The link between cable services and retail devices is a messy one, and nowhere is that more evident than in the continuing debate over how the FCC should regulate technology for combining the two products in consumer homes.
In the latest episode of a years-long saga, TiVo Inc. (Nasdaq: TIVO) has petitioned the Federal Communications Commission (FCC) for either clarification or a waiver on a rule that requires consumer electronics companies to implement a home-networking interface on devices supplied to pay-TV operators that is based on an open industry standard. Currently, TiVo's solution does not meet that requirement, but the company argues that its own technology "anticipates and in many respects surpasses" the FCC's rule, and that "consumers who lease TiVo products from their cable operators already enjoy the benefits of home networking that the rule seeks to enable."
The FCC's home-networking mandate is specific to hardware provided to pay-TV operators, but it has once again opened up the Pandora's box of whether the regulations covering pay-TV hardware should -- or should not -- be implemented more broadly. Verizon Communications Inc. (NYSE: VZ) pounced on TiVo's recent petition, using it to urge that the agency not only get rid of the home-networking mandate, but all set-top technology mandates, including the integrated security ban that forced widespread MSO deployments of CableCARD security technology back in 2007. (See MSOs Struggle With Set-Top Change.)
CableCARD technology allows retail set-tops to access pay-TV content, but it has been costly to implement and has several limitations. Practically speaking, the technology also hasn't created the robust, competitive retail market that regulators were aiming for. (See TiVo Criticizes CableCARD Coverage.)
Unsurprisingly, TiVo heartily disagrees with Verizon's response. TiVo and its subscribers have been the primary beneficiaries of CableCARD rules, because the rules have enabled TiVo to sell its own cable set-tops at retail and put its software into other cable boxes. So the company doesn't want to see the mandate abandoned, even as the industry (slowly) transitions to more flexible IP video solutions. In its official reply this week to Verizon's comments, TiVo urged the FCC "to grant its unopposed Petition for Waiver, and to ignore calls to adopt sweeping changes to its Section 629 [i.e., CableCARD] rules in this narrow proceeding."
The pay-TV regulatory situation is a balancing act for everyone involved. TiVo and pay-TV providers alike have market interests to protect, even as they also want to keep consumers happy by providing innovative TV solutions. Their overarching goals are essentially the same -- particularly with more IP video on the horizon -- but the preferred methods for getting from here to there are very different.
— Mari Silbey, special to Light Reading