Charter Dangles Broadband Carrot at the FCC

MSO Pledges to Expand its 100 Meg Footprint, Go All-Digital if FCC OKs Proposed Set-Top Waiver 4/09/2013 5:25 AM Eastern

Charter Communications has promised to expand the reach of its 100 Megabits per second high-speed Internet service tier by an additional 200,000 homes and go all-digital in every market if the Federal Communications Commission (FCC) grants the MSO a temporary set-top waiver that will help Charter deploy a new downloadable video security system.

Those are two of three voluntary conditions and "additional assurances" Charter president and CEO Tom Rutledge outlined in an April 4 filing, delivered as the FCC continues to weigh Charter's request for a two-year waiver that would let the operator deploy set-tops capable of running the new downloadable security system alongside an integrated version of its legacy conditional access platform. The proposed dual-security box would not support a CableCARD interface.  

Charter is seeking a two-year waiver that would let it deploy those boxes as it tees up the new downloadable security platform. It's all part of a broader plan at Charter to reclaim analog spectrum and apply that capacity toward other advanced services, such as DOCSIS 3.0 and HDTV.  

To help Charter secure the waiver, here's what Rutledge is proposing:

  • Charter will convert 100% of its systems -- including its entire rural footprint -- to all-digital within nine months after the end of the two-year waiver.
  • Charter will make broadband Internet access service of 100 Mbps or greater available to 200,000 additional homes within two years of grant of the waiver. Charter declined to say how many of its 3.8 million residential cable modem customers currently have access to the MSO's 100 Mbps Ultra cable modem tier today, which is paired with a 5 Mbps upstream, but the vast majority of its plant has the pieces in place to deliver such speeds. According to a 10-K filing with the Securities and Exchange Commission, Charter ended 2012 with DOCSIS 3.0 deployed to 94 percent of its homes passed, "allowing us to offer multiple tiers of Internet services with speeds up to 100 Mbits download to our residential customers."  About 98 percent of Charter's cable network supported 550 MHz or more of capacity at the end of 2012.
  • Charter will continue to provide CableCARDs for new CableCARD devices (such as a TiVo DVR) until such time as a third-party retail device with downloadable security is available for use by Charter subscribers.

Charter is modeling its plan after one Rutledge championed as the chief operating officer of Cablevision Systems, which received a similar waiver in 2009.  If Charter follows the same blueprint, expect it to use a downloadable security system based on the NDS (now Cisco Systems) "key ladder" that Cablevision is currently running on Samsung set-tops.  

Charter wants to deploy boxes with the proposed dual-security system, arguing that it would be prohibitively expensive to develop downloadable security boxes that also support the CableCARD. The MSO also holds that the proposed security system can be made to operate on a range of consumer electronics devices.  Charter told the FCC  in January that the costs of supporting a dual-security box with a CableCARD module and interface would "add $40 million of unnecessary costs for every million set-top boxes."

Like it did with Cablevision, the Consumer Electronics Association (CEA) opposes Charter's plan, and is urging the FCC to instead pursue AllVid, a proposed CableCARD successor that could be applied to all types of multichannel video programming distributors (MVPDs), not just cable operators.

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