FCC Publishes Order Giving Cable Operators Permission to Encrypt Basic Service Tier
After months of delay, the FCC released an order that will let cable operators fully encrypt their services in all-digital systems. The order, published Friday (http://xrl.us/bnuci7), had been expected as far back as February (CD Jan 26 p6). But a presentation by Boxee, which introduced a device designed to use cable operators’ unencrypted basic tier signals, slowed its approval (CD Feb 8 p4). The order is largely consistent with what an earlier draft proposed, but adopts a series of commitments by the six largest cable operators for accommodating devices like Boxee’s. The commission concluded that a limited number of customers will be affected by the rule change. Communications industry attorneys following the rulemaking said they don’t expect the order to be challenged.
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The order also grants a series of waivers of the ban on encrypting the basic service tier that had been requested by RCN, Mikrotec CATV, Inter Mountain Cable and Coaxial Cable TV, effective upon its release. Those waiver recipients must still comply with consumer protection conditions in the order. Other cable operators will have to wait 30 days after the rule is published in the Federal Register, following review by the Small Business Administration and GAO.
Under the order, subscribers who buy only the basic service tier and don’t already use a set-top box or CableCARD will be entitled to “the equipment necessary to descramble or decrypt” the signal on up to two TV sets for free for two years, the order said. Those who subscribe to higher level of service, such as expanded basic, but use a DTV set or other CableCARD device to receive programming, are entitled to such equipment on one set for one year. And subscribers who receive Medicaid and also buy basic service without using a box or CableCARD device are entitled to such equipment on two TV sets for five years.
Cable operators who wish to encrypt their basic service tier on all-digital systems must notify subscribers of those offers at least 30 days before encrypting the basic tier signals and for at least 180 days after, the order said. Moreover, the top six cable operators will have to ensure third-party IP-connected devices the ability to receive basic-tier service for three years, as outlined in letter of commitment from the NCTA (CD July 26 p13). After three years those requirements will expire, but the Media Bureau can opt to extend them. That provision drew some concerns from Commissioner Robert McDowell.
"I would prefer that the Commission, rather than the bureau, make this call,” McDowell said in a statement released with the order. “I am concerned that delegating this authority to the bureau may invite further unnecessary delay.” McDowell approved the order in part and concurred in part, as did fellow Republican Commissioner Ajit Pai. “I would prefer a less complicated order with fewer conditions,” McDowell said. Like McDowell, Pai raised concerns about an element of the order that would seemingly require cable operators to stop encrypting the basic tier “if the application of any conditions contained in this order are held to be invalid as applied to any circumstance.” Such a non-severability provision “seems both overbroad and unnecessary,” he said.
Boxee said the order “opens the door for innovation.” The item “ensures that startups like Boxee can continue to invest in building products to innovate in the set-top box/connected TV space,” CEO Avner Ronen wrote on the company’s blog (http://xrl.us/bnuco4). “We are also excited about the new opportunity to work with cable companies to provide next-generation experiences,” he said.
The AllVid Tech Company Alliance is encouraged that the commission agreed that “it’s important to address the effective implementation of section 629 in the context of future device compatibility,” said Bob Schwartz, a partner with Constantine Cannon and counsel to the alliance. But in the same footnote where the commission took that position it said it agreed “with Cablevision that those important issues need not be resolved before revising the ban on encryption of the basic service tier.” The NCTA and American Cable Association each cheered the order. NCTA CEO Michael Powell called it sensible and pro-consumer. ACA President Matthew Polka said at least some of its members plan to take advantage of the rule change after it becomes effective.