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FCC Circulates Order Lifting Basic Encryption Ban

According to sources, FCC chairman Julius Genachowski has
circulated an order allowing cable operators to encrypt basic tiers and it is
said to incorporate some accommodations for IP-enabled devices -- like Boxee --
offered up by cable operators to help secure passage of the item.

The commission signaled last fall it wanted to remove the
ban, which cable operators had asked it to do/ Sources suggest the commissioner, Democratic and Republican are generally on board with the order, though a vote is not expected until at least next week.

‌In a July 25
letter to the FCC,
in response to complaints by Boxee and others about the
inability of such devices to access programing on basic tiers once they are
encrypted, the National Cable and Telecommunications Association said that it thought
the concerns were misplaced, but that its six largest members would make a
three-year commitment to ensuring those devices could receive a signal through
one of two options, both pertaining to retail boxes.

According to a source familiar with the order, the FCC did not include a three-year sunset, but instead agreed with the Consumer Electronics Association that it should not be time-limited given that it is a nascent market. The Media Bureau will review the market in two years, though.

Cable ops said they would provide either an adapter with
home-networking capability to decrypt TV signals and pass them through to IP
devices or an encryption solution that would be made commercially available to
third-party manufacturers.

According to an FCC source, the commission has incorporated
the cable proposals into its proposed order, though details were not available.
The source said cable ops have already started asking for meetings next week, which means cable ops may not have gotten everything they
wanted out of the order, like that absence of a 3-year sunset.

While cable ops had offered both hardware and hardware-free
solutions -- it would be the operator's choice and depend on the system -- Boxee
and other consumer device manufacturers were looking for a hardware-free,
long-term solution for third-party devices.

Boxee also said that if the FCC accepted the cable ops'
proposal, it should make compliance an enforceable prior condition of basic
tier encryption, and should ensure that specs for operator-supplied hardware or
technology under either choice be available to third parties, as well as define
a home networking standard that would be available to all on a
nondiscriminatory basis.

In June, Boxee
and Comcast came to an agreement
on an adapter that would let users of
Boxee-based set-tops access encrypted cable programming.

In October 2011, the FCC in proposed allowing cable
operators to encrypt their digital tiers. But as the world is going digital,
with a push from the FCC, the commission proposed scrapping the ban.

The FCC adopted the rule prohibiting cable operators from
scrambling digital basic tiers so that viewers with cable-ready sets would not
have to buy or rent a set-top box. Now, because of the cost savings to cable
operators, the reduction in pollution from fewer truck rolls, theft-of-service
prevention, and the general lack of complaints in markets where the agency had
granted waivers -- most prominently to Cablevision Systems in New York in 2010 --
it was time to lift the ban.

Todd Spangler
contributed to this report.