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FCC Grants Waiver To Evolution's Low-Cost Set-Tops

The Federal Communications Commission on Tuesday granted a three-year waiver to Evolution Broadband for two low-cost set-top boxes that do not include CableCards -- a blanket exemption to the so-called "integration ban" that could pave the way for cable operators to deploy much less expensive set-tops.

The sub-$50 devices from Evolution Broadband covered under the waiver are one-way "limited-capability devices" that provide integrated security, referred to in the industry as digital terminal adapters. The boxes convert digital signals to analog format and don't provide advanced functions like digital video recording.

Under the waiver, Evolution Broadband is allowed to provide the set-top units to any cable operator. The FCC reached the decision May 28 and issued the order Tuesday.

"It's pretty clear -- it's an unlimited waiver," John Egan Sr., chairman of Evolution Broadband, said in an interview with Multichannel News. "It's something the industry should have done years ago."

American Cable Association president and CEO Matt Polka applauded the agency's order.

"The FCC's action will allow small cable operators to take their systems all-digital at a much faster pace because now they can deploy set-top boxes that will cost about $50 instead of several hundred dollars each," Polka said in a statement. "Under this ruling, cable's transition to digital -- which the federal government is not subsidizing as it did for TV stations -- will be far less costly for cable customers in this economically stressful time."

The decision comes after the FCC's May 28 ruling that Cable One, in a single market in Tennessee, would be allowed to deploy a low-cost set-top box capable of displaying HD signals. Cable One said that without a waiver it would need to rely on a CableCard-based HD box with a wholesale price range of $400 to $500.

The FCC's policy of forcing MSOs to use CableCards in their own set-tops, known as "common reliance," is supposed to ensure that the removable cards work in any retail products that conform to the CableLabs-developed standard.

As of March 23, according to the National Cable & Telecommunications Association, the top 10 MSOs had deployed more than 12.35 million CableCard-based boxes to comply with the rule.

Egan said that given Evolution Broadband's waiver and the Cable One decision, it seems clear that an HD-capable box should not be considered an "advanced service" under the CableCard rules - meaning HD-based DTAs could be exempt from the integration ban as well.

The company has developed a sub-$100 device that provides MPEG-2 or MPEG-4 HD support, for which it plans to file for a waiver, Egan added. "It's a game changer," he said.

The FCC's order on Evolution's waiver request is available here:

Evolution Broadband, based in Centennial, Colo., filed for the waiver request in May 2008. The vendor was represented in the matter by Cinnamon Mueller, a Chicago-based law firm.

The Consumer Electronics Association, which lobbied for the CableCard rule to apply to the cable industry, had opposed Evolution Broadband's waiver request because it said the company's DTAs use "new security technologies that are not disclosed or available to competitive entrants" and "cannot be implemented competitively on a nationally portable basis."

Last week, Evolution Broadband announced a partnership with TiVo, to jointly market TiVo-based HD set-tops to smaller operators that have converted to all-digital operation.