CableCards don't appear to be going away anytime soon.
The clunky conditional-access devices that add an estimated $50 to $70 to the cost of a set-top have been deployed by major cable operators in more than 6.2 million digital set-tops since July 2007. That's when the FCC's so-called “integration-ban” rules kicked in requiring operators to separate conditional access from the rest of a set-top's functions.
The industry has been working for years on the Downloadable Conditional Access System, or DCAS, a software-enabled alternative to CableCards. Since the development of that technology has met delays, new digital set-tops continue to be deployed with CableCards.
The cable industry and consumer electronics manufacturers are also working together on an initiative called “tru2way,” which will allow CableCard-compliant retail devices to perform two-way services such as video-on-demand. If tru2way stays on schedule, a bevy of CableCard-compliant devices—and thus, potentially more CableCards—will be hitting the market later this year.
The CableCard was born of government policy, not innovation. The separation of security functions—a process the FCC started back in 2000 to comply with the Telecommunications Act of 1996—was designed to make cable set-tops a viable retail product for use in any cable operator's system, allowing consumers to buy a box for a one-time fee instead of paying monthly lease charges to operators.
It was also intended to create a new category of digital TV sets that don't require a set-top in order to watch premium cable programming or video-on-demand movies.
Cable operators have opposed the integration ban on the grounds that it adds unnecessary costs to the digital set-tops they lease to subscribers without providing any tangible benefit. They also say that adding cost to digital set-tops creates an additional hurdle to ensuring a smooth end to the DTV transition. Cable must continue to carry both standard-definition and high-definition versions of broadcasters' all-digital signals beyond February 2009, when analog broadcasts cease.
While smaller operators have received waivers from the integration-ban rule, major operators like Comcast were unsuccessful in their attempts to do the same, and plowed ahead with deploying set-tops with CableCards. They have also continued to supply CableCards to those subscribers who request them, although that demand has been slight.
In fact, while CableCards began shipping in 2004, it appears they have had little impact to date on the existing set-top model, where digital cable subscribers lease set-tops, usually made by cable equipment giants Motorola or Cisco (and formerly by Scientific-Atlanta, now part of Cisco), for a monthly fee. According to a report given by the National Cable & Telecommunications Association (NCTA) to the FCC, only 372,000 CableCards have been supplied to date by the top 10 operators to customers who requested them. Consumers requested them for digital cable-ready sets or TiVo digital video recorders.
That number is dwarfed by the 6.2 million set-top boxes with CableCards that the top 10 operators have supplied on a leased basis to their subscribers. Those boxes have been shipped to MSOs with the CableCards installed, and then provided to subscribers.
Executives from CableCard manufacturers Motorola and Cisco say the relatively small number of cards deployed in CE products is attributable to their lack of two-way operation for advanced features like VOD and interactive program guides. This has made CableCards a non-starter among consumers, and set-makers have stopped including so-called “unidirectional” CableCard slots in their HDTV sets.
“When you look at the consumer experience, and you look at a one-way device and a two-way device like a set-top, you can see why the CE industry shied away from continuing to make models that are one-way-ready,” concedes Greg Vaeth, product manager for CableCards for Motorola. “On the other hand, now that tru2way is coming out, you would think there would be more interest in providing a retail box.”
Vaeth imagines that supporting tru2way, including CableCard slots, might add $200 to $300 to the cost of a digital TV set. Consumers will have to weigh that investment versus leasing a set-top from their cable provider.
The consumer experience with tru2way could be streamlined by having a conditional access system triggered via an electronic download instead of inserting a piece of hardware. PolyCipher, a Denver-based firm backed by big operators Comcast, Cox and Time Warner, has been working since 2004 on DCAS, which would provide conditional access functionality for watching premium programming.
DCAS was originally supposed to be ready for a national rollout in July 2008. Thanks to delays, it is now unlikely to be commercialized until at least 2009.
Motorola and Cisco, which have been involved in DCAS from the beginning, are taking a larger role in the project, but some conditional access suppliers and cable operators question how motivated they are to roll it out considering their large investment in CableCard.
Widevine, a Seattle-based firm that provides copy protection technology for Internet video as well as software-based conditional access for IPTV operators, is disappointed with the pace of the DCAS process.
“We see DCAS as being at a standstill right now,” says Widevine CEO Brian Baker. “The cable companies continue to be depending on Motorola and [Cisco] to provide a separable security solution, and that continues to be CableCards.”
Baker believes that Widevine already has a software-based solution that would work for the U.S. cable market with its Cypher conditional-access product, currently being used by telcos such as SureWest Communications in the U.S. and Telus in Canada for their IPTV services. Widevine has requested the FCC to formally recognize that Cypher meets the commission's separability requirements via a public notice.
The FCC did issue such a notice in January 2007 for a prototype software solution from Denver firm Beyond Broadband Technologies (BBT). BBT has developed a system that can download any type of conditional access to a set-top, says CEO Bill Bauer. The product has yet to be commercialized, but last week BBT started testing it via a satellite uplink in partnership with Avail Media, which provides prepackaged IPTV and VOD content to Tier 2 and 3 telcos and small cable operators.
How soon DCAS might be ready to deploy is unclear, and cable operators won't speculate on a date. Some suggest the cable industry is waiting for a new presidential administration—and thus, perhaps a more cable-friendly FCC—before rolling out any new separable security solution.
Tony Wasilewski, chief scientist of subscriber network systems for Cisco's Service Provider Video Technology Group, cautions that the cost savings of DCAS versus CableCard may be overstated, as adopting a downloadable security approach would result in higher costs across the network. And even if DCAS were to get done tomorrow, that wouldn't sound the death knell for CableCards. As long as cable operators are providing separable security, they are under no requirement to roll out DCAS.
“We really just don't know,” Wasilewski says. “Even if we have a complete solution productized, it's not clear the MSOs would roll it out.”
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