Operators Are Top CableCard Buyers

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In July and August, the 10 biggest cable operators in the United States deployed more than 650,000 set-top boxes with CableCards plugged into the back, according to the National Cable & Telecommunications Association.

That's already more than double the number of CableCards — 278,000 as of early September — that have been put into service over the last three years at the request of individual consumers.

The NCTA disclosed the figures in a Sept. 24 letter to the FCC, providing an update on the progress of CableCard deployments.

With just a handful of exceptions, cable operators have been required to use CableCards in all of their digital set-tops since the Federal Communications Commission's so-called integration ban went into effect July 1.

In the first two months, the cable industry spent at least $32.5 million complying with the ban, assuming industry analysts' cost estimates of about $50 per CableCard. Using the NCTA's estimates that each CableCard-based set-top is $72 to $93 more expensive than comparable integrated boxes, the cost would have been $47.8 million to $60.5 million.

Digital set-tops with CableCards do not function differently from models with integrated-security capabilities. The FCC's integration ban is supposed to stimulate competition in the retail market for devices that connect to cable networks, by requiring both cable operators and consumer-electronics makers to rely on a common solution for separated signal security.

In September, Comcast said it planned to take the FCC to federal court after the agency, for a second time, rejected the operator's request to have three low-end set-top models exempt from the integrated set-top ban.

CableCards are an interim solution until the cable industry can develop a software specification for a Downloadable Conditional Access System (DCAS). Denver-based PolyCipher, a joint venture of Comcast, Cox Communications and Time Warner Cable, is expecting that its DCAS product will be available in systems for field testing by mid-2008.

The FCC earlier this year granted a limited waiver to the integration ban to Charter for certain low-end set-tops, citing that operator's financial straits. The agency also gave Cablevision Systems an exemption until July 1, 2009, because it uses a removable smart card supplied by NDS Group to handle security in its set-tops.

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