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Chris Llana, Editor


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Verizon Says "Me Too" on CableCARD Waivers

July 16, 2006

With Comcast's CableCARD waiver petition still pending, Verizon has asked the FCC for a similar exemption from the set-top box integration ban.

The July 2007 integration ban will prohibit new "cable" set-top boxes that contain both the security function (what CableCARDs do) and the navigation function.

The "security" function is properly the domain of the video service provider, as it controls what channels the customer can watch (those that they have paid for). It also functions as gatekeeper for other services, making sure the proper fees have been paid.

The "navigation" functions, on the other hand, control how the customer uses all of the services. If these two functions are split apart, then the navigation functions can be handled by the TV set itself or by a competing third-party set-top box that may be more capable or innovative or cheaper than the one offered by the cable company, or now, by the telephone companies that are getting into the video programming service. The government has decided that the STB market needs more competition--hence the integration ban.

It seems that everyone these days wants to bundle services--telephone, high-speed data, and video--and it seems that all of them want their customers to use their proprietary set-top boxes. Gives them more control, and provides an inducement for one-stop shopping.

Verizon has been building out a multi-billion dollar fiber-optic cable network since 2004 for its budding "FiOS" video-and-other-stuff service. It's now in 50 localities in seven states, and will be available to more than six million homes by the end of the year.

That fiber-to-the-premises (FTTP) network runs ultra-high-bandwidth fiber-optic cable all the way to customers' homes (versus the hybrid fiber-optic systems that switch over to twisted pair copper wires for the final run to customers' homes).

Verizon has also been lobbying Congress hard for national franchise legislation that would let it bypass separate negotiations with the 40,000 or so local governments that now license cable providers. AT&T has also joined the fray.

Verizon is arguing that it should be exempt from the integrated STB ban because of the stated government policy to encourage new competition for video service providers (i.e. competition with cable companies).

While this is a commendable and much needed goal, competition in the market for cable set-top boxes may end up being a casualty.

The Comcast petition argues that its waiver request be granted and applied not only to three specific set-top boxes (STBs), but also to those STBs that evolve from those. It further suggests that the waiver should also be applied to similar STBs used by other cable companies (eg. Time-Warner).

If Verizon's STBs are also exempt, the much-delayed integration ban would be gutted, and consumers would continue to be stuck with the cable company's set-top box (or the telephone company's STB).

Verizon describes its service offerings (besides TV programming) as "innovative," "brand-new," and "important."

What are they? Well, they give as an example: "widgets." These would be similar to Apple Computer's "Dashboard" application that sends mini-applications called widgets up on the screen at the push of a button. Verizon cites a weather widget; push a button and get an instant weather report on your screen.

It seems to me there must be more important, innovative services than that to justify a waiver. I guess we'll have to wait.

The provision in the law that calls for waivers says that if a multichannel video programming provider makes "an appropriate showing" that a waiver is necessary "to assist the development or introduction of a new or improved" service, then they get a waiver.

Verizon has to say what it has to say. Yep.

Verizon says it has CableCARDs, but a software solution to the security function is under development. Instead of spending money on more capable CableCARDs, all its efforts and resources should be put into expanding its network and developing the software fix.

Remember, this downloaded software security is supposed to replace CableCARDs.

It's true that the software solution (called DCAS--downloadable conditional access system) has been in development. It's also true that negotiations are not going anywhere because of rampant industry disagreement.

The DCAS that the cable companies are advancing is at odds with what the telephone companies say they need and at odds with the computer companies' vision.

Verizon says the FCC needs to step in and encourage the development of an "truly interoperable" and "open" DCAS that will benefit all video providers.

They give four general principles:

  1. Open DCAS must utilize a non-proprietary chipset based on standards developed in an open forum;

  2. Open DCAS must use a transport-agnostic solution such as IP over ethernet for the return path, rather than a technology that favors any particular type of network architecture such as DOCSIS [cable industry practice via coax cable (wire), etc. versus glass fiber];

  3. Under Open DCAS the root trust authority must be competitively neutral and not beholden to any particular competitor or group of competitors; and

  4. DCAS standards must be limited to the hardware and software truly necessary for conditional access support, and must not require provider consumer electronics manufacturers to implement extraneous, unrelated technologies.

Well, accomplishing all of that (getting all the competing parties to agree on something) is going to take a heap of time. Wouldn't be surprised if we're all stuck with leased set-top boxes for awhile.

Brave new world we're getting into. The FCC has its work cut out for it. Stay tuned for the next exciting episode!