FCC Delays Date Imposing Ban on Leased Set-Top Boxes with Integrated Security
Late yesterday, the Federal Communications Commission released the text of its Second Report and Order in the ongoing Navigation Device proceeding and granted a one-year extension, until July 1, 2007, of the effective date of its rule banning integrated security from new leased set-top boxes supplied by cable operators. The decision had been the subject of much controversy with the cable industry urging elimination of the ban in its entirety and consumer electronics manufacturers opposing even a short extension. In the end, this one-year extension recognizes the substantial progress achieved by the industry to date and was adopted unanimously in order to provide an opportunity for the cable industry to further develop software-based downloadable security as a conditional access technology that could be used in leased set-top boxes as well as in retail consumer electronics devices.
This proceeding is part of the FCC’s statutorily mandated effort to make multi-sourced “navigation devices” available at retail (See Updates dated June 11, 1998, June 29, 1998, May 17, 1999, May 24, 2000, June 1, 2000 and Sept. 10, 2003). The Commission found that separating out the security component would enhance the portability of theses devices by “increasing [their] market base, facilitating low-cost volume production and empowering new functionality and services.” The cable industry went beyond the statutory mandate and entered into an agreement with major consumer electronics companies, known as “plug and play,” whereby retail “digital cable ready” televisions can receive and display digital cable programming without the need for any set-top box, leased or retail. This was achieved with a standardized CableCARD-Host Interface in these devices which utilize cable operator supplied CableCARDs to descramble unidirectional cable services that would otherwise have required a set-top box to receive.
The CableCARD (formerly “POD”) contains physically separated security and copy control tools, and plugs into a CableCARD slot in a “digital cable ready” “Host.” The Host (be it a digital television, DVR, or digital tuner) may be produced either under a “CHILA” license available from CableLabs, or under a CableLabs “DFAST” license and a set of regulations adopted by the FCC in September 2003 as part of the “plug and play” agreement. Considerable time, effort, and cost would have been involved had current leased set-top boxes been required to be re-engineered to use CableCARDs by July 2006. That effort and cost would not have created any new functionality in the box. Downloadable security is a new technology under development by the cable industry that may allow security to be downloaded from the cable head-end directly into compatible devices that include new secure chips. Arguments for and against the ban and extension were extremely heated up to the closing hours of the Powell administration, when the order was released.
The FCC generally affirmed a desire to impose a ban on integrated security, in order to require a “common reliance” by cable operators and consumer electronics manufacturers on the same security interface. However, the FCC’s order recognized the many advantages of downloadable security as a better means to serve that end, and took important steps to accommodate its development. In extending the ban’s effective date from July 2006 until July 2007, the Commission noted that a further extension could be available if the development and deployment of downloadable security requires more time.
There were two significant clarifications in the decision that will help both in the transition to downloadable security and in the digital transition generally. First, the FCC ruled that cable operator supplied set-top boxes or other devices that incorporate downloadable security will not be deemed “integrated” or subject to the ban if downloadable security is also available for competing retail devices. Second, the FCC accommodated the need for low-cost digital devices so customers’ analog devices will still be able to display cable operators’ video programming services when cable systems go “all digital.” The Commission ruled that waivers would be available for the simplest integrated digital devices, although less likely for devices with advanced capabilities. “We do not believe that waiver will be warranted for devices that contain personal video recording (“PVR”), high-definition, broadband Internet access, multiple tuner, or other similar advanced capabilities.”
In response to the many concerns that bubbled to the surface during the vigorous debate preceding this order, starting Aug. 1, 2005, the FCC is requiring NCTA, CEA, and the six largest MSOs to report periodically on (1) how “plug and play” is working with details on installation, support, and troubleshooting for CableCARDs in one-way retail host devices; (2) the progress of negotiations for standards governing two-way devices (that may receive and display interactive and on-demand services in addition to one-way linear services); (3) the availability of a “multi-stream CableCARD” which would allow the reception of one channel while another is being recorded; and (4) (starting Dec. 1) the development and deployment schedule for downloadable security, with an opportunity for public comment on the licensing terms for such security.
Although the FCC’s approach requires cable operators and CE manufacturers to rely on the same security interface, it specifically preserves the rights of cable operators to innovate. The FCC did not take up invitations by the consumer electronics industry to disrupt the current means by which these cable technology solutions are developed through CableLabs. The Commission noted that CableLabs’ OpenCable Applications Platform (“OCAP”) is “the basis for interactive functionality in two-way devices.” It also stated unequivocally that “it is not our intent to force cable operators to develop and deploy new products and services in tandem with consumer electronics manufacturers. Cable operators are free to innovate and introduce new products and services without regard to whether consumer electronics manufacturers are positioned to deploy substantially similar products and services.”
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