CEA Says Comcast Waiver Could Kill CableCARD Devices

Not surprisingly, Motorola and Pace Micro -- which supply 2 of 3 set-top models cited specifically in Comcast’s waiver request -- voiced strong support for the waiver, as did NCTA. All endorsed Comcast’s arguments that the Commission itself repeatedly has said it would entertain such waiver requests and that a waiver would serve the public interest. Thomson also is a backer, CEO Frank Dangeard having written June 14 to FCC Chmn. Martin urging approval. Doing so would “reflect recent technological developments and marketplace changes and better position the nation for a more rapid and consumer-friendly transition to an all-digital world,” Dangeard said.

Once, Thomson vehemently opposed cable efforts to delay or defeat the integration ban, but since then it has divested holdings in RCA DTV sets and other CableCARD devices. Low- end set-top costs have fallen dramatically since 2003, Dangeard told Martin. “However, the cost of the current implementation of separable security has not followed the same trend and now represents a very large percentage of the cost” of a low-end set-top, he said. Rejecting a waiver for Comcast “would mean a significant incremental cost and therefore slow down the transition to all-digital services and technologies,” he said.

But granting the waiver would further relegate CableCARD devices to the status of niche “specialty” items, CEA said. “What has been lacking in the retail environment is any assurance that the installation of a CableCARD, and the operation of a CableCARD-reliant product, will be routine,” CEA said: “Ideally, it ought to be possible for a retailer that sells a product such as a DTV receiver or a DVR and sets it up in a consumer’s home to also procure a CableCARD from the local MSO, and have it authorized on the cable system as part of the retailer’s setup process of the product itself. A consumer buying a product on a ‘carry-out’ basis ought to be able to do the same thing.” As long as CableCARD-reliant products are limited and specialty items, “this is unlikely to be the rule,” CEA said: “Absent having achieved this level of reliability, inclusion of the CableCARD slot can become a burden, rather than a selling feature, to the competitive manufacturer and to the retailer.”

Any waiver cutting CableCARD deployment, combined with cable’s move from CableCARDs within a year toward downloadable security, “would severely cut into the scale economies and manufacturing and support efficiencies that otherwise would be expected,” CEA said. Benefits of such volume efficiencies “are long overdue -- especially since, it appears, some and perhaps most competitive products will have to rely on CableCARDs indefinitely,” CEA said: “Supporting CableCARDs only in competitive products has been shown to be inefficient and unrealistic.”

Problems in CableCARD deployment and installation, which the CE industry historically has tried to paint as serious and widespread, are another reason to deny the waiver, CEA said: “The Commission should not give consideration to any waiver application that does not address, positively, constructively, and concretely, the existing and projected problems that have been identified.”

Comcast’s filing “is exactly the type of request” the FCC repeatedly has said it would entertain and view favorably, NCTA said. The agency first did so in March 2005, extending imposition of the integration ban a year to July 2007, NCTA said. More recently, FCC attorneys arguing in U.S. Appeals Court, D.C., on cable’s petition to vacate the integration ban order restated the Commission’s openness to fielding waiver requests as a way to limit the ban’s “adverse effects,” NCTA said. NCTA strongly backed Comcast’s request for a ruling within 90 days. Not only is the 90-day rule “statutorily mandated,” it’s needed, since the integration ban is set to take effect in less than 15 months, NCTA said.

If the waiver is delayed or denied, Motorola fears a delay in cable’s attempts to develop and deploy downloadable security, said the company, whose DCT-700 set-top is among the 3 listed in Comcast’s filing. To come up with “CableCARD alternatives” to the low-cost DCT-700, “manpower and other resources” would have to shift from work on downloadable security, Motorola said. Such a reallocation would “slow progress on downloadable security and deny cable operators, cable customers and CE manufacturers the many public interest benefits” associated with it, the company said.

A waiver for Comcast is “critically important to the growth of competition” in cable set-tops, said Pace Micro, whose Chicago device Comcast cites in its submission. As the leading “2nd source” set-top provider to cable operators, it offers them “greater diversity, competitive alternatives and choice in set-top design, features and capabilities,” Pace said. If the waiver dies, the Chicago set-top’s deployment in cable systems using Motorola or Scientific-Atlanta headends would be “scuttled and the opportunity for Pace and perhaps other set-top box suppliers to expand their business in the U.S. market will be lost,” Pace said.

But granting the waiver “will not advance consumer choice” on downloadable conditional access systems (DCAS) or other next-generation technologies, said a coalition of IT companies -- Hewlett-Packard, Intel and Sony -- opposing the Comcast request. “Rather, it will provide incentives for the cable industry to maintain DCAS as a proprietary technology with no meaningful competition from the personal computing platform,” they said: “If the Commission fails to hold the cable industry to its common reliance obligations now, then the information technology industry and consumers have no reason for confidence that the cable industry will take any more seriously its obligations to develop DCAS consistent with the principles of consumer choice.” Granting the waiver “only further will undermine any incentive for cable to advance CableCARDs. From an IT industry perspective, which to date has only CableCARD to rely on for access to digital cable content, the prospects are poor for a more competitive environment if the waiver request is granted,” they said.

However, Panasonic joined those backing the waiver in the name of speeding DTV transition. Describing itself as the first company to introduce a CableCARD-ready DTV set, it said it nevertheless “agrees that Comcast’s ability to offer such limited-capability set-top boxes would assist in the nation’s transition to all-digital television. This is because such set-top boxes would enable cable subscribers to continue to use their existing, conventional NTSC television displays even as they purchase new digital TVs.” First-time exposure of basic and/or analog-only cable subscribers to even a limited number of digital services -- albeit still in NTSC -- “will broaden awareness of the digital transition and encourage cable subscribers to learn more about their overall digital television choices,” Panasonic said: “In this way approval of the Comcast waiver will ease a successful national transition based on consumer understanding and convenience, indeed, enthusiasm.” Last CES, Panasonic announced the industry’s first agreement to supply Comcast with a new series of “RNG” digital cable set-tops, compliant with OCAP. The Panasonic set-tops will have HD DVR capabilities with at least 250 GB storage, plus MPEG-2 and H.264 decoding codecs -- features essentially missing from the set-tops for which Comcast is seeking CableCARD exemptions.