Operators Are Standing By …
February 2, 2007

For independent cable operators, it can many times be impossible to get a second source for the unique hardware and programming required to service our customers. In fact, the exclusivity that many of our wholesale providers enjoy contributes directly to the inflating cost of providing cable services.

In 1996, the U.S. Congress adopted a law that effectively banned the deployment of cable-set-top boxes with “integrated security.” This means the cable set-top box -- with all of its features, guides, codecs and tuners -- would no longer be allowed to share the same circuit board with the electronic key to the cable signals’ encryption and security devices. The ban was to go into effect two years ago, but the industry was granted an extension to allow for time to develop the technology. Coming this summer, the FCC will enforce the final deadline for the ban July 1, 2007.

Cable operators throughout the U.S. must stop issuing integrated boxes on this date and begin issuing new boxes compatible with CableCARD technology. Existing set-tops in homes can stay, and those returned from the field may be reissued. However, no new integrated boxes can be deployed.

Sounds complicated but doable, right? The real problem? Not only is there not a second source for these new separable security set-tops: There isn’t even a first source with a compliant box in production. The top box makers -- Scientific Atlanta and Motorola -- are not taking orders yet for the new devices. In addition, Motorola has slowed production down of the current models to a trickle, giving first priority of the current stock to the largest MSOs.

Just outside Las Vegas this week at the National Cable Television Cooperative meeting, independent cable operators listened to presentation panels from set-top-box manufacturers about their plans to cooperate with one another (or not) to take the first steps into an open market for set-top boxes.

Both SA and Motorola shared concepts for new CableCARD-compatible digital-cable set-top boxes not yet in production. Pace Micro, a Boca Raton, Fla.-based set-top-box maker, also introduced boxes -- essentially clones of SA’s and Motorola’s models. In theory, Pace’s boxes, which are shipping today, will work on either a Motorola or SA system even before the July deadline.

The problem is that many small operators like Full Channel rely on a national system for set-top authorization. The system, called “NAS,” is basically a load-sharing service on an authorization server based in Denver. Hosted by Comcast Media Center and Motorola, NAS allows small operators to share the cost of a very expensive computer system for conditional access. However, NAS is incompatible with Pace’s set-tops.

With nowhere to turn for set-top inventory, independent operators are feeling the effects of the industry’s manufacturing veterans’ posturing as they delay until the very last minute, stifling competition and creating fear and panic around the July transition. With a shortage of set-tops now and no hints of a production date for the new boxes, “Independent operators are standing by!”

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