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CableCanard

9/25/2007 8:25 AM

What a waste. In the span of about two months, cable operators have shipped more than 650,000 set-top boxes with CableCards plugged into the back. 

The boxes, remember, don’t do anything differently from their non-CableCard cousins. They just cost more.

So that’s at least $32.5 million operators would not have had to spend otherwise, assuming $50 per CableCard. Using NCTA’s estimates of $72-$93 per box, you get $46.8 million to $60.5 million. And counting: This is only after nine weeks under the FCC’s ban on set-tops with integrated security functions.

Note that 650,000 CableCard-based set-tops is more than double the number of CableCards that consumers have requested in the last three years.

The additional cost will likely be spread across all digital-cable subscribers, in the form of incrementally higher set-top lease fees.

And in return, cable customers get… nada, nichts, nil.

The FCC’s rationale for forcing cable companies, but not satellite operators or most telephone companies, to use the same separable-security technology is… what, again?

Let’s look at the agency’s June 29 order granting permanent waivers to all-digital multichannel video programming distributors (or those promising to be "all-digital" by Feb. 17, 2009), which spells it out like this:

The Commission concluded that such common reliance will “align MVPDs’ incentives with those of other industry participants so that MVPDs will plan the development of their services and technical standards to incorporate devices that can be independently manufactured, sold, and improved upon” and make it “far more likely that [MVPDs] will continue to support and take into account the need to support services that will work with independently supplied and purchased equipment.”

So will a thousand cable-ready consumer devices now bloom? Well, no.

See, the consumer-electronics industry has already moved on, after apparently concluding that getting access to cable’s linear TV programming isn’t enough to make the sale. (As evidenced by the poor uptake of CableCards — only 278,000 as of early September.)

The next fight is over so-called two-way cable. The Consumer Electronics Association wants to force cable to open up not just linear programming but to provide standardized access to interactive services like VOD, pay-per-view and on-screen program guides. But not through the OpenCable Platform (a.k.a. OCAP), which cable has been working on for years. Through something brand-new, called DCR+ ("digital cable ready plus"), which would provide access to a subset of interactive cable services.

The NCTA, in not so many words, said: You have got to be kidding. Here are the association’s comments from a Sept. 10 filing with the FCC:

The CEA proposal is an astonishingly intrusive proposal. CEA would require 20 percent of cable customers to limit reception of their services on cable-supplied set-top boxes to what a DCR+ can do and then forbid them from upgrading their set-tops as technology advances. CEA would shift to cable operators the practical costs of developing and deploying DCR+ devices: costs of a major redesign of every part of cable architecture, including VOD, guides, DVRs, leased set-top boxes and entirely new CableCARDs with radically different capabilities, resources, and form. The costs will be suffered by cable customers even if no DCR+ devices are ever built.

The FCC has yet to rule on the two-way cable proposals. After the CableCard mess, which is costing the industry millions of dollars every week, operators should hope the current commissioners take a very, very long look at this issue before doing anything.

September