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CABLE COULD CALL HORSEPLAY Broadcasters Eye Pay TV Services

The broadcast community is working to create encryptionstandards that would allow them to scramble digital standard-definition signals and tocharge viewers for unscrambling those signals.

Such standards leave open the possibility that broadcasterscould compete directly with cable operators for subscription or pay-per-view programming.

Facing political heat in Washington, D.C., manybroadcasters have been shy about stating their desire to choose pay TV services overhigh-definition television. Some will likely do both.

At the request of Fox Broadcasting, according to industrysources, the Advanced Television Systems Committee has quietly set up a subcommittee todevelop on open standard, National Renewable Security Standard, for digital terrestrialencryption in the United States.

The Broadcast Conditional Access Subcommittee, dubbed T3S8,is expected to introduce a draft standard later this spring. Committee membership --including television manufacturers, encryption-technology companies and broadcasters --will vote on the draft before sending it on for a vote from the full ATSC membership.

Charlie Jablonski, vice president of broadcast and networkengineering for NBC Television, said the network participates on the ATSC committee, but"we don't have a lot of skin in the game." Because NBC doesn't have ahuge movie library, he said, it does not have immediate plans for a premium multicastservice.

Jablonski said he wants to see the standards kept open andeasily accessible to all broadcasters.

In fact, it's too early to say whether the standardswould be finalized in time to be included in the first digital-television models, whichare due out by the end of the year, although it appeared unlikely to some observers.

If not, television manufacturers may be able to update theencryption system through software upgrades over satellite or telephone lines.

Thomson Consumer Electronics plans to develop a digitaltelevision that handles the direct-broadcast satellite demodulation format, called QPSK(quadrature phase shift key), as well as the VSB (vestigial-sideband) demodulation thatbroadcasters will use for their digital-TV transmissions.

Thomson has said that it will include Digital SatelliteSystem receivers in its first digital televisions. DSS uses a separate encryptiontechnology than what is likely to be chosen as the broadcast conditional-access standard.

The new digital televisions would give DirecTv Inc. animmediate tie to the local TV programming that it needs to bolster its service mix, whilegiving broadcasters a way to approach a pay model for some of the digital channel capacityallocated to them by the Federal Communications Commission for digital broadcasts. The FCChas stated that broadcasters must deliver at least one free digital channel.

Cable executives said such liaisons between DBS companiesand broadcasters could unfavorably taint what is already shaping up to be a messy scenariobetween cable and broadcasters, particularly in light of possible retransmission-consentand must-carry legislation.

"If broadcasters align themselves with DBS,they'll kill themselves with cable," said one MSO executive, speaking onbackground.

The encryption standards could also be fraught with myriadtechnical issues that appear difficult to resolve, executives said.

Unless the broadcasters agree to a singlebroadcast-encryption system, "people could have to switch [security-access] cards inand out" when they change channels, said Jeffrey Krauss, president ofTelecommunications and Technology Policy, a consulting firm based in Rockville, Md.

According to Beth Erez, director of corporate strategicplanning for conditional-access company NDS Ltd., the ATSC is committed to open standards.

"Nobody's really sure what's going tohappen," Erez said, "but people are trying to find ways to make the new standardinteroperable."

The technology needs to be interoperable not only among thedifferent broadcasters that might implement it, but also with digital-cable andsatellite-encryption systems.

Erez said there's some concern that it will be muchmore expensive to make digital televisions compatible with three separate encryptionformats -- cable, broadcast and satellite -- than for just two of those.

Complicating matters somewhat are the facts that there arenow three separate encryption standards for DBS in the United States, and that theOpenCable format has not yet been implemented.

Another technical snafu could come in theconditional-access piece because of questions related to how different broadcastersauthorize a consumer to receive a scrambled channel. Even given open standards forbroadcast encryption, broadcasters would need to negotiate business deals to make thesystem work.

A senior cable executive, who asked not to be identified,said Fox and ABC could be forging ahead with their own new arrangements as a way topre-empt the open standards and to go after a de facto method instead. Under thisscenario, the executive said, News Datacom would provide conditional-access and controltechnology

"There are serious operational challenges here thatare not obvious and not easy to figure out," Krauss said. "It could turn outthat they'll all get together and agree on a way to make it work, and then again, itcould work out that they'll spend a lot of money on it and find out that itdoesn't work."