FCC CableCARD Order May Reflect Industry Agreement on Many Issues

Forthcoming rules on fixing CableCARDs as an interim step toward adoption of gateway devices that let plug-and-play devices connect with any pay-TV provider and get online video on set-top boxes may reflect agreement among industry players on perhaps all but two significant issues, executives said. There appears to be agreement among consumer electronics and pay-TV companies on many of the ways cable operators can make it easier for subscribers to use CableCARDs to connect devices, like DVRs, that they buy from retailers to cable systems, executives of both industries said. They expect the agency will OK use of digital terminal adapters for cable operators with systems of any size to use cheap set-top boxes without CableCARDs. That would let subscribers get HD without two-way services like interactivity.

FCC Chairman Julius Genachowski is expected by industry and commission officials to soon seek a vote on an anticipated Media Bureau draft order mandating fixes to how cable operators deal with CableCARDs. The order hadn’t circulated last week but is likely to do so in time to be voted on at the Oct. 14 commission meeting, agency and industry officials said. A bureau spokeswoman declined to comment on the coming item.

"There is a rather bloody history” on CableCARDs between CE and cable operators, “but I am heartened by some of the things I am hearing from cable” on improvements, said Vice President Julie Kearney of CEA. “They seem sort of ready to put down some of their differences.” General Counsel Neal Goldberg of NCTA sees “general agreement on the part of cable operators, the FCC, TiVo” that cable operators “want to do what’s best for consumers,” he said. “We supported most of the FCC’s proposals” in the CableCARD rulemaking. Some, such as requiring cable technicians to bring the correct number of cards to customers’ homes, are “no-brainers,” Goldberg said.

An area of disagreement among industry players is whether cable operators can keep using tuning adapters, often bulky set-top boxes, for plug-and-play device users to get channels on systems using switched video technology, executives said. Operators want to continue using the tuning adapters while making improvements to them, but TiVo wants them to install gear in their headends so a plug-and-play device that doesn’t work with tru2way technology doesn’t need to be connected to a box. It could cost $10,000 to $25,000 to install a server in each headend, which serves tens of thousands of subscribers, when cable operators use switched digital video to save bandwidth by not sending all subscribers every channel all the time, an executive estimated.

The IP backchannel solution TiVo seeks for headends “is just a more elegant, cost-effective and consumer-friendly method of signaling” than the tuners companies including Time Warner Cable now use, said TiVo General Counsel Matt Zinn. Time Warner Cable said there are “significant problems” to using IP signaling to plug-and-play devices to tell them what channel is being transmitted which make it “untested and fraught” with complexities and costs (CD Sept 15 p12) OR (CED Sept 15 p9). “Time Warner is just raising straw-man technical arguments, just to make things more complicated than they really are,” Zinn said. “If it can be used for VoD, it can be used for switched digital. There may be some differences, there may be some complexity, but it can certainly be done.” Time Warner Cable declined to comment on the statement.

Ditching tuning adapters for IP signaling means “dealing with a significant amount of technological investment and research and development to accommodate what might be a small group of users,” said Senior Director Jason Friedrich of Motorola. “There is a solution out there. That is the tuning resolver.” CEA thinks IP backchannel is a viable solution, said Kearney. “I don’t know that we've been given great reasons why it can’t be done. Consumers hate the tuning adapter,” and “we know that TiVo has had success with the IP backchannel with at least one cable provider,” she said. RCN is among the cable operators using it for VoD, Zinn said.

"We agree that there can be some changes to make the tuning adapter work a little bit better,” said NCTA’s Goldberg. It’s a “heck of a process to implement an IP backchannel solution” that would be used for cable subscribers who already have working gear, he added. A better approach is making tuning adapters easier to use and letting subscribers install them without getting a visit from a cable technician, Goldberg said. “The TiVo customer is our customer and we want to work with TiVo and the FCC to make the tuning adapter a better experience without re-engineering every headend for a backchannel experience."

Cable operators prefer the tuning adapter, because using one of them and a CableCARD is cheaper than the backchannel solution, especially while there’s not “a critical mass of people using” TiVo and other devices that would benefit from IP signaling, said analyst Sam Rosen of ABI Research. “They're trying to adhere to the letter of the FCC rules without opening up their network to other devices that take away their control and their ability to tie the customer into their experience,” he said of cable operators. “TiVo could use tru2way and not need the tuner, but they probably feel their guide is a better experience."

The other area of disagreement between cable and some others involved in the docket is the extent to which operators must break down the cost of CableCARDs in the monthly bills they send to subscribers. “A lot of things we're hearing from some filers go far beyond the FCC’s proposals,” Goldberg said. “It just doesn’t make sense to have a bill cluttered with all that type of information” when “there is very limited real estate” on the document, he said. Putting the cost to the operator of CableCARDs to subscribers who don’t pay for them separately from cable service “would create more consumer confusion, but we're willing to work toward as much transparency as we can,” Goldberg said. Consumers “should know what they're paying for” and “what goes into their bundle,” said Kearney. “Things should not be buried.”