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How the FCC's Set-Top Plan Could Work

Mari Silbey
1/29/2016

Meet Brad Love. Love believes in open source. He's anti-patent (especially anti-software-patent). And he's the original author of the virtual headend technical solution that appears to be at the heart of the FCC's new proposal for set-top competition.

Federal Communications Commission (FCC) Chairman Tom Wheeler announced earlier this week that he's circulating a Notice of Proposed Rulemaking designed to "unlock the set-top" and create "choice and innovation." The goal is to open up the traditionally closed set-top market so that more companies can develop innovative hardware and software applications -- like TiVo has done -- that work with the services provided by pay-TV operators. (See FCC Ready to Rule on Set-Top Overhaul: Report.)

Unsurprisingly, reactions from the service provider industry were swift and fierce.

Comcast Corp. (Nasdaq: CMCSA, CMCSK) Senior Vice President Mark Hess said in a blog post: "The proposal, like prior federal government technology mandates, would impose costs on consumers, adversely impact the creation of high-quality content, and chill innovation."

Time Warner Cable Inc. (NYSE: TWC) CEO Rob Marcus also piled on with his statements during the TWC earnings call this week. "It appears an attempt to create a regulation that's really unnecessary," said Marcus, adding "It's hard to really see the need for regulation in a market as dynamic as this one." (See TWC Chief Slams FCC STB Proposal.)

However, for those that fought all last year for a new set-top mandate -- companies like Google (Nasdaq: GOOG), Public Knowledge , and Hauppauge Digital Inc. , where Love is a senior software engineer -- the news from the FCC was a big win. (See DSTAC: 2 Opposing Views on the Future of TV and Content Security Battle Threatens TV Upheaval.)

Many of the details of the new proposal aren't available yet, but Love agrees that, "In spirit, the Chairman's proposal does mimic the competitive navigation proposal [developed by his organization and others] very very closely."

Love created the initial technical plan for that proposal, which details a virtual headend solution. Then he worked with Google software engineer Jeff Kardatzke to refine and implement the technology, and with Senior Staff Attorney John Bermayer of Public Knowledge to draft the technical filing that was ultimately submitted to the FCC by Public Knowledge last October.

Love also pooh-poohs the argument from pay-TV providers that implementing a virtual headend solution throughout the industry would be unduly burdensome. First of all, he explains, "We've already implemented the virtual headends for several different formats and it took only a few weeks of work to implement the full proposal."

He cites an ex parte demonstration of the technology provided to the FCC in December as evidence.


For more on TV technology trends, check out our dedicated video services content channel here on Light Reading.


Secondly, Love says that the solution can be implemented by operators entirely through existing equipment and software updates. One of the reasons the cable industry hated the CableCARD when it was introduced was because not only did operators have to support the modules in third-party hardware, but they also had to use the same equipment with their own boxes. That cost a lot of money and created a lot of operational headaches.

Love argues, however, that the same wouldn't be true with the virtual headend solution. For example, he says, the quickest migration path for cable operators would be to repurpose existing CableCARDs with virtual headend technology, embed them in new set-tops and ship those out to subscribers.

Chairman Wheeler was also adamant in a press conference yesterday that the virtual headend solution would require no new hardware.

"There is no second device. Let's get this real clear, real straight, real early," declared Wheeler. "Six years ago, there was -- in 2010, there was a proposal that there would be a second box solution. It was called AllVid. The cable industry is continually trying to call this AllVid. It is not. It is not requiring a second box. It is about open standards versus closed standards."

Interestingly, TiVo Inc. (Nasdaq: TIVO), which very much debated on the side of Google and Public Knowledge during FCC advisory committee meetings last year, has been cautious in its response to the new FCC proposal.

"We're happy that the FCC is finally addressing the need for a successor to CableCARD," says TiVo Senior Vice President and General Counsel Matt Zinn. But he also notes that TiVo hasn't "really endorsed any particular solution or solutions. We've just said that we want a successor standard. We've also said that we're happy to work with the industry on this. Obviously, other than Comcast, we haven't been very successful in convincing the industry to work with us on a successor outside of regulation."

Zinn is referring to an agreement with Comcast to work on a post-CableCARD solution that was established back in 2014. (See Comcast, TiVo May Ditch the CableCARD.)

TiVo CTO Joe Weber adds, "I was on the other side, I was on the cable side for the first CableCARD agreement, and at a point similar to this one, the two industries sat down and said look, neither one of us is necessarily happy, but let's work together and figure it out, and within months they had." Weber hopes there's still an opportunity to do the same today.

So what happens now?

"We'd like the Commission to vote favorably on pursuing a ruling," says Zinn. "That's the next step. That's the first step. And then we'll see."

A vote is scheduled to happen at the next FCC on February 18.

— Mari Silbey, Senior Editor, Cable/Video, Light Reading

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kq4ym
kq4ym
2/10/2016 | 10:03:53 AM
Re: Thanks, but...
With Chairman Wheeler's assurance that a "virtual headend solution would require no new hardware." it should be clear to at least the advantages to the consumer if not the industry would be great. Only the near monopolistic advantages of the service providers with proprietary gear would suffer some downsides, at that may only be temporary, as customers may very well flock to subscription services once they have more freedom to choose.
danielcawrey
danielcawrey
2/2/2016 | 11:36:57 AM
Re: Thanks, but...
I think something needs to be done.

Television as a product is just not very good, and I think there is a ton of opportunity for innovation. Just look at what Netflix has been able to do on exiting digital platforms. What if there were set-top devices that could innovate cable?
KBode
KBode
2/1/2016 | 12:26:23 PM
Re: Thanks, but...
"I feel like I had this same conversation last week about Open Access.  Why are we spending time (regulator time or technologist time or standards body time) on something that is being killed."

I see both sides of that argument. I do see merit in the idea that the FCC may not want to wade into another protracted CableCARD fight when the legacy TV industry is set to be totally disrupted anyway.

Still, cord cutting is a glacially slow trend, and I can see the cable TV market remaining viably powerful for a decade, especially if they're willing to compete on price. Under that model it would still be greatly beneficial to have an open set top competition system in place.

At the end of the day this solely comes down to protecting that $20 billion in annual set top box fees, which I have no sympathy for. 

 

Granted time spent on this issue is time NOT spent on other issues that won't be going away, like usage caps and zero rating, and how those hinder streaming platforms. 
msilbey
msilbey
2/1/2016 | 11:58:06 AM
Re: Thanks, but...
Not sure I'm following all of your arguments here. Content may be available over streaming services, but it's not easily available to other third parties, a la TiVo, that want to create new navigation experiences without getting into the content services business. 

Also, efforts to keep content away from Netflix is part of what the FCC reportedly had issues with when it looked at the Comcast/TWC merger. So whether programmers want a large audience or not, there will be times when powerful interests can keep (or at least try to keep) programming away from new upstarts.

Finally, see here for more details on networking from a single set-top to multiple screens: http://apps.fcc.gov/ecfs/document/view.action?id=60001330156 
brooks7
brooks7
2/1/2016 | 10:01:45 AM
Re: Thanks, but...
 

Mari,

 

Can you name 1 single piece of video content not available via streaming?

 

How do I get HDMI ports over to TVs?  If you are saying that I can do it via Ethernet or WiFi, then I am not sure why that is any different than any other streaming service.  See the point?

So, the question is will Linear TV be dead in 10 years?  If so, will it take more time than that to develop and deploy a whole new series of STBs?  There is no way that a cableco is bulk replacing all the STBs that are deployed.  That means it takes many years to replace the boxes.  This is a significant problem given that essentially the service has 100% take rate and everybody already has an STB.  The total number (at least in the US) is likely to decline over time. 

Which is why I think we are trying to solve a problem that the market has already solved.

seven

 

Edit:  If you haven't thought about it, there is a huge reason why content is not locked up.  There are 100s of millions of subs that don't have your service on a global basis.  By restricting your content to your own subs, no matter how large, you essentially cut your market by a huge percentage.  If you live where I do and you lock your content into Charter cable subs, then I can never get it.  I am in a Comcast property.  

This is the mistake I see made here all the time.  There are so many more subs NOT on your network. 

 
msilbey
msilbey
2/1/2016 | 9:50:10 AM
Re: Thanks, but...
brooks7- You won't need 1 STB per TV. You can connect up to 5 or 6 screens off one box.

Also, to your other point about cable and linear TV, sure the model's changing, but the point is there will continue to be entrenched entities (including probably Comcast and Charter) that right now have the ability to lock their content up in apps (or on their legacy cable systems) with total control over the interface. For other companies that don't want to be their own video service providers, the ability to innovate on top of that content experience goes away. 
thebulk
thebulk
1/31/2016 | 2:12:50 PM
Re: Thanks, but...
Probably not at all. I would guess not one bit. 
brooks7
brooks7
1/31/2016 | 2:01:30 AM
Re: Thanks, but...
So, in 6 years will Cable and Sattelite as Linear Pay TV still matter?

seven

 
davidhoffman5
davidhoffman5
1/31/2016 | 12:42:13 AM
This should be easy.
This should be relatively easy. I have seen USB memory sticks with DoD and NSA high security hardware and firmware. The cable companies requirements are not any more demanding and should not be any more demanding. The technology to do this is out there. The subscriber should be able to go to a Big Box Bargain Bin store and select from many dozens of different DVRs that can be purchased. Buy one. Take it home. Plug it in. Insert new cable card and it works. 
davidhoffman5
davidhoffman5
1/31/2016 | 12:28:45 AM
Re: Thanks, but...
We still need this because many cable subscribers desire it as a solution. They are not into using OTT as much as they want to be able to get a set top box of their choice, the same as they did with VCRs. Go to nearby Big Box store. Pick from the 100 different set tops on display. Take home and plug in cable card to make work. The FCC needs to show strength with this.  A bidirectional cable card with full security was possible over 20 years ago. We could have had numerous choices of set top boxes back then. We should have it today. We should have it in the very near future. Various technical wizards have proven it can be done at a reasonable cost. If you want to do the whole home decryption route, that is acceptable also, but it needs to lead to being able to get your own DVR from Big Box and using it with ease in your home. I can do it for internet service with a generic DOCSIS compliant modem, so I should also be able to do it with the video service from a traditional cable company, wireline telephone company, or one of the newfangled companies like Google Fiber, LUS Fiber, EPB Fiber.

The satellite situation? Well with AT&T purchasing DirecTV, DirecTV will be included in the list of companies that have to comply because AT&T U-Verse will be in the mix. Dish Network? They can be given some extra time, maybe up to 6 years, beyond the time frame for the others to comply. 

 

 
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