FCC Shoots Down TiVo's SDV Proposal

The Federal Communications Commission (FCC) has dismissed a proposal from TiVo Inc. (Nasdaq: TIVO) that would have mandated cable operators to use an IP backchannel to set up the delivery of switched digital video (SDV) programming to DVRs and other CableCARD-based retail boxes.

TiVo hoped its recommended approach would serve as a replacement for separate tuning adapters (made by Motorola Inc. (NYSE: MOT) and Cisco Systems Inc. (Nasdaq: CSCO)) that are used now to set up SDV streams on some retail DVRs. Although TiVo participated in the development of tuning adapters, it has since altered its support, arguing that the devices are kludge, are tantamount to a separate set-top box, and place TiVo at a disadvantage over boxes leased by operators. (See TiVo: Cable Should Love It Some IP, Everyone Hearts the Tuning Adapter!, Cable Subs Don't Heart the Tuning Adapter , and TiVo Gives Cable Both Barrels .)

The dismissal of the TiVo proposal is just one result to come out of a new set of rules that the FCC considered as it looked to "fix" (or at least improve) the existing ban on integrated security devices, which came into effect in July 2007. (See Countdown to 'Seven-Oh-Seven'.)

On Thursday, the FCC unanimously voted in favor of several new rules that may actually help TiVo gain closer parity with leased set-top boxes, including provisions that make CableCARD costs more transparent to consumers, allow for self-installation of the security modules, and make it easier for consumer electronics manufacturers to gain approval for CableCARD-based set-tops and TVs. Today's order allows operators to buy and deploy hi-def Digital Terminal Adapter (DTA) devices with integrated security. [Ed. Note: We'll have additional coverage on all of those elements soon.]

The decision not to mandate TiVo's proposal is a win for the cable industry. Cable, led by the National Cable & Telecommunications Association (NCTA) , has argued that the tuning adapter is perfectly suitable for the small number of consumers who require it, and that it would cost the industry as much as $22 million to implement TiVo's idea. Other cable interests have held that the idea is fraught with complexities, and introduces security risks. (See TWC Pokes More Holes in TiVo's SDV Proposal and NCTA Prices TiVo's SDV Idea at $22M.)

Although the proposal got shot down this round, it may come up again when the FCC pursues an "AllVid" inquiry that could result in gateways and gateway adapters that would apply not just to cable, but to telco- and satellite-TV operators, too. (See FCC Floats 'Simple' Gateway, CableCARD Rules and All About the FCC's AllVid.)

In the meantime, operators such as RCN Corp. and Suddenlink Communications are using the IP backchannel concept to set up video-on-demand (VoD) sessions on MSO-leased TiVo boxes. Cox Communications Inc. is in the process of performing a similar integration that would let TiVo's retail boxes support that MSO's VoD service alongside the DVR's support of over-the-top video services from Netflix Inc. (Nasdaq: NFLX) and Amazon.com Inc. (Nasdaq: AMZN). (See Cox, TiVo Strike a DVR Deal , Suddenlink Boxes Up TiVo Deal , and RCN to Expand TiVo 'Premiere' Rollout.)

— Jeff Baumgartner, Site Editor, Light Reading Cable

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