August 19, 2010
Cablevision Systems Corp. (NYSE: CVC) has picked Samsung Electronics Co. Ltd. (Korea: SEC) as the first vendor to supply the MSO with tru2way-based HD boxes outfitted with a new downloadable security platform, Light Reading Cable has learned. The move represents another nail in the coffin for the so-called Motorola Inc. (NYSE: MOT)/Cisco Systems Inc. (Nasdaq: CSCO) set-top duopoly.
Cablevision confirmed Wednesday that it has an agreement to buy the boxes from Samsung, noting that the deal is non-exclusive. The MSO declined to say how many set-tops it's initially buying from Samsung or when it intends to start deploying them to customers.
Certain Federal Communications Commission (FCC) stipulations call for all new set-tops deployed in Cablevision's footprint to incorporate the new downloadable system by the end of 2010. In January 2009, the FCC awarded Cablevision a deadline-laden waiver for the continued use of NDS Ltd. SmartCard security in order to give the MSO time to develop and deploy the new downloadable platform. Cablevision, by the way, also agreed to support CableCARD-based set-tops and digital TVs going forward. (See Cablevision Seeks Extended Security Waiver and Cablevision Scores Set-Top Waiver Extension .)
In addition to being the first boxes to use Cablevision's new security system, based on the NDS "Key Ladder" (K-LAD), the Samsung boxes will also adhere to a set of other Cablevision specifications.
According to industry sources, those specs call for boxes to be outfitted with the OpenCable Application Platform (the middleware component of tru2way); a Docsis Set-Top Gateway (DSG) (a standard high-speed backchannel for guide data and other set-top data); and Digital Living Network Alliance (DLNA) , a protocol that allows tru2way boxes to share content with other DLNA-complaint devices. Those boxes will also support dual conditional access systems -- in this case, Cisco's PowerKey and NDS's VideoGuard. Cisco is Cablevision's incumbent set-top supplier. (See Tru2way Flashes Some Retail Hope .)
It's also understood that Cablevision's Samsung boxes won't come with on-board DVRs, but will instead be capable of supporting the MSO's upcoming, network-based, Remote-Storage DVR (RS-DVR) service. Earlier this year, Cablevision COO Tom Rutledge said the MSO intends to stop buying traditional DVRs by the end of 2010. (See Cablevision RS-DVR Gets Limited Deployment and Cablevision Won’t Disable Fast-Forward on RS-DVR.)
Getting the Samsung box in front of customers will be critical to Cablevision's downloadable security strategy, which is already well underway. According to a declaration at the FCC from the MSO's EVP of corporate engineering and technology, James Blackley, Cablevision intends to commence the commercial use of downloadable security in all "Phase II" areas (the balance of its systems) by Sept. 1, 2010. The operator hit its deployment deadline for the "Phase I" area (Long Island and parts of New Jersey) in July 2009. Cablevision has agreed to pay up to $5,000 per day for any missed milestones as outlined in the FCC set-top waiver extension. (See Cablevision Starts Downloading .)
That Cablevision is going with Samsung isn't a big surprise. In earlier filings with the FCC, the MSO disclosed that Samsung and LG Electronics Inc. (London: LGLD; Korea: 6657.KS) had signed on to develop beta set-tops capable of using the NDS Key Ladder.
The deal strengthens Samsung's position in the US cable industry. It's already supplying tru2way-based boxes to Time Warner Cable Inc. (NYSE: TWC) and Bright House Networks , and is believed to be in the door at Comcast Corp. (Nasdaq: CMCSA, CMCSK) and developing boxes for that MSO's Residential Network Gateway (RNG) project.
Breaking down the duopoly
This also isn't the first time Cablevision has developed a digital video strategy using a big name from the consumer electronics world.
Cablevision shook up the US cable industry in 1999 when it signed a deal to use Sony Corp. (NYSE: SNE) set-top boxes outfitted with NDS's conditional access platform. Cablevision adjusted its strategy in 2002, opting for headends and boxes from Scientific-Atlanta (now part of Cisco). But to get the deal done, SA agreed to support SimulCrypt, a system that allows more than one conditional access system to operate on a single video program stream. That all-important concession allowed Cablevision to preserve its use of the NDS platform and keep its set-top box options relatively open. (See Cisco, Moto Called Out by Ohio MSO.)
If Cablevision's downloadable security system is deemed successful, it could hold major ramifications for the US cable industry and weaken Motorola and Cisco's grip on video security and set-top boxes.
Industry sources tell Light Reading Cable that other MSOs are also interested in pursuing Cablevision's approach with the NDS Key Ladder now that it's increasingly unlikely the industry will go forward with a downloadable platform that was initially being developed by the cross-MSO PolyCipher LLC joint venture. (See Cisco, Moto Take Control of DCAS .)
Although the K-LAD originates out of NDS, it's capable of supporting conditional access systems from other suppliers. NDS, as a condition of Cablevision's FCC waiver, said it's committed to making Key Ladder technology available to any other vendor on an open basis.
Cablevision's approach may also gain more attention at the FCC as it looks to update existing CableCARD rules and inquire about "AllVid" gateways and adapters that would apply to cable operators, telcos, and satellite TV operators and try to open up the retail market for video devices. (See All About the FCC's AllVid and FCC Inches Towards Net-Agnostic Gateways.)
— Jeff Baumgartner, Site Editor, <ahref="http://www.lightreading.com/lr-cable/">Light Reading Cable
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