November 9, 2015
The FCC is dealing with more than a few weighty pay-TV issues at present. Note Charter's proposed deals to acquire Time Warner Cable and Bright House Networks, and the Commission's evaluation of whether or not to expand the definition of a multichannel video programming distributor (MVPD) to include some online video providers. Amid these regulatory reviews, it might be easy to overlook a debate on the future of content security technology. But that would be a mistake.
The argument over content security is coming to a head, and if the brand power of the companies involved is any indication (hint: it is), then the fight brewing at the Federal Communications Commission (FCC) over whether the government should regulate downloadable security technology for the pay-TV industry is headed for outright war.
The FCC is closing out comments today on a report submitted by the Downloadable Security Technical Advisory Committee (DSTAC) in September. The comments on file include submissions from virtually every major cable, telecom, satellite and online video company, as well as key hardware and software vendors, and top industry associations. Big names include Comcast Corp. (Nasdaq: CMCSA, CMCSK), Charter Communications Inc. , Amazon.com Inc. (Nasdaq: AMZN), Google (Nasdaq: GOOG), TiVo Inc. (Nasdaq: TIVO), Dish Network LLC (Nasdaq: DISH), AT&T Inc. (NYSE: T)/DirecTV Group Inc. (NYSE: DTV), the Motion Picture Association of America , Arris Group Inc. (Nasdaq: ARRS) and Cisco Systems Inc. (Nasdaq: CSCO), just to list a few.
Split into two factions, commenters argue either that the government should require pay-TV providers to unbundle their video content from proprietary user interfaces, or that pay-TV providers can satisfy consumers' desire to access content in new ways simply by offering new apps that play on third-party devices.
The issue doesn't sound like one about content security, but that's where the debate begins. The reason pay-TV content has been locked up on cable set-tops and in old-style user interfaces for so long is because of the conditional access technology protecting premium video assets. The shift to IP video should make conditional access irrelevant, but even if the entire industry switched to IP overnight (it won't), pay-TV providers now have other reasons why they say their content can't be separated from operator-provided user interfaces.
First, pay-TV providers argue that their service consists of more than just the video they deliver, but also includes interactive features, parental controls, advertising support and more. Second, they argue that content licensing agreements prevent them from just turning over video to a third-party company because current deals include specific requirements like the display resolution mandated for different video assets and even where a channel must be placed in the program guide lineup.
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This specific content security debate with the FCC has been going on all year, but a lot has changed even since the time the Commission's advisory committee submitted its final report in early September. Ever anxious to show their commitment to the app ecosystem, several cable companies have introduced new streaming video apps that make their content available not only on mobile devices, but also on IP-connected TVs. Charter launched its Spectrum TV app for the Roku platform. Time Warner Cable confirmed it's testing a TWC TV app for Roku in New York City with plans to offer its entire channel lineup over IP. And Comcast submitted a filing to the FCC documenting how it plans to introduce an app that will deliver Xfinity TV service to more connected devices. (See Charter Parks Its App on Roku, TWC Steps Toward All-IP TV and Here Come the TV Apps!)
All of these moves demonstrate how pay-TV is becoming more accessible on retail hardware, but they also show how committed providers are to maintaining a walled garden around the video services they deliver. By making TV available in an app, service providers can still control the overall experience, including the user interface and interactive features.
As a backdrop to the entire debate is also the history of the last time the FCC tried to regulate content security rules in the pay-TV industry. When the FCC instituted its integrated security ban in 2007, it pushed forward the implementation of CableCARD technology. The CableCARD has been a boon to TiVo, which has been able to sell DVRs at retail that access linear pay-TV content through the use of a CableCARD module. However, TiVo is the only success story out of that regulatory endeavor, and even its success at retail has been limited. The bottom line is that cable companies spent a huge amount of money to remove the security function from their set-tops, and the effort didn't create the open market for retail TV devices that was promised. There's plenty of blame to go around over why CableCARD largely failed, but the reality is that it did, and the precedent is a cautionary tale for the FCC going forward.
So what's next?
The FCC hasn't said what it will do once all public comments on the downloadable security report are in, but it has to weigh the issue in the context of everything else on its regulatory agenda. For example, given that the Commission is also considering whether to categorize some online video distributors as MVPDs, any decision about content security has the potential to apply in new ways to new service providers in the future.
Whatever the FCC decides to do, it won't make everybody happy. In fact, any decision is likely to make a lot of people very, very angry.
— Mari Silbey, Senior Editor, Cable/Video, Light Reading
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