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HD-DTA Battle Heats Up

Jeff Baumgartner
LR Cable News Analysis
Jeff Baumgartner
4/14/2010
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Opposing sides are jockeying for position at the Federal Communications Commission (FCC) this week as the agency prepares to formally propose new CableCARD rules that may allow cable operators to buy and deploy a new breed of relatively inexpensive hi-def Digital Terminal Adapter (DTA) boxes with integrated security.

The FCC has already granted waivers to several standard-definition DTAs, but now cable wants to use HD versions that, in volume, can be had for less than $50 per unit -- far less than entry-level HD boxes that use separable, CableCARD-based security.

The FCC -- which will present a freshened up Notice of Proposed Rulemaking on the CableCARD and open a Notice of Inquiry regarding network-agnostic "gateway" devices on April 21 -- has initially thought about offering an HD-DTA exemption to a relatively small number of bandwidth-strapped cable systems with 552MHz or less of activated capacity. (See FCC Floats 'Simple' Gateway, CableCARD Rules and FCC Chews on HD-DTA Exemption .)

Since then, the National Cable & Telecommunications Association (NCTA) , Comcast Corp. (Nasdaq: CMCSA, CMCSK), and Charter Communications Inc. , among others, have urged the agency to consider extending that exemption to include all cable systems. (See NCTA, Comcast Push for Blanket Exemption .)

The FCC has not commented on any of these possible exemptions officially, but Communications Daily reported Tuesday that the Commission is now expected to change its draft rules to include a proposal that the HD-DTA exemption indeed apply to a wider range of cable systems.

Public Knowledge weighed in at the FCC on Tuesday to say it's against any further exemptions that would sidestep the FCC's 2007 ban on integrated security boxes, including any new HD-capable models.

"Creating exemptions to set-top box rules that would allow operators to offer high-functioning boxes would undermine any efforts to create a viable consumer market for set-top boxes," the consumer advocacy group noted.

The cable industry, led initially by the individual HD-DTA-related waiver efforts of Cable ONE Inc. , has argued that HD services should no longer be considered "advanced" because they now represent competitive table stakes. (See Cable ONE Looks to Pump Up HD-DTA Volumes and HD No Longer an 'Advanced' Service?)

The NCTA, in comments filed at the Commission today, also asserted that it's "absurd" for Public Knowledge to even suggest that DTAs are "high-functioning" devices, since they are capable only of receiving one-way programming services (so they aren't capable of receiving interactive cable service such as video-on-demand). "Moreover, the only Unidirectional Digital Cable Ready Products available at retail today -- those manufactured by TiVo and Moxi -- have far more advanced functionality in order to differentiate themselves," the Association added.

Another jab at the DTA
Public Knowledge also asked the FCC to resolve a pending petition to reconsider the original SD-DTA waiver granted to Evolution Digital LLC last June, before the Commission takes any further action. Evolution, by the way, is trying to obtain a similar three-year waiver on a hi-def-capable DTA model. (See FCC Believes in Evolution-ary DTAs and ACA Wants Action on Evolution's HD Box Waiver .)

Public Knowledge claims that the existing waiver process has harmed companies that have invested in set-tops that comply with the FCC's separable security rules. The only example it's presented so far is the case of IPCO LLC, a company that claims FCC DTA waivers have all but destroyed its ability to sell boxes, secure funding, and retain key executives. (See Box Maker Blames FCC for Everything and IPCO Update.)

The NCTA also countered that claim, holding that IPCO's boxes do not comply with CableCARD requirements. IPCO recently showed its "CableCARD-complaint" boxes to the FCC, and images of the devices and their related specifications documentation indicate no presence of a CableCARD slot.

— Jeff Baumgartner, Site Editor, Light Reading Cable

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DCITDave
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DCITDave,
User Rank: Light Beer
12/5/2012 | 4:39:42 PM
re: HD-DTA Battle Heats Up
Sorry, I'm one of those "I'll just rent my modem" idiots, so consider the source, but: Do we need a viable consumer set-top market?

Beyond TiVO, which has utility far beyond just delivering linear TV channels, why does the government care that anyone can go to the store and buy a set-top box? And does anyone ever just go to the store and buy a set-top box?
DCITDave
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DCITDave,
User Rank: Light Beer
12/5/2012 | 4:39:39 PM
re: HD-DTA Battle Heats Up


If you were Motorola, what could you build/do to convince service providers that the set-top still matters?


My U-verse set-up is bookended by Moto set-tops and they are the weakest link in the chain. They use IR remotes (seriously) so you have to be standing a foot away from the set-top at all times.


Likewise, they're just slow. The reboot cycle takes longer than some PCs. I would blame MSFT for that, but the DVR and VoD performance is equally pokey when compared to satellite TV services.


So other than providing basic content security, what does Moto's set-top business do to add to consumer enjoyment or service provider revenues?

DCITDave
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DCITDave,
User Rank: Light Beer
12/5/2012 | 4:39:39 PM
re: HD-DTA Battle Heats Up


Exactly. And if the CE industry wants us to buy a set-top direct from retail, then make the set-top do something that no other box can possible do. For some reason that basic requirement has slipped by everyone and the retail set-tops that are on the market, by and large, are pretty disappointing. 


From time to time I'll spotlight one where a company has done a great job on Internet/TV integration, but most of the best ideas seem to be aimed at helping service providers vs. providing a retail product. Great point, below, btw:


Congress and the FCC should not be in the business of deciding which business models are appropriate, consumers will vote with their wallets to determine that.





Telco
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Telco,
User Rank: Light Beer
12/5/2012 | 4:39:39 PM
re: HD-DTA Battle Heats Up


The purchase of a STB does not meet the two goals most purchasers seek. The point of a an available STB for purchase is mute.  1) If you purchase a STB such as Moxi or Tivo, you are tied to a monthly subscribion fee, in my case, slightly more than twice the monthly rental fee from Verizon.  2) the main reason for getting a STB was to avoid a walled garden of marketing that is required for service providers to collect advertising revenue. 


The purchase of a STB tied to a monthly subscription turns your viewing data over (which I do not object to) but the data then comes back to haunt your with manipulated results.  Much like Google prior to setting up for Public Offering compared to now.  Two things I hate about search that are common to walled garden video. example: Type TCAP Messaging prior to 1999 into Google, I find my own work and many collegues, Post Public Offering planning (about 2000) the same search provides service bureau ads for VoIP/SIP trunking which is completely useful.  Likewise, I now type in many companies names to gain abilty to purchase chips/toolkits for the datasheets and I will virtually never get their URL, I get their distribution partners or worse yet, the price list which has no bearing on my decision if I cannot find out the MIPS and OS.


Let's say my son is home playing games and watching entertainment (familyguy/cleveland?) for two hours more than my PBS, Bloomburg and TV Land Re-runs.  My daughter viewing of USA is more than both my son and I.  The data collection will soon groom to placement ads.  The pointed ads for me will come in very much useless just like search engines are now.


Thus, for a solution, I would like a one way Hi-Def and Standard Def DTA/STB but Comcast would drop MOT STBs if MOT produced it faster than AT&T dropped MOT Handsets when MOT wanted to have the App Hosts.

Cooper10
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Cooper10,
User Rank: Light Beer
12/5/2012 | 4:39:39 PM
re: HD-DTA Battle Heats Up


There are numerous examples where consumers have clearly indicated their preference to either lease equipment from a service provider, or will agree to a service contract in exchange for a subsidy of the cost of equipment.  Both DBS providers used to offer their set tops at retail for consumer purchase, but found that the upfront expense was a deterrent to adoption for most consumers, and have largely moved to only leasing equipment.  Similarly, VERY few consumers purchase their cell phones outright from retail, the vast majority opt for free or heavily subsidized handsets in exchange for a term commitment with the service provider.  80%+ of cable modem customers opt to rent their modems, despite universal availability of the modems at retail.


TiVo, after 10+ years in market, has ~1.6M customers who purchased their set tops at retail - for context, that is less than 1% of U.S. households.  TiVo's greatest subscriber gains came from being integrated into DirecTV service, with (you guessed it) equipment subsidized in exchange for a service contract.  TiVo may have a great product, but their business model is a failure for the mass market (or said less harshly, appeals to a small niche of consumers).  Congress and the FCC should not be in the business of deciding which business models are appropriate, consumers will vote with their wallets to determine that.


Consumers simply prefer to be able to able to sign up for a service with the required CPE either heavily subsidized (i.e. free), or included as part of their service subscription.  The CE and retail industries would prefer that not be the case, but it is.

Jeff Baumgartner
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Jeff Baumgartner,
User Rank: Light Beer
12/5/2012 | 4:39:38 PM
re: HD-DTA Battle Heats Up
The FCC is looking to "fix" the existing CableCARD rules, but it's still impossible to say if there is true demand out there to support a retail market for set-top boxes.



The initial stab at it with the CableCARD caused plenty of Excedrin-sized headaches when customers tried to get their TiVos or Moxis paired with a CableCARD, so we can't really use that as a true gauge because that experience has been terrible for many consumers.


But the point of the separable security mandate was to give CE makers the ability to sell boxes that support the baseline cable services and then innovate on top of that. Tru2way's supposed to help out in this area by at least enabling with two-way services like VoD but some CE guys have complained about cable-controlled licensing and certification requirements.


The new CableCARD rules may help to erase some of the problems that have troubled what little retail box market exists now, but the longer-term, agnostic gateway project might better determine if there is any demand for an open (and sustainable) retail set-top market GĒō and at least cable won't be the only industry having to carry that separable security burden. JB

Jeff Baumgartner
50%
50%
Jeff Baumgartner,
User Rank: Light Beer
12/5/2012 | 4:39:38 PM
re: HD-DTA Battle Heats Up
The FCC is looking to "fix" the existing CableCARD rules, but it's still impossible to say if there is true demand out there to support a retail market for set-top boxes.



The initial stab at it with the CableCARD caused plenty of Excedrin-sized headaches when customers tried to get their TiVos or Moxis paired with a CableCARD, so we can't really use that as a true gauge because that experience has been terrible for many consumers.


But the point of the separable security mandate was to give CE makers the ability to sell boxes that support the baseline cable services and then innovate on top of that. Tru2way's supposed to help out in this area by at least enabling with two-way services like VoD but some CE guys have complained about cable-controlled licensing and certification requirements.


The new CableCARD rules may help to erase some of the problems that have troubled what little retail box market exists now, but the longer-term, agnostic gateway project might better determine if there is any demand for an open (and sustainable) retail set-top market GĒō and at least cable won't be the only industry having to carry that separable security burden. JB

Jeff Baumgartner
50%
50%
Jeff Baumgartner,
User Rank: Light Beer
12/5/2012 | 4:39:38 PM
re: HD-DTA Battle Heats Up
The FCC is looking to "fix" the existing CableCARD rules, but it's still impossible to say if there is true demand out there to support a retail market for set-top boxes. The initial stab at it with the CableCARD caused plenty of Excedrin-sized headaches when customers tried to get their TiVos or Moxis paired with a CableCARD, so we can't really use that as a true gauge because that experience has been terrible for many consumers.
But the point of the separable security mandate was to give CE makers the ability to sell boxes that support the baseline cable services and then innovate on top of that. Tru2way's supposed to help out in this area by at least enabling with two-way services like VoD but some CE guys have complained about cable-controlled licensing and certification requirements.
The new CableCARD rules may help to erase some of the problems that have troubled what little retail box market exists now, but the longer-term, agnostic gateway project might better determine if there is any demand for an open (and sustainable) retail set-top market GĒō and at least cable won't be the only industry having to carry that separable security burden. JB
Cooper10
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50%
Cooper10,
User Rank: Light Beer
12/5/2012 | 4:39:33 PM
re: HD-DTA Battle Heats Up
Valid points - although one would think that companies like TiVo and Moxi, despite any complications with CableCard, would be seeing much more success in the market if they indeed have built a better mousetrap.
Jeff Baumgartner
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50%
Jeff Baumgartner,
User Rank: Light Beer
12/5/2012 | 4:39:33 PM
re: HD-DTA Battle Heats Up
That's true. The market hasn't indicated much success even with the cableCARD and what diffentiation TiVo and Moxi boxes can bring to the market (with their nav systems and over-the-top video capabilities), but I think TiVo would argue that their mousetrap is missing some key parts without an easy way to include cable VoD and easy access to switched digital video channels (the Tuning Adapters is really nothing more than a band-aid fix) in their box offerings. I'd be first in line if TiVo's new Premiere boxes could do all the interesting bells & whistles that TiVo's added in on its own and could support cable VoD without requiring me to use a cable operator-supplied cable box.




I'd also be very interested to see what a company like Boxee could do if it every decided to make a device that could do the base level services one would expect from a leased cable box plus the additional innovation that Boxee could add in. But i'm afraid we are years away from seeing anything like that. JB

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