The cable industry and OTT video specialist Boxee are slugging it out at the Federal Communications Commission (FCC) about a proceeding that might let MSOs encrypt their basic video tiers.

Boiled down, cable wants the rule changed, and Boxee thinks consumers are best served if cable's most basic digital video tiers are kept "in the clear" -- something also called "Clear QAM."

Boxee is trying to appeal to so-called cord-cutters by giving consumers a less expensive video alternative. Of recent note, Boxee has introduced a new dongle that lets its broadband-connected device bring in over-the-air digital broadcast channels. But not everyone can get a good over-the-air signal, so using the integrated QAM tuner would let the box also pipe in basic cable channels, so long as they aren't encrypted. Otherwise, Boxee would have to use a CableCARD or some form of cable-approved downloadable security.

"If Clear QAM is eliminated, consumers who have little or no OTA antenna reception will not only be denied the choice of 'shaving the cord' with a product such as Boxee," but will be forced to rent set-tops from MSOs, Boxee told the Commission.

In response, the National Cable & Telecommunications Association (NCTA) argued that basic-tier encryption would be good for consumers in part because it would eliminate truck rolls when service is turned on or off. And, the organization added, it would reduce cable theft and help MSOs go all-digital, noting that cable operators would commit to give away boxes so customers could continue to view basic channels after they are encrypted.

Many of these arguments mimic those that Cablevision Systems Corp. (NYSE: CVC) presented to the FCC when it sought a waiver to the existing rules. The FCC ended up granting Cablevision the waiver about two years ago, but the agency has yet to act on this broader encryption proceeding or decide to move forward on a possible CableCARD successor called AllVid.

Why this matters
Boxee wants to sell more boxes and offer more content options without having to deal with the expense and headache of integrating a CableCARD or another FCC-approved removable security mechanism. A Clear QAM option would add more value to the Boxee device and play into its plan to provide what it thinks is a cheaper alternative to traditional pay-TV.

The proceeding is coming into play as cable operators, notably Comcast Corp. (Nasdaq: CMCSA, CMCSK), are in the process of reclaiming all of their analog spectrum to beef up their high-speed data capacity, add HD services and, possibly, install an IP simulcast. Once that migration is done, all of cable's video services will be piped in digitally. (See Comcast Says Goodbye to Analog TV.)

For more
Read more about Boxee's cord-cutting (and cord-shaving) ambitions, and how Cablevision got the FCC to see it the MSO's way on the basic video encryption issue.

• FCC Lets Cablevision Lock Up Its Basic TV Tier
• Cablevision Looks to Lock Up Basic Video Tier
• A Virtual MSO Shall Rise, Boxee CEO Says
• Boxee Playing All the Angles
• Boxee Adds a Video Sling
• Boxee Launches Cord-Cutting Box

— Jeff Baumgartner, Site Editor, Light Reading Cable