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CEA Calls NCTA Encryption Proposal 'Utterly Insufficient'

The Consumer Electronics Association said the cable industry's proposal for the six biggest MSOs to let IP-based devices access encrypted programming via low-cost adapters or licensed technology is fundamentally flawed.

Last month, the National Cable & Telecommunications Association floated a proposal with the Federal Communications Commission to let third-party devices access encrypted basic-tier programming. Cable operators want the agency to lift the 18-year-old ban on encrypting basic cable as they look to cut theft of service by broadband-only subscribers.

Under the NCTA proposal, the six largest U.S. operators would provide either an IP-based adapter for decrypting TV signals for no charge to subscribers or would license the relevant content-security technology to manufacturers. The trade group suggested the commitments last for three years and recommended that other cable operators beyond the six biggest MSOs also be permitted to encrypt the basic tier.

But the consumer-electronics industry wants much firmer concessions before it's willing to let MSOs fully flip the crypto switch.

The CEA, in a filing this week with the FCC, complained that the NCTA's proposal does not define the devices or interfaces; that the MSOs' licensing and certification commitments are "lacking or insufficient"; and that the three-year sunset makes the options unworkable for competitive device entry.

"CEA recognizes and has no desire to impede the transitions of cable operators to digital distribution and IP-based interfaces," the association said in a July 31 filing. "We continue to insist, however, that the necessary changes to FCC regulations should be forward as well as backward-looking."

The FCC's proposed elimination of the encryption ban for cable operators with all-digital systems elicited complaints from companies including Boxee, which argued that its Internet set-top box relied on unencrypted, clear QAM digital cable programming.

In June, Comcast and Boxee worked out a deal, which served as the template for the NCTA propsal. Under that agreement, Comcast is developing an adapter that would let users of Boxee-based set-tops access encrypted cable programming, along the lines of what the NCTA proposed in the first option. A long-term solution proposed by Comcast and Boxee involves licensing digital transport adapter (DTA) technology into third-party devices.

Boxee, in ex parte comments filed Monday, said it was "pleased" that the six largest cable operators were taking steps to enable access to encrypted programming, but that the commitments "fall short of being a comparable successor to Clear QAM." That's because the NCTA proposal lacks a long-term commitment that the solution be hardware-free and that operators outside the six largest would not be held to the same obligations, Boxee said.

The FCC in 1994 adopted the rule prohibiting cable operators from scrambling their digital basic tiers so viewers with cable-ready TV sets would not have to buy or rent set-tops.

The CEA, which has continuously lobbied the FCC to make cable TV accessible via cable-ready set-tops, televisions and other devices sold at retail, said it agreed with Boxee that the offer of an undefined and limited version of an interface to access encrypted cable programming available for only three years "makes no sense."

The FCC, in allowing DTAs to be exempt from its integrated set-top ban in 2010, opted to not require that DTAs include an IP interface, the CEA noted. "The Commission, in effectively granting a blanket waiver, never required operators to document the purported cost of providing this interface. Now, in the context of a rulemaking to save operator costs by allowing basic tier encryption, the FCC should not repeat its mistake," the CEA said.

If the FCC does change its rules to allow basic-tier encryption, "it should also, in the same rulemaking, terminate its exclusion of DTAs" from the integrated set-top ban, the CEA said.

The NCTA's position is that the requirement is outdated -- and puts MSOs at a competitive disadvantage relative to satellite, IPTV and online video distributors.

"The fact is that encryption is ubiquitous in the video marketplace," NCTA president and CEO Michael Powell said in a July 25 letter to the FCC. "There is no valid basis for continuing to hold back cable innovation in today's dynamic and competitive marketplace."

In addition, allowing MSOs to encrypt the basic tier for all-digital systems would reduce truck rolls and encourage the adoption of new services such as higher-speed broadband services, according to the NCTA.

Meanwhile, the FCC has a separate proposed rulemaking, issued in April 2010, dubbed "AllVid," that would require all pay-TV providers to conform to a standard technical way of making video programming available to third-party devices.

The AllVid proceeding remains technically open, but several sources said the idea is all but dead after opposition from the NCTA and satellite operators. Pay-TV providers say such a regulation would impose significant costs even as they open up their services to an array of IP-based devices through business deals.

"Given the advent of smart TVs, it's harder for CE to argue that the cable operator needs to modify its set-top or other connection," said a communications lawyer who asked to remain anonymous.