Stick to July 2006 Integration Ban on Cable Set-Tops, CEA Urges FCC

If the FCC hadn’t already delayed the deadline to July 2006 from Jan. 2005, CableCARD interoperability probably wouldn’t still be the issue it is, CEA told the Commission. “If CableCARDs were to be integral to new MSO-provided products, their design, firmware, software and head-end support would likely by now have been thoroughly proven and field-tested by cable operators,” CEA said. Moreover, if the Commission had chosen an even earlier date, such as the 2001 deadline urged by the CE industry, “the acquisition costs of CableCARDs would by now have plummeted because of economies of scale,” CEA said.

On cable’s assertion that it has made a firm commitment to promote new retail distribution and support CableCARD-enabled devices, CEA said despite the “diligence” of both industries, “problems are being experienced in the field” almost 5 months after the plug- &-play order took effect July 1. “The cable industry’s good faith efforts have run counter to their own market imperatives because they need not rely on the technology that has been mandated for the benefit of others,” CEA said. It added that “even with all the good faith in the world, a first-generation, low-volume electronics product will still cost several times more than a later- generation, high-volume product.”

Contrary to cable’s argument that the plug-&-play order obviates the need for a costly integration ban, CEA said the plug-&-play negotiations were never intended for that purpose. “The basic problem of an implement designed by the cable industry for use by its device competitors, but not for its own use, was never meant to be addressed in these negotiations and has not been addressed,” it said.

CableCARD costs “could have and should have by now been a fraction” of the estimates provided back in 1998 by CableCARD suppliers Motorola and Scientific Atlanta “and are still relied upon by NCTA today,” CEA said. Citing Intel’s claims that CableCARDs in quantity should cost only $15-$19 in initial production runs, CEA said that “given Intel’s experience in mass production, we believe prices will fall even further once July 1, 2006, is behind us, provided that the reliance date is not delayed again.”

Cable has argued that failure to lift or delay the July 2006 integration ban could impede the progress of negotiations over bidirectional plug-&-play devices. But CEA disagreed, saying the talks on 2-way interactive plug- &-play “are not stymied by debates over separable security.” Quite the contrary, CEA argued, because work on “a competitive interactive framework would gain a new level of certainty, and the negotiations would gain impetus, with the present FCC rule on security left in place.”

Regarding cable claims that the integration ban would impede development of a low-cost digital set-top and thus a rapid DTV transition, CEA invoked the words of cable’s own Comcast, which it said “recognizes that hardwired, physically integrated security is not the answer to providing a low-cost device to serve legacy products.” Comcast’s proposal is for a future solution based on downloadable security, CEA said. But the future under discussion “appears to be generations ahead of equipment available today or in 2006,” CEA said.

That “competitive entrants” have been shooting at “a moving target” has been a major obstacle to establishing the competitive market Congress envisioned in 1996, CEA said. Two years after that, the FCC gave cable 7 years to allow competitors to “catch up in the area of a common security interface, by giving cable operators that long to use the same one as competitors,” CEA said. The FCC in 2003 extended this to 8-1/2 years, it said. “Now that competitive products are finally entering the market, now is not the time to pull the rug out from under this core area of commonality.”