Stepped Up Cable Lobbying for Encryption Comes as FCC Works on Order

Media Bureau staffers continue working on a draft order that would likely allow encryption, and may not make operators set up radio-frequency traps that Boxee and other clear QAM equipment makers seek so gear keeps working (CD Feb 22 p6), FCC and industry officials said. They said the bureau’s work had been slowed by the concerns from Boxee and others. Hauppauge Computer Works and Really Simple Software had also opposed encryption. A bureau spokeswoman declined to comment.

The FCC’s decades-old rule that the basic tier not be scrambled is a “relic” and the type of regulation the Obama administration has sought to eliminate, the cable-operator CEOs wrote (http://xrl.us/bmwmxk). “Encryption is ubiquitous in the video marketplace” given all DBS and IPTV “providers encrypt all of their programming, and the same is true for online video distributors,” said the CEOs of Bright House Networks, Cablevision, Charter Communications, Comcast, Mediacom, RCN, Suddenlink, Time Warner Cable and others. “Each day that passes without Commission action delays the significant benefits that will come from the Commission’s proposed rule change” because bandwidth is freed up in all-digital systems for faster broadband speeds, more HD channels and more VOD content, they said. “For the very small percentage of customers in all-digital systems who receive basic tier services without equipment, we have made clear our support for transitional equipment measures to help ease the potential impact” by offering set-tops or CableCARDs, the executives said.

That’s not enough for Boxee. “They're not making any new arguments,” CEO Avner Ronen said of the letter. “That it was signed by all the CEOs doesn’t make the argument any better.” FCC approval of encryption “would go against all those tenets at once” of the agency’s mission to look out for the public interest and consumers, Ronen said. Operators want to “increase revenue” at a time when the industry isn’t adding many subscribers by renting set-tops to customers, he said. “It is not the role of the FCC to help them fight competition -- it’s the other way around.” For clear QAM devices to continue to work isn’t “propping up our business model” as cable operators contend, he said. “This is not something that we benefit from -- it’s something the consumer benefits from, and it’s something the cable company benefits from, because they charge much more than they pay in basic” programming fees for that tier, Ronen said of Boxee Live TV users who get that content from operators. “QAM is something that’s been sanctioned by the FCC ... for years."

Powell spoke with Genachowski to slam Boxee’s arguments, a filing showed (http://xrl.us/bmwmyd). “Boxee has several alternatives for obtaining broadcast content, including improving its customers’ ability to receive over-the-air broadcast signals and/or adding CableCARD functionality to their devices,” it said. It’s “unreasonable” for Boxee to try to “lure away cable’s customers by asserting that cable delivers an inferior service” so they should get the CE product, “while at the same time petitioning the government to prevent cable operators from modernizing their networks,” the association said.

For Public Knowledge, “encryptions with safeguards are the way to go,” Feld said. “We do think that you ought to move forward” and the commission should begin a proceeding for advanced set-tops to have a standard, non-proprietary home-networking port, he continued. “I don’t think the Boxee concerns have been dealt with, but our feeling is there ought to be a solution to this problem that isn’t clear QAM forever or traps,” Feld said. “Barring somebody coming in with a last-minute offer, we have reached a point where the commission has a record in front of it, the parties have had a chance to do their filing, if nobody is going to say anything new, then the commission has enough information to make a decision.”