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ACE Waiver Yields Retail Sale Of 202 Set-Tops

An FCC waiver that granted Adams Cable Equipment (ACE) permission to sell refurbished set-top boxes with integrated security has not yet come close to the supplier’s 50,000-unit limit.

According to a report filed with the FCC on July 3, ACE said as of June 30 it had sold 850 integrated set-top boxes at wholesale to participating cable operators and just 202 integrated boxes to retail customers of those cable operators.

ACE said the retail set-tops were sold for an average price of $53.35, noting that it recently lowered prices in an attempt to boost retail sales. It currently lists the standard-definition only Motorola DCT-2000 model (pictured above) for $29; the DCT-6200 HD box for $39; the digital-only/SD DCT-700 model for $89; and two HD/DVRs (the DCT-6412 and DCT-6416) with integrated security for $89 and $199, respectively.

The FCC granted the waiver last July, giving ACE the ability to sidestep the Commission’s 2007 integrated set-top security ban for up to 50,000 refurbished set-tops in ACE’s inventory. ACE successfully argued to the FCC that selling refurbished integrated security boxes would give cable operators an alternative to using one-way Digital Transport Adapters, which are not subject to the ban, to facilitate their all-digital transitions. ACE has since petitioned the FCC to expand the waiver to cover up to 200,000 older boxes with baked in security.

ACE acknowledged that it was tardy in providing this batch of data to the FCC. The Commission’s waiver order required ACE to submit an initial report within six months and ten days of the first sale of integrated boxes made based upon the waiver. ACE said it made its first sale pursuant to the waiver in August 2013, meaning it should have filed the report in February 2014. “ACE sincerely regrets its oversight in failing to submit a timely report,” the company told the FCC. “ACE moves that its second  report include data through December 31, 2014 and be submitted no later than Monday, January 12, 2015.”

ACE likewise said the current results back up its original argument that there’s “no countervailing harm to the public interest” to the waiver, “as the small scale of these sales poses no threat to the cable industry’s common reliance on CableCARDs. Therefore, the waiver should not be terminated and ACE should be permitted to continue its experiment in this new means of providing navigation devices to consumers.”

The FCC originally implemented the ban to spur a retail market for set-tops using separable security, notably via the CableCARD security module. But the numbers clearly show that the CableCARD has failed to produce a sizable market for retail cable set-tops and cable-ready TVs.

According to the National Cable & Telecommunications Association’s latest report on the topic, the nation’s top nine incumbent cable operators have deployed more than 47 million MSO-supplied set-tops with CableCARDs, and just over 616,000 CableCARDs for use in retail devices, such as TiVo DVRs.

The NCTA has repeatedly called on the FCC to end the set-top ban. Last fall, Reps. Robert Latta (R-Ohio) and Gene Green (D-TX) introduced  legislation  that aims to “remove the unnecessary and costly” set-top security integration ban, putting forth an FCC estimate that the mandate has cost cable operators and consumers more than $1 billion.

Additionally, the Senate Judiciary Committee recently marked up and passed a version of legislation reauthorizing the Satellite Television Extension and Localism Act (STELA), now being called the Satellite Television Access Reauthorization Act of 2014 (STARA), that seeks to eliminate the FCC’s integration ban, though the current draft would retain the FCC’s power to reinstate the ban on any successor to the CableCARD regime.