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Policy Watch: TiVo, Cable Trade SDV Barbs

Jeff Baumgartner
6/30/2010

TiVo Inc. (Nasdaq: TIVO) and a good portion of the US cable industry remain on opposite ends in the debate on whether the Federal Communications Commission (FCC) should impose new rules on switched digital video (SDV) as it looks to "fix" what's wrong with the CableCARD regime.

The Commission is expected to vote on new CableCARD rules later this year. The deadline for reply comments was this week, and plenty of fire and brimstone was splashed on the SDV issue.

The cable industry doesn't want the FCC to impose any new SDV-related mandates, while TiVo wants the industry to adopt an IP backchannel so its CableCARD-capable DVRs/set-tops can access SDV channels without the need for separate tuning adapters made by Cisco Systems Inc. (Nasdaq: CSCO) and Motorola Inc. (NYSE: MOT). (See Cable Defends Its SDV Crutch.)

Here's a roundup of the arguments and counterarguments made this week and some other points of contention that circulated in the FCC docket:

  • TiVo, of course, defended its IP backchannel proposal, contending that it's more elegant and potentially less costly to deploy than tuning adapters are today. TiVo says cable-wide efforts to deploy SDV proxy servers cost in the range of $10,000 to $15,000 each.

    TiVo used Time Warner Cable Inc. (NYSE: TWC), an operator that has SDV widely deployed, to amplify its point, noting that the MSO has already spent about $2 million deploying tuning adapters. That's based on TWC saying it's provided 16,000 of the boxes at a cost of $125 each.

    At that price, "the cost of a few hundred adapters exceeds the cost of the IP backchannel approach," TiVo claimed.

    TiVo also poked holes in Cisco's earlier suggestion that the IP backchannel approach would be technically onerous because 12 combinations of standards would have to be addressed to accommodate all the cable headend and SDV systems on the market. TiVo questioned whether all of those combinations are actually used and noted that each headend need only work with one SDV server platform.

    As for cable's arguments that an IP-fueled backchannel could expose operators to possible service theft, that's a "canard," TiVo said, because the proposal uses location, authentication, and authorization protocols. TiVo noted that RCN Corp. is already using the new backchannel system to validate customers that have signed up for TiVo's "Premiere" DVR. (See RCN to Expand TiVo 'Premiere' Rollout.)

  • Cisco, in its reply comments, says it thinks TiVo is significantly underestimating the cost and complexity of an IP backchannel.

    The Consumer Electronics Association (CEA) and others have suggested that cable's recently introduced "TV Everywhere" services show TiVo's proposal would be easily implementable. (See Comcast to Expand 'Xfinity' to DSL Subs.) But Cisco said there's "no connection" between TV Everywhere, which uses Web-based delivery, and SDV, which relies on QAM-based technology.

    Cisco disclosed that it has shipped more than 42,000 tuning adapters so far, and expects to ship 35,000 adapters annually over the next several years.

  • BendBroadband told the FCC that smaller MSOs may not have the scratch or technical resources to implement TiVo's idea, and that the mere notion of exploring it would "require considerable study and likely consulting by costly outside vendors."

    Even if TiVo's suggested implementation costs were correct, it's still a substantial sum for smaller cable operators, BendBroadband said.

  • Time Warner Cable Inc. (NYSE: TWC) countered TiVo's complaint that the MSO, which has deployed more than 16,000 tuning adapters so far, hasn't done enough to inform customers about the equipment. TiVo's grumbling that TWC's Website does not expressly mention the availability of tuning adapters. The MSO said the complaint is misplaced because TiVo "cannot reasonably demand -- and the Commission plainly should not require -- that TWC or any other cable operator serve as TiVo's marketing agent."

  • Verizon Communications Inc. (NYSE: VZ) sided with cable's position that the FCC should not add any SDV-related mandates to the CableCARD rules, citing the usual concerns about expense and the stifling of innovation.

    The FCC "should turn away from the failed approach of technology mandates," Verizon said.

  • The CEA and The Consumer Electronics Retailers Coalition (CERC) are on the other side of the IP backchannel argument, favoring TiVo's proposal and agreeing with TiVo's convenience and cost arguments.

    They claim the economics of tuning adapters "provides a powerful disincentive [for MSOs]to support competitive products... Any growth of the UDCP [Unidirectional Digital Cable Products] market through the success of competitors like TiVo, Moxi, Roku, and new entrants can only tend to incite the industry to do even more to force or persuade its subscribers to accept leased boxes."

    Beyond the IP backchannel
    Not every argument posed in this week's reply comments centered on SDV. Here's a sampling of other topics.

  • Nagravision SA wants the FCC to clear up its stance on downloadable security.

    Nagra specifically wants the FCC to clarify whether a downloadable security platform from Beyond Broadband Technology LLC (BBT) truly conforms to the separable security rules. BBT's system uses a secure microchip in set-tops that's designed to work with conditional access systems from multiple vendors.

    The FCC Media Bureau acknowledged in January 2007 that BBT's approach was within the rules, but Nagra, which describes itself as a "motivated" customer for conditional access systems, is holding off on shopping until it's sure of the FCC's position. (See BBT Notches First Install .)

  • CableOne is in favor of a blanket rule that would let all US operators use HD-capable DTAs with integrated security. CableOne remains the only operator to obtain an HD-DTA waiver, albeit for just one market in Tennessee. (See Cable ONE Looks to Pump Up HD-DTA Volumes and Scoop! Cable ONE Makes HD-DTA Picks .)

  • BBT, however, warned the FCC that a blanket exemption for proprietary HD-DTAs "will guarantee that the existing dominant set-top box manufacturers can lock up the market for the foreseeable future. It would likely do more harm than good in the long run."

    BBT also argued that a "no-DVR" restriction on HD-DTAs could be circumvented with whole-home, network DVRs or a "modular DVR add-on device."

    — Jeff Baumgartner, Site Editor, Light Reading Cable

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    Jeff Baumgartner
    Jeff Baumgartner
    12/5/2012 | 4:31:01 PM
    re: Policy Watch: TiVo, Cable Trade SDV Barbs


    Yep, there are still no tru2way boxes available at retail. in fact , there's only one box (from ADB) that's even been certified.... Samsung and Panasonic have had tru2way tvs certified, but good look finding one.  The TiVos and Moxi boxes with cablecards can't do cable vod and need the tuning adapter to do SDV if they are being used in a market that supports SDV. But I think the cable industry agrees with you that there's not much value in tying cablecards to leased gear, though it has forced the industry to support cablecard... but no retail market has evolved to go along with it.  The AllVid NOI will look to solve some of this across industries, but that's many moons out. JB

    jobenso
    jobenso
    12/5/2012 | 4:31:01 PM
    re: Policy Watch: TiVo, Cable Trade SDV Barbs


    There are NO standard or high def cable card host boxes being sold in retail. You can buy a TiVo or a moxi, both will set you back either the same retail fee's as a MSO provided STB. If a consumer wants to buy a STB, a host box, you can't get one. Hell you can't even get a CC tuner for a PC, so the home theater setup is a bust too. What good is a cable card if it's tied to a rented piece of hardware. I don't understand how the FCC let this happen or why someone in the electronics industry hasn't seen an opportunity.

    jobenso
    jobenso
    12/5/2012 | 4:31:00 PM
    re: Policy Watch: TiVo, Cable Trade SDV Barbs





    I'm sure I'm off topic here, sorry for high jacking your post.


    I'm not even mentioning tru2way, tuners in TVs are dead. Since most MSOs have started encrypting all of the video that's not gov and free air we have no choice but to rent a box. Well, if you want to have no HD channels you can get a DTA I guess. My cable provider isn't doing SDV, they have enough bandwidth to make their sports and special language programming available. In my case, just a HD HOST STB would provide the relief I need. I rent 3 boxes, 10$ each = $360 in fees, that's every year. We can all go over the top for VOD and for guide data, it can be a feature of a retail HOST STB.


    Why Tivo gives a crap about Ethernet/IP return is a mystery to me. Just partner with a over-the-top VOD vendor and be done with this mess. Same for sports, MLB has licensed internet clients in TVs and bluray players. They are just spinning their wheels, no cable operator wants to open up the network for a third party.


    How can Tivo make money on something the MSO is selling anyway?



    SDV is just a stop gap anyway, ieptv is the future.





    --jobenso

    Jeff Baumgartner
    Jeff Baumgartner
    12/5/2012 | 4:30:59 PM
    re: Policy Watch: TiVo, Cable Trade SDV Barbs


    Heh, no problem. Hijack at your leisure... gets us going into some new areas.


    I think TiVo cares because they want to offer all the bells and whistles they bring to the table while also supporting everything else that the MSOs do via generic boxes, so they feel hamstrung if their retail CableCARD boxes end up doing less.  And they just simply refuse to make a tru2way box over complaints about the licensing and certification costs and processes. I think they should make a go of it, but it seems they just don't want ot make the investment based on their experience working with cable so far.


    I've heard good and bad stories about tuning adapters... it's less than ideal, but it seems to be a stop-gap.  There are lots of critics already, but i think TiVo's IP backchannel approach might make sense longer term since it removes some kluge from the setup. I don't see the FCC mandating anything like that in this round.


    Unless you're a big TiVo fan, what's the incentive for a consumer to fork over $$$ for one of their cable boxes if can even replicate the base level cable services that a generic box can give them?  I agree that doing OTT-VoD helps TiVo, but cable VoD is still of value based on the new movies  many offer in the DVD window. JB

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