CEA Blasts Microsoft for Defecting to Cable on Integration Ban

Microsoft Senior Vp Craig Mundie joined in a conference call last week with Comcast CEO Brian Roberts and his Time Warner Cable counterpart, Glenn Britt, to urge FCC Chmn. Powell that the integration ban be delayed “for some period ranging from 6 to 18 months,” it was disclosed in an ex parte filing at the Commission. They said the delay was needed for the development of “downloadable, software-based conditional access systems that hold great promise” for MSOs, CE and IT companies and consumers.

Under a proposed agreement with Microsoft, Britt and Roberts have pledged to deliver the FCC a plan “to deploy a common soft conditional access system that would be simultaneously relied upon by all digital cable systems and available in all digital cable products, whether offered by cable operators or CE or IT manufacturers,” the filing said. The plan would include technical specifications and “a specific transition schedule,” the filing said, but it didn’t specify when the plan would be presented to the FCC.

It said Microsoft agreed with Comcast and Time Warner Cable that imposing the integration ban in July 2006 would be an impediment “in an environment in which the cable industry is moving quickly toward enabling retail bi-directional digital cable products and soft conditional access solutions to be relied on by all parties.” The ban could unnecessarily raise prices for consumers, place cable at a cost disadvantage with competing services “and further impede the kinds of collaborative efforts between the CE, IT and cable industries that are needed to devise more forward-looking and effective solutions to the issues that the integration was thought to address,” the filing said: “Furthermore, the companies recognize that implementing the ban in July 2006 would require the cable industry to devote time, money and other resources to removing the already-integrated conditional access functionalities from current products.”

Similar language has been used in cable’s many filings at the FCC seeking to persuade the Commission to extend the July 2006 deadline 18 months or scrap the ban entirely. But now the language has the apparent blessing of Microsoft, which previously had sided with CE and IT companies in arguing the July 2006 deadline be left unchanged. But Microsoft was a less vehement supporter than IT companies like Hewlett-Packard and Intel of keeping the integration ban intact. Moreover, Microsoft’s Mundie showed a softening of his company’s position when he met with Powell at the Las Vegas CES, according to a Jan. 7 ex parte filing. Mundie discussed with Powell “the possibility that imposing an integration ban may not, by itself, be sufficient to ensure that a full range of consumer devices can be connected to cable TV networks in the future,” the filing said.

In accusing Microsoft of being “out of step” with others in the CE and IT industries on the integration ban, CEA’s Shapiro said the company also was party with Comcast and Time Warner Cable to another delaying tactic on the CableCARD issue. “With this downloadable security proposal, cable has again come up with a creative way to delay meeting their responsibility to the FCC, the CE industry and consumers, Shapiro said. “The cable industry should stop playing ‘four corners’ with this proceeding and instead apply this same level of energy and creativity to working with the CE industry and meeting their legal commitments.” Shapiro and others in CE had used similar language in the days before CES to blast NCTA’s urging Powell to convene a summit of the affected industries to hash out differences on the integration ban. NCTA declined Fri. to comment on the Microsoft development.

The filing said Britt, Mundie and Roberts told Powell they agreed to provide the FCC with “periodic progress reports” on the effectiveness of currently available unidirectional CableCARD products and hold “joint status meetings” with FCC staff on the progress of negotiations on bi-directional CableCARD technology. They pledged to work “together personally” to ensure bi-directional CableCARD products become available during calendar 2006, the filing said. Microsoft agrees with Comcast and Time Warner Cable that the integration ban should be delayed so all parties can focus on “immediate deployment and support” for current unidirectional CableCARD products, the filing said. But the claim was likely to raise the hackles of those in the CE industry who have argued cable previously had committed to do just that on unidirectional CableCARDs but hasn’t lived up to its commitment and likely won’t if the July 2006 deadline is postponed.

In what sounded like a commercial for Windows Media DRM solutions, the filing said Comcast, Microsoft and Time Warner Cable expressed an interest to Powell “in exploring business arrangements and technical support for content provided to consumers through cable that would allow such content to migrate to other devices in the consumer’s environment, including mobile and other devices that are not connected to the cable system directly.” The filing said Britt and Roberts “acknowledged that this may require a different model than that which has historically been associated with traditional cable set-top boxes.”