At yesterday’s open meeting in Washington, D.C., the Federal Communications Commission voted to issue a Notice of Inquiry (NOI) and a Fourth Further Notice of Proposed Rulemaking (FNPRM) “to promote innovation and consumer choice in the video device marketplace…as recommended in the National Broadband Plan. 

The NOI seeks to meet a congressional mandate to create “a competitive retail market for navigation devices for use with multichannel video programming distributors (MVPD).”  The FNPRM proposes changes to the current CableCARD system to make it more consumer-friendly while a new technology approach is being developed. 

“Installation and support for a CableCARD used in a retail device would cease to be more inconvenient than for one used in a leased device. And cable operators would be required to offer CableCARDs that enable a retail device to record one program while displaying another,” commented FCC Chairman Julius Genachowski. “These simple changes, which we aim to implement promptly, should have a direct and immediate impact on effectiveness of the CableCARD regime while we work on its replacement.”

He continued, “Specifically, we introduce the concept of an adapter that could act either as a small ‘set-back’ device for connection to a single smart video device or as a gateway allowing all consumer electronics devices in the home to access multichannel video programming services. Unlike the existing cable-centric CableCARD technology, this adapter could make possible the development and marketing of smart video devices that attach to any MVPD service anywhere in the United States, which could greatly enhance the incentives for manufacturers to enter the retail market.”

According to the commission, because subscribers are getting their video content from multiple sources, including MVPD services, the Internet, DVDs and over-the-air broadcasting, the NOI will gather public comment on “ways to foster a more competitive marketplace for navigation devices and in particular calls for comment on a standardized interface that enables smart video devices to bring video from all of these sources together for ease of selection, recording, and viewing.”

As such, a standardized interface could be implemented through an “AllVid” adapter that would act as an intermediary between the consumer’s device and the MVPD’s service, and a service provider could innovate within its network to improve its services without requiring replacement of the consumer’s home devices. In addition, subscribers could switch from one provider to another without having to buy new proprietary hardware.

On the other hand, “the FNPRM proposes to remedy shortcomings in the existing CableCARD system to provide consumers with better service in the interim before the new ‘AllVid’ approach is in place,” the FCC said. “In order to remove the disparity between consumers who choose to use a retail CableCARD-equipped video device and those who lease a cable provider’s video navigation box, the proposed interim measures would ensure that retail devices have comparable access to video programming that is prescheduled by the programming provider, make CableCARD pricing and billing more transparent, streamline CableCARD installations and clarify certification requirements.”

This fourth FNPRM dealing with CableCARDs also proposes the following rules:?
•    That equivalent prices be charged for CableCARDs for use in cableco-provided set-top boxes and in retail devices;
•    That CableCARD billing be more transparent;
•    That the CableCARD installation process be simplified;
•    That cable operators offer their subscribers CableCARDs that can tune multiple streams; and
•    That the CableCARD device certification process be streamlined.

In a statement following the meeting, Commissioner Mignon Clyburn wrote, “By unveiling today’s NPRM and NOI concerning navigation devices, the Commission is taking important steps towards retooling a set-top box regime that has long been broken. Just one measure of this failure is the fact that, since July 1, 2007, cable operators have deployed more than 18.5 million leased devices pre-equipped with CableCARDs, compared to only 489,000 CableCARDs installed in retail devices connected to their networks. The proof, as they say, is in the pudding…We must engage with industry and listen to consumers in order to develop more effective preconditions to an environment in which navigation devices can flourish at the retail level.”   

Added Commissioner Meredith Baker, “As we consider a long-term solution, I hope that we recall valuable lessons from the CableCARD regime. First, our technological mandates come with significant costs.  By one estimate, the cost of CableCARD compliance for the cable industry alone – costs passed on to cable consumers – has totaled nearly $1 billion.”
 
Baker also noted the flip side of new set-top innovation: “We should be mindful that not all consumers want the latest technology: over 100 million televisions in cable households today are not connected to a set-top box at all. Consumers may also prefer certain conveniences – lower upfront costs, ease of installation and upgrade – that come with leasing devices.”

Industry reaction to the new FCC initiatives came quickly, with NCTA President and CEO Kyle McSlarrow commenting, “We applaud the Commission for adopting a Notice of Inquiry that will explore how best to achieve a competitive retail marketplace for devices that can access the video services of all multichannel providers…We also welcome and applaud the Commission’s targeted examination of the current CableCARD regime, particularly the proposal to increase our industry’s ability to deploy low-cost, high-definition digital terminal adapters. Low-cost digital adapters are a vital tool for all cable systems to recapture bandwidth that can be used to provide consumers with faster broadband speeds, more HD channels and other interactive services.”

And kudos also came from American Cable Association President and CEO Matthew Polka, who congratulated the FCC for a FNPRM that may end up allowing small cablecos to “provide better service to their customers, including faster broadband speeds, by having greater flexibility under existing set-top box rules to offer low-cost, high-definition boxes.”

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