FCC AllVid Rule Would 'Ban The Set-Top As We Know It': Analyst

The Federal Communications Commission's proposed AllVid spec for providing a common way to access cable, satellite and telco TV services would, if enacted as a regulation, "ban the pay-TV set-top box as we currently know it from the U.S. market," according to IMS Research senior analyst Stephen Froehlich.

"Such a ban would directly affect more than 40 million set-top box shipments and $4.7 billion worth of sales annually," Froehlich wrote in a research report.

On the other hand, such an FCC rule could "significantly decrease" the overall cost of customer-premises equipment for pay-TV operators by forcing them to migrate to standardized IP-based gateway architectures, in Froehlich's analysis. Furthermore, if the FCC's AllVid regime no longer required cable set-tops to include both CableCard and FireWire (IEEE 1394) components, that would eliminate about $600 million per year in set-top box costs for the cable industry, he added.

The FCC last week issued a "notice of inquiry" concerning its proposal to require U.S. cable, satellite and telco TV operators to supply all their customers a device or gateway -- capable of delivering as many as six different IP video streams to TVs, DVRs or other equipment in the home -- beginning no later than the end of 2012.

The commission suggested IP and 100-Mbps Ethernet as the communications protocol and physical-layer interface, respectively, for AllVid. However, the FCC also is seeking comment whether Multimedia over Coaxial Cable (MoCA) or other network technologies could serve as the link between AllVid adapters and retail navigation devices or whether the FCC would need to mandate a physical-layer technology at all.

According to Froehlich, the big winners from an AllVid requirement would be makers of "no-new-wire" networking interfaces, such as Broadcom, Entropic Communications, CopperGate Communications (owned by Sigma Designs), Atheros Communications, DS2 and other makers of Wi-Fi chip sets.

Major set-top box vendors affected if the proposed rule is enacted include Motorola, Cisco Systems, EchoStar, Technicolor, Pace, Humax and Samsung.

The FCC proposed that AllVid devices incorporate the Digital Transmission Copy Protection over IP specification (DTCP-IP) for encryption and authentication. DTCP-IP is used by the Digital Living Network Alliance (DLNA) standard and has been approved by CableLabs.

If the new regulation allowed operators to deliver a user interface over a standardized remote protocol, such as the RVU Alliance's remote user interface technology, "the general trend will be that the value-adding functions will move from the MPEG decoder to the broadband gateway or to servers on the 'cloud,'" Froehlich wrote. In that case, he said, AllVid gateways would reduce the overall cost of CPE by minimizing the number of MPEG decoders and associated intellectual property fees per TV.

However, "the total financial impact of the new FCC rule depends both on its details and future innovation," Froehlich cautioned, noting that specific numbers about the cost of an AllVid-compliant gateway or device are speculative at this point.

The total cost of AllVid will depend strongly on whether it introduces support issues that require truck-rolls, Froehlich said: "The FCC could word regulations in such a way that a massive finger-pointing game ensues anytime there is a problem with the system."

Meanwhile, AllVid could create an even bigger hardship for certain other pay-TV distributors. For example, AT&T's U-verse TV service as it is currently implemented is not able to deliver six full video streams to a subscriber household, as the AllVid gateway requirements are described in the FCC's notice of inquiry.

IMS Research, based in Wellingborough, U.K., with offices in Austin, Texas and Shanghai, China, is a supplier of market research and consultancy services on a range of global electronics markets.