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To Seal In Revenues, Open the Video Lock

3/17/2002 7:00 PM Eastern

It's no great secret that the one of the larger technological grumbles these days is about cable providers' inability to change the lock on digital-video security without having to replace both it and
the door.

It's also no great secret that U.S. cable providers are redlining in risk, as more and more consumers choose direct-broadcast satellite — or that stateside operators lag their European counterparts by at least one year in the deployment of revenue-producing interactive services.

The intractable lock and the stagnancy risk are related. Locks, and (speaking in analogy) the steel security doors on which they're mounted, are built into digital set-tops in the form of encryption and conditional access. The lock is the encryption. The door is the conditional access — on the condition that a customer is authorized to receive a scrambled service, the access door swings open.

In contemporary U.S. digital-video installations, the lock and the door are inextricably intertwined, and cannot be purchased separately.

The keys to unlocking and opening that door are the secret sauce for the industry's duo of dominant suppliers. For Motorola Inc. and Scientific-Atlanta Inc., sharing key recipes with other manufacturers — thus encouraging competition that would lessen per-unit prices — is like asking Merck & Co. and Bristol-Myers Squibb Co. to openly publish the formulas they spent zillions of dollars to discover and patent.

Ten years ago, the European group responsible for DTV standards, known as DVB (Digital Video Broadcast), started tackling the same riddle: How do you keep premium content secure without ceding too much control to security suppliers? What they wound up with is a decoupled set of conditional access and encryption methods called "simulcrypt."

An invented word, simulcrypt essentially means you can change locks without having to change doors, too. Technically, simulcrypt is a system that allows different set-tops to receive and descramble premium signals, using different conditional-access schemes. It does that by walling conditional-access functions to a separate, removable card that's not unlike the POD (point-of-deployment) technique defined by Cable Television Laboratories Inc.'s OpenCable project.

In a vast oversimplification, simulcrypt works like this: Keys to content, called "control words," are encrypted and sent along to the digital set-top in an Entitlement Control Message, or ECM. Whether or not the customer using the simulcrypt box is allowed to receive the scrambled content, with its nested key, is discerned under a separate transmission of an Entitlement Management Message, or EMM.

When a European operator chooses to use two conditional-access systems, they run side by side, spewing out separate entitlement messages to separate set-top types.

Much of this framework, of course, already exists in the U.S. Back in 1996, CableLabs negotiated a cross-licensing "Harmony" agreement between Motorola and S-A. In 1999, MediaOne Group Inc. used a simulcrypt approach in its Jacksonville, Fla., system. that included neither duopoly incumbent. And Cablevision Systems Corp. is using a simulcrypt-like technique with its Sony Corp. digital-cable rollout.

PODs work both in set-tops outfitted with receptacle slots and in TVs — despite what consumer-electronics companies say about the spec not being ready for primetime. At the Consumer Electronics Show two years ago, Panasonic demonstrated a TV with a built-in POD slot. It worked in Cox's Las Vegas system. (Some believe Panasonic approached the project to disprove the cable POD, and was surprised to see that it worked. It hasn't yet built a commercial version of the set.)

Why, then, aren't multiple conditional-access schemes — either based on a Harmony offshoot or a simulcrypt conversion — happening in the U.S.? There's no easy answer.

Part of it has to do with cost: Adding the muscle to support multiple security formats means adding another rack of expensive equipment, per headend, on the hope that competing set-tops will someday hang from it.

Another part of it has to do with the blessing — and curse — of inertia. In fourth-quarter 2001, U.S. cable providers fielded about 150,000 new digital boxes each week, based on proprietary security systems. That's the good news. It's also the bad news. With that much momentum, it's hard to turn the ship.

On the other hand, addressing today's security conundrum for incremental (i.e. not fielded) set-tops may be the only way to break digital video hardware and applications out of the dis-innovation vortex.

The choice lies mostly with cable providers: Should you write the check to open security, or risk losing the monthly checks of existing cable customers to satellite providers?

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