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NCTA to FCC: Allow Cable Operators to Encrypt Basic Tier

The National Cable & Telecommunications Association has urged the FCC to allow cable operators that have gone all digital to encrypt their basic tier.

That came in comments Monday on the FCC's proposal to do just that. "Given the substantial public interest benefits and the lack of harms associated with encryption, NCTA endorses the Commission's tentative conclusions and urges it to act expeditiously in amending its rules," NCTA said. It added that allowing basic encryption would largely eliminate theft of service, promote innovation and investment, and reduce pollution and fuel consumption by reducing truck rolls to activate or deactivate service (NCTA said Monday that the benefits would outweigh the minimal extra watts consumed by new boxes).

Cable operators also argued that the competition has no similar ban on encryption. "When the encryption rule was adopted in 1994, cable was the dominant MVPD, and there were few competitors," said NCTA. "The situation is dramatically different today. DBS and telco IPTV providers  -- each requiring set-top boxes for each of their subscribers -- serve approximately 40% of the marketplace with all-digital service on a fully encrypted basis. Likewise, online video distributors deliver video to customers on an encrypted basis. Netflix alone has 23.8 million subscribers, more than any MVPD. None of these video providers is barred from encrypting or otherwise protecting the content they provide to their customers."

As B&C/Multi first reported back in October, FCC Chairman Julius Genachowski proposed allowing all cable operators to encrypt digital basic channels, given that the TV industry is going all-digital and that the move would have consumer, environmental and theft-protection benefits.

The commission officially voted Oct. 13 to propose that change and put it out for comment. "We tentatively conclude that allowing cable operators to encrypt the basic service tier in all-digital systems will not substantially affect compatibility between cable service and consumer electronics equipment for most subscribers," the commission said. The FCC has already granted several waivers -- most prominently to Cablevision -- and more are in the hopper from cable operators.

The FCC conceded there was an issue with consumers with basic-only digital who accessed it without set-tops, or second or third sets without digital boxes that would now need new equipment to unscramble a signal. It proposed adopting the conditions it put on the waiver it gave Cablevision to encrypt its basic service in New York.

Those conditions include requiring cable operators to offer "current basic-only subscribers up to two set-top boxes or CableCARDs without charge for up to two years, (b) digital subscribers who have an additional television set currently receiving basic-only service one set-top box or CableCARD without charge for one year, and (c) current qualified low-income basic-only subscribers up to two set-top boxes or CableCARDs without charge for five years."  But it also asked whether this was adequate of whether the Cablevision time frames are appropriate.

NCTA had some tweaks to the language of those conditions, but said it had no quarrel with their substance.