Still hoping to hit the jackpot with a “gateway” device, FCC asks public to pick a card, any card

Would you like a cable box that (a) you don’t have to pay the cable company to rent, (b) you install yourself, (c) puts the Internet on your TV and (d) has a ton of new and innovative features? Well, the FCC wants you to have one and, acting quickly on a set of proposals issued just last April, the Commission has now issued new rules to try to get it for you. Of course, those new rules are actually updates on the rules that were supposed to get you that box over a decade ago. Still, hope and regulations spring eternal here in Washington.

The push to bring competition to the cable set top box universe began with the Telecommunications Act of 1996. Congress instructed the FCC to make rules that would encourage the development of third party equipment that consumers could use to access video programming and other services offered by cable companies and other multichannel video programming distributors (MVPDs). The hope was that consumers would be able to buy fully functional equipment that the consumers could move between different service providers. This, in turn, would not only make it easier for consumers to switch providers (encouraging competition, lower prices and better services from providers), but also produce new and innovative set top boxes.

Most set top boxes, however, don’t just enable navigation of MVPD services. They also restrict access to those services – unscrambling and decrypting only those services for which the subscriber has paid. Thus, to protect the security of MVPD systems while still allowing third party navigation devices, the FCC and the affected industries adopted the “CableCARD” system. The CableCARD system separated the security functions of the set top box from the navigation functions. The security functions were segregated into a credit card sized element to be provided by the MVPD that could be plugged into various set top boxes, including third party boxes.

The idea was that consumers could go out and buy any box they wanted and then rent the CableCARD from whatever MVPD they happened to choose. If the consumer moved or switched providers, they could use the same box and just switch out the CableCARD. After several false starts, CableCARDs became available and several hundred different devices were certified for use with CableCARDs.

Then no one bought them. (Well, almost no one. The FCC estimates that just one percent of all navigation devices are purchased at retail.)

There were many reasons for this lack of success. Regulatory delays, pricing issues, difficulties in ordering and installing the CableCARDs, and the limited number of “two way” and interactive services (e.g., video on demand) available through third party boxes have all been suggested. The FCC identified several of these issues in the National Broadband Plan and moved to address some of them in its recent order.

Some of the new rules are highly technical and will chiefly impact cable operators and equipment suppliers – things like streamlined certification processes to approve more devices for use with the CableCARD system.

Other rules will have a more apparent effect on subscribers using third party devices. For example:

  • Cable operators are now required to support the reception of switched digital video (SDV) services on third party devices. SDV systems are used by MVPDs to deliver scheduled programming in a more bandwidth-efficient manner. In an SDV system, the cable box requests specific channels from the cable system, which provides those channels only as they are requested (as opposed to the usual system of sending the signals of all the channels down to the subscriber’s home and using the box to select between those channels). Most third party boxes, however, lack the two-way communication needed to request channels. The new rules require SDV support for such boxes without mandating the exact technology used to provide such support. The rules also impose new technical standards intended to encourage increased connection to home networks.
  • Cable operators must now provide “multi-stream” CableCARDs by default unless a subscriber specifically requests a “single stream” CableCARD. This should help ensure that third party devices are capable of decrypting multiple channels at once, allowing the subscriber to view one channel while recording another. “Multi-stream” CableCARDs have been available for several years, although cable operators have not always provided them to users of third party boxes without a special request.
  • In an attempt to curb price discrimination, cable operators are now required to list on their websites and annual rate cards the fee for CableCARDs separately from the “host” devices. The goal is to allow consumers to see what they are paying for the CableCARD separately from what they are paying for the navigation box. The FCC hopes this will allow consumers to (a) more accurately compare the cost of a retail box to the cost of an MVPD-provided box and (b) ensure they are not paying more for CableCARDs in third party boxes than they pay for CableCARDs in the MVPDs’ boxes. The new rules also require that the prices for CableCARD lease fees be uniform and that users of third party boxes get the benefit of any “package discounts” that include MVPD-provided boxes.

The FCC also addressed the issues involved with the installation of CableCARDs. One complaint about the CableCARD system was that many companies required users of third party boxes to have the CableCARDs installed by the cable providers’ technicians. This imposed numerous delays and difficulties as the boxes could not be used until the customers were able to schedule an appointment for installation. Even when technicians arrived (“Our service window is between 9 a.m. and 5 p.m., Sir”), the relative rarity of third party boxes often led to confusion about proper installation, the number of CableCARDs required, etc.

Under the new rules, customers may order CableCARDs and self-install them. For those customers preferring professional installations, new service standards for such installations are imposed. The new rules also streamline the FCC’s complaint process for violations involving CableCARD services and installations.

Even as it adopted these new rules, however, the FCC recognized the poor track record of the CableCARD system. In fact, the FCC’s National Broadband Plan calls for an entirely new approach to connecting consumer devices to cable systems – envisioning a mandatory “gateway device” similar to a cable modem to which any television, DVR or other device can attach. While that next generation system gestates, however, the new CableCARD rules may help consumers gain a remote measure of control over their set top box.