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A New Battle Brews About Old Set-Tops

It didn't take long for the Consumer Electronics Association (CEA) to toss cold water on a waiver request to let MSOs sell old set-top boxes, including HD-DVRs, with baked-in security.

To recap, Adams Cable Equipment Inc. (ACE), a distributor of cable gear and refurbished set-tops, is the one asking the Federal Communications Commission (FCC) for the waiver. The request replicates the waiver granted to Baja Broadband in 2010 on grounds that the small, cash-strapped operator didn't have the scratch to support set-tops with CableCARDs but still wanted to let its customers purchase the boxes if that was their desire. (See ACE Plan Would Let MSOs Sell Old Set-Tops .)

The CEA opposed Baja Broadband's original request and is now objecting to ACE's as well. In an FCC filing this week, the organization says ACE isn't suffering the financial hardship that Baja was. The ACE waiver, if approved, could be used by any MSO, though it's expected that only Tier 2 and 3 operators would even care to put it into action.

The CEA also wants the FCC to get a fix on how many non-compliant boxes (i.e. those with integrated security) ACE holds in inventory so it has a sense of what the potential supply might be, because the CEA said it was led to believe that the number should be on the decline now that more than four years have passed since the FCC's ban on integrated security set-tops went into effect. (See Countdown to 'Seven-Oh-Seven'.)

The FCC has been granting waivers pretty liberally in recent memory, dismissing the CEA's concerns about rule tweaks that now allow MSOs to deploy simple Digital Terminal Adapter (DTA) devices in support of their digital transition projects. But I'd be surprised if the Commission blesses this one as-is. (See FCC Believes in Evolution-ary DTAs.)

While it's unlikely that an operator the size of Time Warner Cable Inc. (NYSE: TWC) would give a rip about being able to sell rickety Motorola Mobility LLC DCT2000s to customers for $50 a pop, the ACE waiver should, at the very least, require operators to pursue it only if they can show that money is tight.

— Jeff Baumgartner, Site Editor, Light Reading Cable

Jeff Baumgartner 12/5/2012 | 5:43:50 PM
re: A New Battle Brews About Old Set-Tops

There are several companies that are targeting Tier 2/3 cable ops with new digital platforms. As you might expect, they aren't crazy about this waiver request either. Obviously they want those operators to buy from them rather than staying hitched to old boxes, but they are taking pragmatic angles  on it.


From Brent Smith, president of Evolution Broadband, a company that's pitching msos on a digital platform that has TiVos and DTAs in its lineup, and uses Conax as its primary content security partner:


"It is understandable that a used equipment reseller would want to pursue this type of waiver. It is also understandable that some independent operators would like to gain access to lesser expensive legacy equipment, considering how they have been unfairly charged exorbidant prices by the legacy box providers for these boxes. However, I am sure the CE industry would vehemently oppose such a waiver, considering the efforts they are making to develop smart TVs, and gaming consoles which can support the full video service from MVPD providers, and avoid a set top altogether. One must not also forget the additional cost to transport and operate these older boxes. DTA's are a fraction of the size of a legacy set-top,  and consume less than 5 watts of power, compared to the 35 watts consumed by a Motorola DCT 2000. For operators and consumers who are concerned about energy efficiency, this would be a step in the wrong direction."  


 


 


 

Jeff Baumgartner 12/5/2012 | 5:43:49 PM
re: A New Battle Brews About Old Set-Tops

I still find it funny that consumers try to sell these boxes on eBay. bidding on this 2000-class box starts at $19, but buyer beware... you'll still need an operator that's willing to activate it for you, and you may have to answer some hard questions on how said device fell into your hands since it's probably the property of some cable operator (Comcast, in this case, apparently).


Joking aside, I think the retail option is one way to unload these things and maybe extend their usefulness, but I think a blanket waiver goes too far. Maybe a more limited waiver on systems with a certain subscriber-size or certain financial position should be able to apply for it. Also, applying for one-off waiver requests also costs money, so it would behoove the FCC to make this process as simple as possible for operators that are cash-strapped. 


But I imagine there still has to be millions of refurbished boxes still out there.  Even if many 2000s are melted down by now, there still has to be plenty of  HD-DVRs with embedded security out there still in service or collecting dust in warehouses. JB

msilbey 12/5/2012 | 5:43:49 PM
re: A New Battle Brews About Old Set-Tops

I understand the CEA's objection, but honestly, what else are companies going to do with those old DCT2000s? I guess there's still a market south of the border, but isn't there also something to be said for just decimating the inventory in any way possible? I don't think old set-tops are seriously going to quell consumer interest in Rokus, tablets and connected TVs. Let's get rid of them and move on.


Separately, though, like the CEA, I am curious how much old-set-top inventory is left. Seems like the supply should have declined significantly by now. 

Jeff Baumgartner 12/5/2012 | 5:43:49 PM
re: A New Battle Brews About Old Set-Tops

And one from Bill Bauer, CEO/CTO of Beyond Broadband Technology LLC, a venture that's pitching a downloadable security system alongside hybrid QAM/IP boxes:


"I highly doubt it will pass the FCC as this would completely gut separable security. Yes there are boxes for sale but they have all been through repair at least once if not 2 or 3 times. The set tops have run to the end of their life even for a cable operator. Most operators are tired of playing this game and want a long term solution." 


 


As you might also guess, he thinks BBT fits the bill.   And BBT's made some progress in the tier 2/3 cable world. I'll have more on this soon. JB 


 

msilbey 12/5/2012 | 5:43:49 PM
re: A New Battle Brews About Old Set-Tops

I do agree, for the most part. It just seems a sin to let all those boxes go to waste. For one thing, they may not be energy efficient, but using them up is probably more resource-friendly than trashing or recycling them and buying all new equipment. It's like getting rid of a standard car after a few years just to buy a hybrid. A hybrid is good if you have to buy a car, but not buying a new car at all is better still. 

Cooper10 12/5/2012 | 5:43:45 PM
re: A New Battle Brews About Old Set-Tops

The most recent NCTA filing on CableCards indicated that there have been 554K CableCards installed in retail devices in the last 5 years, or about 1.7% of the total device deployments by MSOs over that time.  Is CEA convinced that might become 1.71% if someone isn't able to deploy an older integrated security STB?


The inability of the FCC to simply acknowledge the failure of the separable security mandate and move on is fascinating.

Jeff Baumgartner 12/5/2012 | 5:43:44 PM
re: A New Battle Brews About Old Set-Tops

No kidding. It's got to be one of the most ineffective and unecessarily expensive mandates handed down, though I think there's blame to go around-- the cable industry and the CE industry didn't execute this properly or have the right buy in on both sides to force it to work, despite the fact that the CAbleCARD was an outdated technolgoy by the time it finally made it to market in the first place.


 If the FCC doesn't pursue AllVid, which has been running on radio silence, they should just kill this thing and see how the market evolves without gov't. interference. The results can't be any worse, can they? JB

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