MSOs Get Waiver on Set-Top Security

Christmas came early for three cable operators Friday when the Media Bureau of the Federal Communications Commission (FCC) granted special waivers ahead of the July 2007 ban on digital set-tops with integrated security.

Designed to spur set-top competition, the ban will prevent cable operators from purchasing digital set-top boxes with the security elements already baked into the device. After the ban, the bulk of new set-tops will come equipped with an interface that accepts the CableCARD, a removable security module that contains the "keys" necessary to authorize a customer for cable services. To reduce operational complexities, some operators plan to deploy those boxes with the CableCARD pre-inserted.

Operators have argued that digital set-tops with CableCARDs cost two to three times that of like models with integrated security.

The Bureau, just ahead of next week's The Cable Show in Las Vegas, granted a one-year waiver to Charter Communications Inc. (Nasdaq: CHTR) and conditional waivers to Millennium Telecom LLC (d/b/a Once Source Communications) and General Communication Inc. (GCI) (Nasdaq: GNCMA).

Charter initially sought a permanent waiver on seven lower-end digital boxes with integrated security that support apps and services such as an electronic program guide, pay-per-view, and video-on-demand.

The Bureau, however, awarded a limited waiver until July 1, 2008, noting that more than half of the devices Charter will deploy after the July 2007 deadline will have separated security -- in this case, the removable CableCARD. The Bureau also gave Charter some relief due to "severe financial difficulties" the MSO faces, as well as its status as a "rural" operator. Roughly 57 percent of Charter's systems fall into that category. Charter also has the OK to file a request for an extension.

GCI of Alaska and One Source of Texas, were awarded waivers on the condition that they commit "to migrate their systems to all-digital on or before Feb. 17, 2009."

GCI asked for a waiver on all new set-tops issued beyond the integration ban, but the Bureau gave the OK on three Motorola models with integrated security: the DCT700 (an all-digital box) and the DCT1000 and DCT2000, which are hybrid analog/digital boxes.

OneSource was seeking a waiver on the DCT700 and the DCT3416. The Bureau endorsed the waiver on the bare-bones DCT700, but did not grant continued deployment of the DCT3416, a model with an on-board digital video recorder and high-definition television capabilities. The Bureau said it was unconvinced of OneSource's argument that the higher-end model was "critical to its ability to migrate to all-digital."

Friday's waiver and conditional waivers follow similar decisions handed down by the Bureau in January. While denying a waiver request by Comcast Corp. (Nasdaq: CMCSA, CMCSK), it allowed for conditional waivers for Cablevision Systems Corp. (NYSE: CVC) and BendBroadband . (See FCC to Comcast: 'No Waiver for You'.)

Comcast, which had sought waivers on certain all-digital set-top models from Motorola Inc. (NYSE: MOT), Scientific Atlanta , and Pace Micro Technology , is presently seeking full FCC review on the Bureau's original decision. (See Comcast Appeals CableCARD Ruling.)

While most cable operators initially will use the CableCARD to comply with the ban, a number of MSO-led ventures are vetting out less expensive downloadable conditional access system (DCAS) technologies.

Among them are Polycipher LLC, a joint venture of Comcast, Time Warner Cable Inc. (NYSE: TWC), and Cox Communications Inc. ; and Beyond Broadband Technology (BBT), a company led by Buford Media Group, WinDBreak Cable, and Tele-Media Broadband.

Of the two ventures, Polycipher has been the more clandestine in terms of marking its progress publicly. Some additional detail might be revealed at The Cable Show next Tuesday afternoon during a conditional access session. Tom Lookabaugh, Polycipher's CEO, is scheduled to participate on the panel.

— Jeff Baumgartner, Site Editor, Cable Digital News