News

FCC Rule: Set-Top Killer?

5/03/2010 12:01 AM Eastern

Cable may have to kiss
the MPEG-2 digital set-top goodbye,
if the Federal Communications
Commission has its way.

The commission’s proposed
AllVid spec for providing a common
way to access cable, satellite
and telco TV services would, if
enacted as a regulation, “ban the
pay TV set-top box as we currently
know it from the U.S. market,”
according to IMS Research senior
analyst Stephen Froehlich.

“Such a ban would directly affect
more than 40 million set-top
box shipments and $4.7 billion
worth of sales annually,” Froehlich
wrote in a research report
last week.

On the other hand, such an
FCC rule could “significantly decrease”
the overall cost of customer-
premises equipment for
pay TV operators by forcing them
to migrate to standardized Internet
protocol-based gateway architectures,
in Froehlich’s analysis.

The total financial impact of
any new FCC rule “depends both
on its details and future innovation,”
Froehlich cautioned, noting
that specific numbers about
the cost of an AllVid-compliant
gateway or device are speculative
at this point.

The total cost of AllVid will depend
strongly on whether it introduces
support issues that require
truck-rolls, Froehlich said: “The
FCC could word regulations in
such a way that a massive fingerpointing
game ensues anytime
there is a problem with the system.”

Furthermore, if the FCC’s All-
Vid regime no longer required
cable set-tops to include both CableCard
and FireWire (IEEE 1394)
components, such a move would
eliminate about $600 million per
year in set-top box costs for the
cable industry, he added.

The FCC last month issued
a notice of inquiry concerning
its proposal to require U.S. cable,
satellite and telco TV operators
to supply all their customers
a device or gateway—capable of
delivering as many as six different
IP video streams to TVs, DVRs or
other equipment in the home—
beginning no later than the end
of 2012.

If the new regulation allowed
operators to deliver a user interface
over a standardized remote
protocol, such as the RVU
Alliance’s remote user interface
technology, “the general
trend will be that the value-adding
functions will move from
the MPEG decoder to the broadband
gateway or to servers on
the ‘cloud,’” Froehlich wrote. In
that case, he said, AllVid gateways
would reduce the overall
cost of CPE by minimizing the
number of MPEG decoders and
associated intellectual property
fees per TV.

Meanwhile, AllVid could create
an even bigger hardship for certain
other pay-TV distributors.

For example, AT&T’s U-verse
TV service as it is currently implemented
is not able to deliver
six full video streams to a subscriber
household, as the All-
Vid gateway requirements are
described in the FCC’s notice of
inquiry.

Asked to comment, AT&T said
it is able to deliver four different
live standard-definition channels
to four different rooms in
a single subscriber home each
with picture-in-picture, so it
therefore delivers a total of eight
different video streams. “We
look forward to participating in
the FCC’s proceeding,” the telco
said.

The AllVid proposal, though,
clearly indicates multichannel
video programming distributors
should be able to offer six
independent video streams. “If
a subscriber’s home is equipped
to handle six separate video
streams and seven people in the
home want to watch programming
on seven different devices,
which devices take precedence?”
the commission asked in the
document.

MARKET FALLOUT
An AllVid requirement could shake up the
U.S. set-top landscape:

Potential winners: “No-new-wire” networking interface manufacturers
such as Broadcom, Entropic Communications, Sigma
Designs and Atheros Communications.

Potential losers: Set-top box business units of Motorola, Cisco
Systems, EchoStar, Technicolor, Pace, and Samsung.

SOURCE: IMS Research

September