How the FCC's Set-Top Plan Could Work
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.
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