Big MSOs Commit To Make Encrypted Basic Tiers Available To IP Devices

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The six largest U.S. cable operators are prepared to offer two ways to let third-party IP-based devices access encrypted basic-tier programming, as the industry looks to cut theft of service from broadband-only subscribers, the National Cable & Telecommunications Association said in a letter to the FCC.

The NCTA has lobbied the Federal Communications Commission to change its rules prohibiting cable operators from encrypting basic cable for systems that are all-digital. The FCC proposed such a change last October.

But the elimination of the encryption ban elicited complaints from companies including Boxee, which argued that its Internet set-top box relied on unencrypted, clear QAM digital cable programming.

To address that concern, the largest cable operators, which serve 84% of U.S. cable subscribers, will provide either 1) an adapter with home-networking capability to decrypt TV signals and pass them through to IP devices or 2) an encryption solution that would be made commercially available to third-party manufacturers. NCTA president and CEO Michael Powell outlined the solutions in a letter Wednesday addressed to FCC chairman Julius Genachowski.

"The fact is that encryption is ubiquitous in the video marketplace," Powell wrote. "All satellite and IPTV providers encrypt all of their programming, and the same is true for online video distributors. There is no valid basis for continuing to hold back cable innovation in today's dynamic and competitive marketplace."

The template for the NCTA's proposal appears to be the deal struck last month between Comcast and Boxee.

Under that agreement, Comcast is developing an adapter that would let users of Boxee-based set-tops access encrypted cable programming, along the lines of what the NCTA proposed in the first option. A long-term solution proposed by Comcast and Boxee involves licensing digital transport adapter (DTA) technology into third-party devices.

Powell urged the FCC to act quickly: "Indeed, each day that passes without commission action delays the significant benefits that will come from the commission's proposed rule change and subjects cable operators to further theft of service from broadband-only customers that could have been prevented by a rule change."

Boxee vice president of marketing Andrew Kippen said the company is currently reviewing the NCTA's proposal and declined to comment.

Cable operators say giving them the option to encrypt the basic tier in all-digital systems would reduce truck rolls, by eliminating the need to install physical "traps" that block unencrypted signals for nonsubscribers. NCTA also has argued the rule change would spur operators to move to all-digital systems more quickly, with benefits including faster broadband speeds accruing to customers.

The FCC originally adopted the rule prohibiting cable operators from scrambling their digital basic tiers so viewers with cable-ready TV sets would not have to buy or rent set-tops.

In the first option proposed by the NCTA, cable operators would offer to basic tier subscribers who have retail IP-enabled clear QAM devices a set-top box, DTA or other operator-supplied equipment with standard home networking capability (e.g., equipment with a DLNA-enabled Ethernet connector or Wi-Fi capability). The equipment would be available to subs at no charge for a limited period of time, the trade group said.

The second option would permit cable operators to use commercially available security technology -- licensable on a nondiscriminatory basis to manufacturers of such retail devices -- to provide access to encrypted basic service tier programming. Operators who elect this option would be permitted to encrypt their basic tiers three months after submitting such requirements to the FCC.

The NCTA proposed that the commitments would last for three years, unless the FCC determined that an extension is warranted. "In making such determination, the commission will consider cable operator and consumer costs, the services available from other video platforms and providers, the competitive disparity created by application of the commitments only to cable and not to other video distribution platforms, and the state of technology and the marketplace," Powell said.

The trade group added that the basic-tier encryption commitments "do not apply, nor relate in any way, to subscriber access to any other tier of video programming or any other cable services." They also should not apply to any cable systems that have already received FCC waivers of the encryption ban, NCTA said.

Powell recommended that other cable operators, beyond the six biggest MSOs, also be permitted to encrypt the basic tier.

"In light of the cable industry's commitment to offer these additional solutions, we urge the commission to permit all cable operators other than those cable operators subject to the above commitments to encrypt the basic service tier in all-digital systems upon adoption of a basic service tier encryption order," he wrote.