News

FCC Proposes End to Scrambling Ban

10/03/2011 12:01 AM Eastern

Washington — Federal Communications Commission chairman Julius Genachowski has proposed allowing cable operators to encrypt their digital-basic tiers, according to an angency aide familiar with the notice of proposed rulemaking, which he said was circulated to the full commission for a vote this week.

The FCC adopted the rule prohibiting cable operators from scrambling digital basic tiers so that viewers with cable-ready sets would not have to buy or rent a set-top box. Now the agency seems to be reversing course because of the cost savings to cable operators, the reduction in pollution from fewer truck rolls and the general lack of complaints in markets where the agency had granted waivers.

One of the most prominent waivers was granted to Cablevision Systems in 2010 to encrypt its New Yorkarea systems. In its request, the MSO pointed to some of the factors cited above. It also helped that 99% of Cablevision’s customers had either a set-top or a CableCard.

According to an aide to one of the commissioners who has seen the item, the NPRM proposes allowing all cable operators to encrypt digital basic channels, given that the TV industry is going all-digital and that the move would save gas on truck rolls by allowing remote activation and deactivation, as well as make it easier to prevent theft of service.

The FCC has already granted several waivers, and more are in the hopper from cable operators. “We basically just copied the Cablevision petition,” as one cable attorney described it to the commission staffer.

Cable operators have long argued that the FCC made a mistake by imposing the CableCard regime, which standardized encryption in an effort to separate the surfing and security functions of set-top boxes in the hopes of generating a retail set-top market. That standard is one of the things that paved the way for the FCC’s proposal to allow for scrambling of the basic tier, though, the staffer said.

Part of the rationale of why this makes sense is the “digital cable-ready” CableCard standard, he said.

One byproduct of encryption would be for those third and fourth sets in the home, some of them analog, that would now need a set-top to receive the scrambled signal. “The issue of who it will affect the most is those who have one set-top, but four TVs, and I think part of the item is to try to figure out what the best way forward is for that,” the source said.

As of press time, none of the commissioners had voted on the item except for Genachowski, who indicated his support by circulating it for a vote.

The aide withheld judgment on the proposal until commissioners were able to meet about it, but said there were no obvious reasons to object to the item.

The FCC took a similar tack with the ban on HDTV functionality in low-cost set tops, another CableCardrelated move. The agency issued a number of waivers of its mandate separating the security and channel-surfi ng functions in set-tops so that operators could off er integrated low-cost HD boxes, then decided a blanket waiver would be in the interests of promoting HD adoption and migration to digital cable.

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