Microsoft Denies Flip-Flop On Integration Ban Delay

Microsoft is “cognizant of the concerns expressed” by the CE and IT industries that cable “will simply delay action on downloadable security,” the company told us in a statement. But the key issue with the integration ban was to have all parties use “common technology so incentives to have it work well are shared,” Microsoft said. Comcast and Time Warner Cable, “working in conjunction with cable and other industries,” agreed to deliver the FCC a plan on 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,” Microsoft said, repeating the exact wording in the letter sent by the 3 companies to the FCC: “The companies also agreed to work across industry partnerships to help expedite the development of a bidirectional agreement within one year to be filed with the FCC for its consideration and adoption.”

Microsoft, a onetime avid participant in the CE-IT lobbying effort to keep the integration ban unchanged, denied it had flip-flopped on the issue, now that it supported a delay. Microsoft “has been engaged with all parties discussing the impact and a solution for the business opportunity of enabling consumer retail devices and the integration ban,” the company told us. “All of our communications and discussion with both CE companies and the cable industry has been based upon these issues,” it said. But advances in technology since the integration ban rule was first established “have changed the conditions in which all parties want to innovate and serve their customers,” Microsoft said: “A more cost-effective and technically efficient path toward implementing bi- directional retail devices would be to invest in advancing downloadable security technology for cable networks.” It defended the downloadable security approach as one that would benefit “all parties” -- MSOs, CE and IT companies and consumers -- because it would create “an infrastructure more adaptable to future changes.”

Microsoft said it agreed to support delaying the integration ban for “not more than 12 months.” The statement was at odds with the 6-18-month delay sought in the conference call with FCC Chmn. Powell, and we were awaiting comment from a Microsoft spokeswoman on the reason for the discrepancy. Microsoft said the delay would allow the various parties to better support current unidirectional CableCARDs and expedite the availability of multistream unidirectional CableCARDs as sought by TiVo. The delay also would ensure that downloadable software- based security approaches are “further developed and tested,” Microsoft said. Senior executives at Comcast, Microsoft and Time Warner Cable also have agreed to work personally toward an agreement on bi-directional CableCARDs that would make for the commercial introduction of products in 2006, Microsoft said.

CEA told the FCC in an ex parte it believes downloadable security can be achieved quickly without a delay in the integration ban, so long as it’s developed in an “open forum,” such as an ANSI-accredited standards group. “Any agreements to the contrary are merely efforts to stall implementation of the existing rule,” CEA said. “In principle,” CEA said, downloadable security could be implemented “in the form of a common processing element” in cable-ready retail devices and MSO-lead cable boxes, “with a separable security element for conditional access downloaded from each local cable system.” But a software technology meeting FCC requirements “is currently not available,” CEA said.

Parallel with maintaining the July 2006 integration ban, the FCC must provide strict “oversight” to ensure license terms for any new downloadable security system are reasonable and non-discriminatory “and will not address in any way the features and functions of the host device other than the minimum necessary to protect cable networks from theft of service and protection of content,” CEA said. It also urged the Commission to require that MSOs nationwide use the new downloadable security system “only when it becomes available for use in retail devices on a nationwide standard basis.”