Video services

FCC Lets Cablevision Lock Up Its Basic TV Tier

The Federal Communications Commission (FCC) will now allow Cablevision Systems Corp. (NYSE: CVC) to encrypt its basic video tier in its New York City franchise area, but only on the condition that the MSO complies with a handful of set-top- and CableCARD-related concessions.

Cablevision brought the issue up last fall as it made plans to convert its NYC system to all digital, claiming that having encrypted basic tier programming would improve customer service, reduce costly truck rolls, and beef up the overall security of the network. (See Cablevision Looks to Lock Up Basic Video Tier .)

About 20 channels, mostly of the broadcast network variety, make up the MSO's basic video tier. The vast majority (99 percent) of Cablevision's customers already subscribe to a digital TV service. Cablevision's basic tier will continue to run unencrypted in its Yonkers, N.Y., and Connecticut systems.

Going all digital in the NYC footprint will also allow the MSO to free up analog spectrum for other, more advanced services, and perhaps open up required streaming capacity for its ambitious Remote Storage–DVR (RS-DVR) service. (See Supremes Stand Clear of RS-DVR Case.)

Twenty-three organizations, including the Consumer Electronics Association (CEA) , formally opposed Cablevision's basic tier lockup. Some felt encryption of the basic tier would require Cablevision to foist boxes and unnecessary fees on the existing basic customer base. Some feared companies that make devices and software that rely on clear-QAM signals (such as Elgato Systems) might go out of business, since TVs with clear-QAM tuners are only capable of displaying unencrypted digital cable programming.

The FCC will allow Cablevision to encrypt its basic programming tier, but wants the MSO to:

  • Offer current basic-only subs up to two set-tops or CableCARDs without charge for up to two years
  • Give digital customers another set-top or CableCARD for no charge for one year if they have an additional TV presently receiving basic-only service
  • Provide qualified low-income basic-only subs up to two set-tops or CableCARDs without charge for five years
  • Give current basic-only subs with "clear-QAM" devices up to two set-tops or CableCARDs without charge for up to 10 years
  • Not charge connection fees for pro installs of all those devices for basic-only subs once it begins encrypting the basic tier

Cablevision is also on the hook to provide the Commission with three-month, six-month, and 12-month reports detailing the number of customer complaints tied to the waiver; the number of boxes, CableCARDs, and installations provided at no charge; and what impact the waiver has had on truck-roll reductions.

Cablevision declined to say when it will start to encrypt its basic tier.

Cablevision is just the fourth MSO to get such special dispensation from the FCC. In 2003, the agency awarded similar rule waivers to two MSOs in Puerto Rico -- Liberty Cablevision and Centennial Puerto Rico Cable TV Corp. -- to help them clamp down on rampant service theft. Waitsfield Cable Company of Vermont got the first back in 2001 to help it connect and disconnect services remotely to a resort area full of "transient subscribers" and seasonal rental properties.

— Jeff Baumgartner, Site Editor, Cable Digital News

Cooper10 12/5/2012 | 4:45:02 PM
re: FCC Lets Cablevision Lock Up Its Basic TV Tier

This will result in numerous consumer benefits (more content, better services, self-install capability) that will far outweigh any negatives of having to get equipment for a QAM TV to receive the basic tier.

It also recognizes that a level playing field across all pay TV providers is appropriate.

Jeff Baumgartner 12/5/2012 | 4:45:02 PM
re: FCC Lets Cablevision Lock Up Its Basic TV Tier

I think the high penetration of digital at Cablevision also factored in pretty good here, as did Cablevision's original pledge to supply a bunch of free cablecards and boxes over a set number of years after encryption of the basic tier starts.

But i'll be interested to see what kind of flak (and how much) they get from consumers once encryption begins. Some people just can't stand the idea of getting a box, no matter what the benefits. But I don't expect there to be massive outrage over this.  Imagine it's just the start, too. Other MSOs will see this ruling and want to get their own waivers.  JB

craigleddy 12/5/2012 | 4:44:57 PM
re: FCC Lets Cablevision Lock Up Its Basic TV Tier I'm not seeing much benefit from this for Cablevision or its customers, of which I am one. Both will have to endure a lot of near-term rigamarole with the hope of long-term benefits. The FCC appears to be prolonging the life of CableCards when Cablevision wants to move to its key ladder downloadable security. Cablevision already has whittled down its number of basic channels available on cable-ready TVs and now subscribers are hopping mad about the loss of Food and HGTV. So they need to be careful how they handle this to avoid more flak. Why didn't Cablevision go to DTAs like Comcast and others are doing?
Jeff Baumgartner 12/5/2012 | 4:44:56 PM
re: FCC Lets Cablevision Lock Up Its Basic TV Tier Not sure why they aren't going with DTAs in this instance, but it might be because the DTAs on teh market aren't outfitted with the NDS security system, though not sure why something like that can't be made. Cisco has a DTA, so that might work with Cablevision's implementation of Simulcrypt. Cablevision still hasn't said much about how it intends to encrypt the basic tier, but guessing it will be similar to how it does it with digital, meaning they'll be using the NDS keyladder/downloadalbe system you mentioned, or with NDS CableCARDs.
vstone51 12/5/2012 | 4:44:54 PM
re: FCC Lets Cablevision Lock Up Its Basic TV Tier

Since encrypting OTA channels is against fedral law, this is very interesting. They could easily have done away with analog and left the basic tier only as unencrypted digital. What Congressfolk reprsent cablevision's HQ?

Cooper10 12/5/2012 | 4:44:52 PM
re: FCC Lets Cablevision Lock Up Its Basic TV Tier The benefits of this initiative have less to do with the required equipment and more with the fact that Cablevision will be able to leave any home passed connected to the plant, and therefore able to activate and deactivate service by sending customers the relevant equipment (set top, modem, or eMTA) to self-install and provision services remotely. No more taking a half day off from work to wait for the cable guy. It will also reduce theft of service.

This will also meaningfully reduce operating expense for Cablevision, which should translate into less pressure to increase rates to maintain margins.
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