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Low-Cost Cable HD Boxes: Who Is Harmed, Exactly?

There continues to be perplexing logic employed by consumer-advocacy group Public Knowledge in its fight against the cable industry’s request to be allowed to provide low-cost HD boxes to their subscribers.

Cable operators want to be able to use inexpensive HD digital terminal adapters that have integrated security, in an exemption to the FCC’s separable-security rule mandating CableCards in operator-supplied set-tops. Such a waiver would let operators more quickly reclaim analog spectrum and deliver HD services to more subscribers (see Comcast, NCTA Want FCC To Exempt HD DTAs For All Operators).

Public Knowledge remains staunchly opposed to this.

Why? According to the group’s comments to the FCC filed yesterday: “Creating exceptions to set top box rules that would allow operators to offer high-functioning boxes would undermine any efforts to create a viable consumer market for set-top boxes.”

So let’s get this straight. Public Knowledge’s position is that cable providers must be forced to deliver a more expensive solution to their subscribers, so that those consumers will therefore… have an incentive to buy an even more expensive TiVo HD DVR or similar product at retail.

That actually sounds completely anti-consumer to me.

This only harms the vast majority of cable customers who prefer to lease their set-tops from their provider. Meanwhile, after forcing operator-supplied HD boxes to be more costly by including CableCards, Public Knowledge can claim that competitive third-party solutions are needed because, gosh, look how expensive it is to lease an HD box from your cable company!

But check this out: Public Knowledge also claims that the FCC’s previous waivers for standard-definition DTAs, granted to Evolution Digital, Motorola, Cisco Systems, Pace and others, have “injured companies who, in good faith, invested in developing compliant set top boxes with the intention of bringing them to market.”

What is that about? It’s a reference to IPCO LLC, an entity that has claimed it’s trying to sell CableCard-compliant equipment to U.S. cable operators. Public Knowledge previously asserted companies like IPCO would “go bankrupt” as a result of the DTA waivers, because the pricing of IPCO’s allegedly FCC-compliant solution would be undercut.

IPCO now claims it has developed an HD DTA system of its own that uses an Arris digital headend, as described in an April 6 FCC filing. While IPCO has never manufactured or sold any set-top boxes anywhere in the world, the company continues to claim it can offer HD DTAs for less than $75 that comply with the FCC’s integration ban. However, that price point is apparently only possible because the separable security module is “only required for premium service subscribers”; to encrypt cable HD channels, an operator would need to pay extra for a CableCard.

Meanwhile, IPCO owner Jim Gee asserted his company owns a patent that covers “relevant and material” aspects of CableCard and CableLabs’ Tru2way technology. IPCO was described as “shell entity that owns and manages a portfolio of intellectual properties owned by Mr. Gee” according to documents filed in IPCO’s 2007 dispute with Alaskan cable operator General Communications Inc. (GCI), which had sent a cease-and-desist letter to Gee after he attempted to trademark “GCI” for one of his companies, Global Cable Inc.

I’m not sure whom Public Knowledge is trying to protect from being “injured” with its opposition to the cable industry’s HD DTA waiver requests, but it doesn’t seem to be U.S. cable subscribers.