cable operators aren’t eager to discuss their plans for deploying CableCard-based set-top boxes.
“We’re making progress, but have plenty of work ahead during the next few months,” said Charter director of communications Anita Lamont.
Comcast and Time Warner Cable did not respond to requests for information on their CableCard tests and deployment plans by press time. Cablevision in November filed a request with the FCC seeking to confirm that the digital set-top boxes deployed in its systems would be in compliance, since they have removable smart-cards that handle conditional access functions.
Short of waivers to the regulation, some operators had hoped for some wiggle room — specifically, that they would be allowed to deploy already-purchased integrated set-tops after July 1.
The FCC didn’t respond to a request to clarify this question. But the NCTA told Multichannel News that the ban will cover any new box deployed starting July 1, regardless of when an operator purchased the set-top.
Only integrated set-tops that have already been deployed in a subscriber’s home may be redeployed after that date “because they are not 'new’ boxes,” said NCTA vice president of communications Brian Dietz.
Ian Olgeirson, an analyst at Kagan Research, said the FCC ban will probably spur MSOs to be more aggressive in selling digital-cable packages in the first half of 2007. But even with the added cost of CableCard-compliant boxes, they “won’t put the brakes on entirely.”
'A BRICK WALL’
Both Motorola and Scientific Atlanta have been laying the groundwork for the switchover to CableCard devices for more than a year. But they’ve only recently started to put the logistics in place to move to full-scale production of the new boxes.
“This has been a brick wall that’s going to happen that we’ve been working on for a long time,” said Scientific Atlanta’s Clark. “But it’s a fairly big task.”
Scientific Atlanta is initially producing CableCard versions of two existing products: The Explorer 4250C set-top box and the Explorer Digital Video Recorder 8300C, which supports CableLabs’s Multistream CableCard (M-Card) specification to allow multiple video streams to be used at the same time. Clark said units are in customer labs now. Both are available in high- and standard-definition versions.
Clark said there’s a “slight cost delta” to add CableCard capability, in addition to the cost of the CableCard itself, but declined to specify the cost differential.
One research analyst, who did not want to be identified, said the industry’s estimates on the costs to implement CableCard — upwards of $93 per unit — seem high. The actual bill of materials for digital set-top boxes to add CableCards would increase only $15 to $30 per unit, according to the analyst.
NCTA’s Dietz, however, said the industry’s estimates include the cost of labor for engineering and testing, as well as changes to manufacturing processes required to move to CableCard production.
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