Countdown To 'Seven Oh Seven’

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It’s official. There’s now less than a year left to prepare for the July 1, 2007, Federal Communications Commission deadline prohibiting cable operators from deploying set-top boxes with embedded security.

That means today’s inventory of digital video boxes, which carry their security mechanisms on the inside, needs to wane. Subtract a quarter, to spring 2007. (Boxes in the field don’t need to be replaced, but new installs must use removable security.)

Next, manufacturers need to be given fair notice of actual order volumes for each model of new box, so they can ramp up their production lines in time. Subtract two more quarters. Now we’re at November of this year.

Oh, and don’t forget testing of the boxes and the cards. Which brings us to right about … now.

A BRIEF HISTORY OF TIME

Here’s the short version of how this all came to pass: The 1996 Telecom Act mandated retail availability of “navigation devices,” meaning set-tops. Two years later, the FCC issued “navigational device rules,” stipulating a July 2000 deadline for cable operators to provide “point of deployment” modules (now called CableCards) to customers who buy a set-top or TV with built-in set-top.

The industry met the deadline, but nonetheless was told by the FCC to stop deploying boxes with embedded security after January 2005 — the so-called “integration ban.” All multichannel video providers were included, except direct broadcast satellite providers.

Then, in December 2002, the cable and consumer electronics industries filed their landmark “plug-and-play” agreement for one-way devices to the FCC. In April 2003, it pushed the ban back to July 1, 2006.

Meanwhile, work advanced on what’s known as “downloadable conditional access” (see the May 9, 2004 Translation), which would eliminate the need for the CableCard. The system was demonstrated to the FCC, which liked what it saw enough to push the integration ban to July 2007. That brings us to now.

This year produced a flurry of waiver requests: Comcast Corp. and Charter Communications Inc. both asked for exemptions on low-cost, limited-capability boxes. Watch for a yay or nay as soon as tomorrow (Aug. 15).

Verizon Communications Inc. also asked for a waiver last month, saying that it’s also cooking up a downloadable security method. And besides, they’re new to the multichannel video-provider scene. Have mercy.

Technologists tend to get a little worked up when describing the work flow triggered for them by the FCC deadline. They usually start with a reminder that the security card itself is different and more advanced than the cards going into today’s one-way TVs.

For starters, all leased set-top boxes are inherently two-way, so the cards also deliver two-way content, like video on demand and electronic program guides. That’s one difference. Also, most of the new cards are “multistream,” which means they can simultaneously decrypt more than one scrambled string of bits.

Then there are the logistics involved with upgrading headend controllers, testing set-tops, ordering them for scale, getting rid of the warehoused boxes with integrated security, dealing with what will be a massive inventory of CableCards and making sure all existing applications run on the new type of box.

That kind of work intensity would seem to put the big kibosh, or at least a serious dent, into any other system initiatives — like, say, rolling out much of anything else.

SAY IT ISN’T SO

Any way you look at it, if you’re a cable operator, the July 1, 2007, deadline is a big fat bummer. It’s costly, slows progress on competitive initiatives and carries zero benefit for consumers.

Let’s start with the cost. Early estimates put the price tag as high as $480 million per year, for the whole industry, and until downloadable security is ready and deployable. That’s a guess, of course. Right now, CableCards go only to those customers who buy an HDTV or digital TV with a “built in” cable set-top — the “unidirectional” or one-way TVs. After July 1, 2007, CableCards will be required for all leased boxes. It’s a huge difference in card volume.

Here’s how that math comes together: Aggregate industry volume of 6 million units per year, times $60 to $80 for the total card plus slot interface costs, equals $360 million to $480 million per year.

For everyday people, the FCC’s rule does this: Nothing. It means that when you sign up for digital video service, whether standard definition or high definition, you get a box that has a card slot in it, instead of a box that doesn’t have a card slot in it.

Try explaining this to your non-industry friends. The reaction is somewhere between “But why?” and “So what?”

Yet, as of right now, you have to do it. It’ll cost you money. It’s a distraction from innovations that actually offer new features. There’s nothing marketable about it. And, short of a waiver, extension or ban of the ban, there are but 11 more months to get ready. Tick tock.

Stumped by gibberish? Visit Leslie Ellis at www.translation-please.com.

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