& cplSiteName &

Countdown to 'Seven-Oh-Seven'

Jeff Baumgartner
LR Cable News Analysis
Jeff Baumgartner
5/25/2007
50%
50%

T-minus five weeks and counting.

U.S. cable operators, big and small, are hustling to comply with a quickly approaching mandate from the Federal Communications Commission (FCC) that will ban MSOs from buying and deploying set-tops with integrated security. That ban comes into effect July 1, 2007.

When the ban becomes active, cable operators will be prohibited from purchasing or deploying any new set-tops with the security embedded in the device.

After June 30, 2007, any newly purchased and deployed digital set-top purchases must have separable security. More often than not, this separation will occur at the set-top via a special interface that houses the CableCARD, a removable module that contains the conditional access keys necessary to authorize digital cable services. Most "host" devices (set-tops) deployed after this date will handle interactive services such as video-on-demand when used in tandem with the Multistream CableCARD, or M-Card. (See Show Me the M-Card!)

The cable industry is also developing more elegant, less expensive downloadable conditional access systems, but those will not be ready for commercial deployment by the deadline. (See PolyCipher Targets '08 Trials and Small Cablers Plan Sub-$100 Set-Tops.)

By separating out the security elements, the FCC mandate aims to open up cable set-top competition -- an arena presently dominated by Motorola Inc. (NYSE: MOT) and Scientific Atlanta , with some limited traction obtained in recent years by Pace Micro Technology .

Although competition might open up sometime down the road, many operators have complained that the ban will create an unnecessary cost burden in the near-term, and force them to introduce a new system that provides little to no incremental services benefit to cable customers.

Most of those cost-related complaints have centered on low-end, entry level digital set-tops. Operators have argued that the CableCARD version of some set-top models cost two to three times that of integrated security models that provide similar capabilities.

RCN Corp. , for example, has disclosed in FCC filings that the DCT700, a bare-bones all-digital model with integrated security, costs about $84 each, while the DCH100 -- the closest CableCARD equivalent model -- costs about $232 per unit.

Faced with this cost discrepancy, several MSOs, including RCN, have applied for special waivers for lower-end set-top models with integrated security. So far, those efforts have been hit and miss. The FCC Media Bureau declined a waiver request from Comcast, but has granted conditional waivers to a handful of other operators. (See FCC to Comcast: 'No Waiver for You' and MSOs Get Waiver on Set-Top Security.)

Many other MSOs are still awaiting decisions on their requests. The table below offers a snapshot of present waiver activity.

Table 1: Set-Top Waiver Activity

Company Request FCC Media Bureau Action/Status*
BendBroadband Sought waiver on the Motorola DCT700, an entry-level, all-digital set-top that costs less than $100 per unit. Operator argued that the box is critical to its plans to migrate to an all-digital environment. Granted waiver on condition that operator accomplish its migration to all-digital by 2008. Operator must also reach certain milestones during this period.
Cablevision Systems Corp. Sought permanent waiver, citing that deployed digital set-top already use removable SmartCard-based conditional access systems (supplied by NDS Group). Grandfathered Cablevison's present use of set-tops with SmartCard technology until July 1, 2009. After that date, Cablevision must migrate to FCC-approved separable security such as the CableCard or a downloadable conditional access system.
Charter Communications Sought waiver on seven set-top box models. Granted a waiver on those models until July 1, 2008, citing the MSO's "financial difficulties" in its justification. Charter may also file a request for an extension.
Comcast Sought waiver on three entry-level, all-digital models: the Motorola DCT700, Scientific Atlanta 940, and Pace Micro "Chicago" DC501p. Denied Comcast's request for a waiver. MSO now seeking full FCC review of the matter.
GCI Sought waiver on all new set-top boxes, acknowledging it "primarily relies" on the Motorola DCT700, an all-digital model, and two hybrid analog/digital models: the DCT1000, and DCT2000. Granted waiver on the DCT700, DCT1000, and DCT2000, but stipulated that the operator must migrate systems to all-digital by Feb. 17, 2009.
OneSource Communications Sought waiver for the Motorola DCT700 entry-level all-digital box, and the DCT3416, a model with on-board DVR and HDTV capabilities. Conditionally granted waiver on the DCT700, so long as MSO commits to migrate to all-digital by Feb. 17, 2009. FCC denied waiver on the DCT3416, arguing that the model is not "critical" to the operator's all-digital ambitions.
* Results as of May 25, 2007. The FCC Media Bureau has yet to act on several other waiver requests from service providers such as RCN Corp. and Verizon.




To reduce the operational impact of the ban, most operators plan to deploy set-tops with the CableCARD pre-inserted at the factory. As the theory goes, this should all but eliminate the impact on warehousing and provisioning as boxes reach the operator and make their way to the field. Set-top makers have already made this an option for cable operators as they place purchase orders ahead of the deadline.

"The key is to make this as seamless as possible to the consumers," says Marwan Fawaz, the executive vice president and chief technology officer of Charter Communications Inc. .

This installation in the series tracks the progress of three cable operators: Charter Communications, Cox Communications Inc. , and Bresnan Communications. Future reports will cover the progress and challenges faced by other MSOs, how set-top manufacturers are stepping up to meet the tremendous demand for CableCARD hosts, and gauge the opportunities (or lack thereof) the deadline will present to consumer electronics manufacturers that are looking to crack the U.S. cable set-top market.

Charter Communications
Charter is one of a fortunate few to obtain a limited waiver on several digital set-top models with integrated security.

But that waiver -- set to conclude in July 2008 unless Charter tries to extend it -- gives the operator only limited relief and breathing room.

"We're thankful for the waiver," Fawaz acknowledges. "But that still doesn't completely put us in a position where we don't have to support host boxes."

On that note, he points out that more than half of Charter's set-tops are high-end units that support high-definition television (HDTV), digital video recording (DVR), or a combo of both. Because the waiver only addresses low-end set-tops, Charter will still have to deploy the CableCARD versions of the more advanced STB models.

Because those high-end boxes support some services and apps not found in entry-level digital boxes, the bigger cost on the CableCARD version is "a pill easier to swallow," Fawaz says.

Knowing the situation, Charter has been preparing for the deadline in earnest even before it was granted the waiver, gearing up in areas such as warehousing, procurement, training, billing, and customer care.

"It's not a flash-cut when you talk about warehouses," Fawaz says, adding that Charter is trying to exhaust its supply of integrated boxes as much as possible before July 1. Any "new" set-tops with integrated security (i.e., units that have not been deployed to customer homes) still languishing in the warehouse after the deadline will be as useful as boat anchors.

"It's an absolute balance operators have to work through," Fawaz says. "If you haven't provided the right forecast six to nine months ago, it will be extremely challenging." Charter, he adds, started getting ready for the July 2007 ban in the third and fourth quarters of 2006.

While coordinating with suppliers and allocating procurement resources has marked one of the biggest challenges faced by Charter in its preparation for the mandated ban, getting on top of new software releases and getting the bugs worked out and patches installed has also complicated the effort.

"That's been ongoing since the fourth quarter of last year, and we're on the tail end of that," Fawaz says. "We're confident we'll be ready. We have no choice but to comply with the rules."

To Page 2

(3)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
DDustin
50%
50%
DDustin,
User Rank: Light Beer
12/5/2012 | 3:49:44 PM
re: Countdown to 'Seven-Oh-Seven'
The FCC pulling a move like this is very scary. It makes you wonder who might have been bribed and by who. The 'vouchers' look like another system of exchanging favors.

This ordeal stinks of corruption.
tomcoseven
50%
50%
tomcoseven,
User Rank: Light Beer
12/5/2012 | 3:07:53 PM
re: Countdown to 'Seven-Oh-Seven'
Just for completeness, you may want to include the status on the Verizon waiver, which was requested in July 2006.

Satellite is excluded (for now) since at one time in ancient history multi-vendor boxes were sold nationwide through retail stores, rather than leased. It would be interesting to hear whether anyone thinks the FCC will update their positon to reflect current realities, or if Satellite keep this competitive advantage. Also it would be interesing to hear the updated thinking on AT&T's positioning. For the longest time AT&T was arguing they were exempt from any Title VI requirements (franchising, must carry, 629, etc...), because they were a data service. However, if Net Neutrality goes forward (with the Dorgan-Snow exclusion for Title VI), AT&T might want to rethink this.
Jeff Baumgartner
50%
50%
Jeff Baumgartner,
User Rank: Light Beer
12/5/2012 | 3:07:53 PM
re: Countdown to 'Seven-Oh-Seven'
"Just for completeness, you may want to include the status on the Verizon waiver, which was requested in July 2006."

It wasn't pointed out in the story, but the chart within the story did indicate that Verizon, RCN, and several other video service operators are still awaiting answers on their waiver requests. As for Verizon, my understanding is that they are seeking waiver until boxes with downloadable CA becomes commercially viable. But it is good that you mention that DBS is excluded from the fun for now. We'll also do some checking on AT&T's thinking on this...and what Verizon is doing now to prepare for the deadline barring a waiver.
Light Reading’s Upskill U is a FREE, interactive, online educational resource that delivers must-have education on themes that relate to the overall business transformation taking place in the communications industry.
NEXT COURSE
Wednesday, September 14, 1:00PM EDT
What Is Agile?
Kent J. McDonald, Product Owner, Agile Alliance
UPCOMING COURSE SCHEDULE
Friday, September 16, 1:00PM EDT
How to Implement Agile
Alan Bateman, Director, Agile Transformation
Wednesday, September 21, 1:00PM EDT
What Is DevOps?
Colin Kincaid, CTO, Service Provider, Cisco
Friday, September 23, 1:00PM EDT
How to Implement DevOps
,
in association with:
From The Founder
Light Reading today starts a new voyage as part of a larger Enterprise.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
Between the CEOs
CEO Chat: UXP's Gemini Waghmare

8|26|16   |     |   (0) comments


Light Reading CEO Steve Saunders and UXP Systems CEO Gemini Waghmare discuss the strategic importance of digital identity for operators in the midst of transformation.
LRTV Custom TV
F5 Virtual Network Function Integrations With Partner Orchestration Platform

8|24|16   |   6:38   |   (0) comments


F5's Kishore Patnam, product manager for F5's service provider solutions, discusses why service providers are moving towards virtualization and how his clients are utilizing F5's solutions.
Between the CEOs
CEO Chat: Intel's Alexis Black Bjorlin

8|17|16   |   06:23   |   (0) comments


Join us for an in-depth interview between Steve Saunders of Light Reading and Alexis Black Bjorlin of Intel as they discuss the release of the company's Silicon Photonics platform, its performance, long-term prospects, customer expectations and much more.
Telecom Innovators Video Showcase
Accelerating Telecom Digital Transformation With Nominum DNS

8|1|16   |   12:04   |   (0) comments


Light Reading's Steve Saunders gets an update from Nominum CEO Gary Messiana on how his company is helping carriers on the digital transformation journey.
LRTV Custom TV
Reinventing Operations for a Virtual, Software-Defined World

7|28|16   |   5:23   |   (0) comments


Heavy Reading Senior Analyst Jim Hodges speaks with Accenture's Larry Socher and Matt Anderson about what service providers must do to transform their business to get the benefits of SDN and NFV including: leveraging DevOps, introducing real-time OSS and implementing analytics.
Women in Comms Introduction Videos
Fujitsu Sales Leader Shares Lessons Learned

7|27|16   |   5:12   |   (1) comment


As Fujitsu's only female sales leader, Annie Bogue knows the importance of asking for what you want, being flexible (she's been relocated five times), keeping a meticulous calendar, 'leaning in,' working harder than everyone else around you, being aware and more.
Telecom Innovators Video Showcase
VeEX Test & Measurement Solutions

7|25|16   |   08:57   |   (0) comments


Cyrille Morelle, president and CEO of VeEX Inc., talks test and measurement with Light Reading's Steve Saunders at BCE 2016. This includes innovative products such as VeSion Cloud-Based platform for network monitoring; MTTplus Modular Test platform for Access, Business, Carrier Ethernet, Transport and Core services; and OPX-BOX+ for Fiber Optics.
LRTV Custom TV
VeEX: Live From BCE 2016

7|25|16   |   03:20   |   (0) comments


VeEX's Senior Director of Business Development, Perry Romano, explains how VeEX provides tools to help install, maintain, monitor and manage network infrastructure efficiently and effectively. The portfolio of products on display include the RXT-6000, MTTplus and TX300s.
LRTV Custom TV
Real-Time Telemetry & Analytics for Intelligent SDN Orchestration

7|25|16   |   03:09   |   (0) comments


Packet Design CEO Scott Sherwood discusses how real-time network telemetry and analytics are enabling a new breed of SDN orchestration applications.
From the Founder
The Russo Report: Driving Disruption

7|25|16   |   07:44   |   (2) comments


In the first episode of a four-part series, Light Reading Founder and CEO Steve Saunders and Calix President and CEO Carl Russo drive around town discussing the disruptive mega-changes in the communications industry and where hope lies for service providers to meet the escalating demands of the cloud.
LRTV Custom TV
NetScout: Maximizing Enterprise Cloud for Digital Transformation

7|20|16   |   04:53   |   (0) comments


Light Reading Editor Mitch Wagner talks to NetScout CMO Jim McNiel about maximizing the benefits of enterprise cloud and digital transformation while minimizing potential pitfalls with a proper monitoring and instrumentation strategy.
Women in Comms Introduction Videos
Ciena's VP Offers a Career Crash Course

7|20|16   |   4:14   |   (2) comments


How did Ciena's Vice President of Sales, Angela Finn, carve out her career path? Simple, she tells WiC. She stayed true to her company, customers and principles. She shares her advice for women on how to be authentic and credible, as well as for companies that want to make a real change to their culture and practices.
Upcoming Live Events
September 13-14, 2016, The Curtis Hotel, Denver, CO
November 3, 2016, The Montcalm Marble Arch, London
November 30, 2016, The Westin Times Square, New York City
December 1, 2016, The Westin Times Square, New York, NY
December 6-8, 2016, The Westin Excelsior, Rome
May 16-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
Hot Topics
Cisco Developing 'Monica' Digital Assistant
Mitch Wagner, West Coast Bureau Chief, Light Reading, 8/22/2016
FirstNet: A Billion-Dollar Boondoggle?
Dan Jones, Mobile Editor, 8/26/2016
Google Fiber Can't Be Called a Failure
Carol Wilson, Editor-at-large, 8/26/2016
Rocket Fiber Lights Up Detroit With Gigabit
Elizabeth Miller Coyne, Managing Editor, 8/22/2016
'Most Wanted' Kobi Comes Home
Ray Le Maistre, Editor-in-chief, 8/23/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Light Reading CEO Steve Saunders and UXP Systems CEO Gemini Waghmare discuss the strategic importance of digital identity for operators in the midst of transformation.
Join us for an in-depth interview between Steve Saunders of Light Reading and Alexis Black Bjorlin of Intel as they discuss the release of the company's Silicon Photonics platform, its performance, long-term prospects, customer expectations and much more.
Animals with Phones
Live Digital Audio

Bridging the tech skills gap is a major challenge for service providers and suppliers alike today – and the challenge is two-fold when it comes to increasing the number of women in the comms space. Level 3 Communications has made it a priority to overcome both challenges by implementing several unique programs focused on building the right candidates from within – in addition to filling the funnel by supporting STEM and other education programs. During this radio show, you’ll learn about these programs from Mary Beth McGrath, SVP of Global Talent Management at Level 3, and the best ways to bridge your own skills gap so that you are motivated and equipped for change. Plus you’ll have the chance to ask Mary Beth your questions live on the air.