CableCard Ready — or Not

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With just one week left before the Federal Communications Commission’s ban on integrated set-tops kicks in, the agency still had not acted on some two dozen waivers requesting a full or partial exemption to the rule as of press time Friday.

Big cable operators have assumed they won’t be receiving a pass from the FCC on the July 1 ban. Those companies and their vendors have scrambled over the last six months to get ready to meet the deadline.

Verizon Communications does not appear to have done the same.

As it stands now, the set-top boxes Verizon is deploying as part of FiOS TV service — Motorola’s QIP series — are not capable of accepting a removable CableCard device to meet the requirements of the FCC ban, according to Motorola.

Larry Robinson, Motorola vice president of product management for digital video solutions, confirmed that the QIP boxes are not CableCard-ready. “The boxes that Verizon is shipping today have embedded security,” he said.

He added, “We’ve obviously talked with them about the implications” of the FCC’s ban. Robinson referred additional questions to Verizon.

Verizon in July 2006 filed a petition with the FCC for a waiver to the set-top ban. The telco said it needed an exemption from the rule “to facilitate the rapid deployment of innovative service offerings that will provide important new competition to the video market.” The fact that it is providing wireline competition to cable, the company said, “places Verizon squarely within both the language and fundamental purpose of the waiver provision.”

But the agency has not yet ruled on the request. Nor has the FCC responded officially to the National Cable & Telecommunications Association’s industry-wide waiver request or those filed by nearly two dozen service providers. An FCC spokeswoman declined to comment on when the agency planned to act on those requests.

Asked what Verizon will do if denied a waiver, director of media relations Sharon Cohen-Hagar said: “We are hopeful that the FCC will grant our petition for a waiver. … We won’t have any more to say about this until the FCC publishes its order.”

FCC chairman Kevin Martin has said he would favorably consider waiver requests from new entrants in the video market, while at the same time opposing “blanket” waivers to large cable operators.

But Verizon is no struggling startup. Last week, the telco proudly announced that it has signed up nearly 500,000 FiOS television customers in the 20 months since first launching the service.

NCTA CEO Kyle McSlarrow said giving Verizon an eleventh-hour reprieve while requiring cable operators to meet the rule would be “patently unfair” at this late stage. He spoke at the Society of Cable Telecommunications Engineers’ Cable-Tec Expo 2007 here last week.

“You might have thought [the FCC] would deny our waiver and grant Verizon’s,” McSlarrow said in a question-and-answer session following his keynote speech Wednesday. But with just days to go before July 1, he said, “I think that would give them pause.”

The FCC’s Media Bureau in January denied Comcast’s waiver request for three low-end set-tops; Comcast has appealed that ruling to the full commission (which is also still pending). The agency to date has granted the waiver requests of six operators, including one for Charter Communications’ low-end boxes on the basis of the operator’s “severe financial difficulties.”

If Verizon faces the need to comply with the separable-security mandate, it might not have a technical solution.

Gartner analyst Patti Reali said the issue for Verizon is that the hybrid Motorola QIP set-top uses traditional cable quadrature amplitude modulation (QAM) for linear channels, but uses Internet Protocol to access features such as video-on-demand. Therefore, she said, Verizon couldn’t use an ordinary cable set-top with a CableCard in its network without disabling at least some of is features.

“Anything on the QIP box that’s interactive has to go over the IP connection,” she said.

Meanwhile, cable operators said they’re ready to cut over to CableCard-based boxes.

Charlie Kennamer, Comcast’s vice president of engineering, standards and industry affairs, said the operator has already deployed CableCard-enabled boxes in all its markets, at least for trials in employee’s homes.

“We’ve pretty much depleted our inventory of integrated boxes,” he said, speaking on a panel at the SCTE show Thursday. “If we don’t, we’ll have a bunch of bricks in inventory after July 1.”

Kennamer said it will probably be end of this year “before we’re back to 'business as usual’. ”

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