Boxee Presentation Could Slow Basic Tier Encryption Waiver

Boxee executives last week met with FCC Chairman Julius Genachowski, some of his staff and Media Bureau officials to discuss how letting more cable operators scramble their basic service tier would hurt the nascent over-the-top video box market, an ex parte notice shows. “The Commission should not permit encryption of basic tier cable without taking concurrent action to increase compatibility of consumer devices with MVPD programming and ensure alternative means of access by non-MVPD devices to broadcast channel and public access programming,” Boxee said in a 26-page slide presentation given to the chairman and staff (http://xrl.us/bmq5ry). A bureau spokeswoman declined to comment.

Boxee said up to 40 percent of users of its Live TV dongle to its set-top box, which allows customers to watch live HD broadcasts over the air or unencrypted digital cable signals through a QAM tuner, have connected to cable rather than an antenna. The Boxee box integrates those channels with online video from YouTube and other sources, it said. “If Clear QAM is eliminated, consumers who have little or no OTA antenna reception will not only be denied the choice of ’shaving the cord,’ with a product such as Boxee, but will also be forced to rent additional set-top boxes for any TVs in their homes that were previously receiving the basic tier via Clear QAM,” it said in a letter accompanying the presentation (http://xrl.us/bmq5tu).

A final rule should be delayed until the FCC can fully consider the issues raised by technology such as Boxee, John Bergmayer, a senior staff attorney at Public Knowledge, told Dave Grimaldi, an aide to Commissioner Mignon Clyburn, an ex parte notice shows (http://xrl.us/bmq5ug). The commission should also take into account the needs of institutional pay-TV users, Bergmayer said. Boxee has raised new arguments that deserved to be fleshed out in the record, Bergmayer said in an interview. “They and other companies had an issue that didn’t get a full hearing in the record,” he said. “I think the FCC would do well to take it into account and see what it can do to account for companies like Boxee,” he said.

Boxee does not have a robust history of government relations. CEO Avner Ronen said the company learned of the cable industry’s waiver request from a customer who suggested it could affect their service. “We reached out to the FCC and asked for an audience with the chairman and were very happy he agreed to schedule the meeting on short notice,” Ronen said. During the hour-long presentation, Ronen demonstrated Boxee’s technology, and discussed its product roadmap, which includes new features for watching live TV on the device, Ronen said. “We're going to have new features and capabilities in Boxee this year and we're relying on access to QAM,” he said. Ronen said the chairman and his staff appeared engaged in the discussion and demonstration: “We don’t have experience with this, so we don’t know how to read their reaction.”

The NCTA isn’t aware of any holdup to the waiver, but noted that the commission typically likes to respond to late filings such as Boxee’s and it takes time to incorporate those responses into a draft. The association fired back at Boxee in a 10-page letter to the FCC. First, there are several benefits to encrypting cable operators’ basic tier, including the ability to remotely turn video service on and off, said the letter by Neal Goldberg, NCTA general counsel. That would eliminate the need to schedule an appointment with a technician, it said. The basic tier encryption rule waiver would also reduce service theft and eliminate the ability of broadband-only subscribers from illicitly accessing basic tier channels, the letter said.

And if Boxee wants access to MVPD programming, the CableCARD system is set up to provide that access, the letter said. “Its customers would be able to access encrypted cable channels if it included a CableCARD slot in its device,” the letter said. Moreover, Boxee’s claims that a significant part of its customer base can’t access over-the-air broadcast signals with an antenna “cannot be squared with its marketing of Live TV as a cord-cutting device,” the letter said. “If Boxee genuinely believed that almost half of its customers couldn’t get broadcast signals with an antenna, it seems unlikely it would be urging its Live TV customers to cut the cord, cancel cable service and use an off-air antenna,” it said.

Boxee said it plans to seek support from its users online. In a blog post set to be published Wednesday morning, Boxee asks supporters to write to the FCC. “It would be great if you could write a short note to the FCC expressing your concern about having to give even more money each month to your cable company,” the post says, and provides a link to a page on Public Knowledge’s website where visitors can fill out a form letter.