Proposed Bill Would Stir CableCard Debate Anew

NCTA, CE PLAYERS EXPECTED TO SQUARE OFF
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A proposed bipartisan bill that would scuttle the ban on operator-supplied set-tops with integrated security will produce a new, heated round of debate among the cable industry, TiVo and others in the consumer-electronics sector.

TiVo continues to rely on the CableCard security module to deliver cable TV services to its DVRs, including its new line of “Roamio” products, and fears the ban will cause costs to rise, usher in features that will be offered only on operator-leased boxes and stall the entry of a CableCard successor that would be applied to all pay TV operators.

TiVo is “not wedded to the CableCard,” Matt Zinn, senior vice president and general counsel, secretary and chief privacy officer at TiVo, said in a recent interview when the proposed bill was still circulating. “We all want to move on from CableCard. If you eliminate the security ban and leave nothing in its place as a successor solution, I don’t believe that there will ever be a successor, and retail solutions will be put at a disadvantage in terms of features and functionality and cost.”

SWITCHED AROUND

By way of example, Zinn said cable’s use of switched digital video originally prevented TiVo DVRs with CableCards from accessing channels in switched tiers, while leased boxes could. That put TiVo at a disadvantage until the debut of a Tuning Adapter that had to be paired with the TiVo box.

“If the cable industry is using a different security system than retail, I see that same exact thing happening again,” Zinn said.

The cable industry, meanwhile, stresses that the ban would only relieve operators from putting CableCards in leased boxes. Further, the massive base of CableCard devices — standing at more than 42 million strong since the security ban took effect in July 2007 — preserves the cable industry and CE’s common reliance on the devices for the foreseeable future.

“We will still supply [CableCards] to retail devices like TiVo,” Neal Goldberg, general counsel for the National Cable & Telecommunications Association, said in an interview ahead of the bill’s introduction. “The bottom line is that those are our customers, too, and we’re not going to shut them off .”

The assurance that the CableCard will live on “is sort of flipped,” Goldberg added, noting that MSOs already support tens of millions of leased CableCard boxes versus about 600,000 modules for retail devices. “CableCards are an additional cost to the cable customer because some of that additional cost has to be passed through. Separable security would live on for retail.”

‘INNOVATION IS IN THE BOX’

Goldberg also countered TiVo’s contention that cable will use the ban to innovate around the CableCard and put CE players at a disadvantage. “The innovation … is in the box, not the descrambling,” he said.

The cable industry has also argued against the need for new security rules for all pay TV distributors. TiVo, along with the Consumer Electronics Association, Google, and other parties have lobbied for “AllVid,” a proposed all-distributor successor. The Federal Communications Commission has sought comments on AllVid, but so far has not pursued a formal rulemaking effort.

But that doesn’t mean AllVid, or something like it, won’t come into play down the road. Although the proposed bill would end the security ban, the FCC would maintain its ability to regulate set-top boxes in the future.

TAKEAWAY

Consumer-electronics firms such as TiVo are ready to battle a proposed bill that would end the ban on MSO-supplied set-tops with built-in security.

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