Is the end of ClearQAM near?

On October 20, 2011, the Federal Communications Commission solicited comments to a proposal to eliminate the basic service tier encryption prohibition for all-digital cable systems (http://apps.fcc.gov/ecfs/document/view?id=7021738292). This proposal has created a debate that pits the Goliath cable service providers like Comcast and Time Warner against Davidian consumer electronic device startups led by Boxee.

Legislative Background

The prohibition against encrypting basic service tier cable arose from the Cable Television Consumer Protection and Competition Act of 1992.

Cable system operators shall not scramble or otherwise encrypt signals carried on the basic service tier. Requests for waivers of this prohibition must demonstrate either a substantial problem with theft of basic tier service or a strong need to scramble basic signals for other reasons. As part of this showing, cable operators are required to notify subscribers by mail of waiver requests. (47 CFR 76.630)

Congress’ aim was to significantly advance compatibility between cable service and consumer electronics equipment. Congress determined that the rule would have a minimal impact on the cable industry since most cable systems at that time did not scramble their basic tier signal.

With the transition to digital transmission, program carriage agreements increasingly required cable operators to encrypt their programming to ensure that programming is only available to subscribers who have paid for service.

The proposed rule change will allow cable service providers to encrypt their entire cable programming service tier.

Benefits of Encryption

Cable operators applaud this proposed rule change as an effort to “eliminate outmoded regulations,” that were adopted in a very different television broadcast environment. Cable operators emphasize that the potential efficiency and environmental benefits greatly outweigh any harm to consumers.

The prohibition against basic tier encryption was enacted in a very different television broadcasting landscape from the one that exists presently. In 1992, consumers had free access to 60-80 analog channels on their televisions. Satellite service was in its infancy, telephone companies were not yet providing video services, and consumers did not have the ability to stream video over the Internet.

Today, the digitalization of cable means that only about 20 basic tier channels are available to consumers without a set top box. A very large majority of digital cable customers have some sort of premium cable service which requires a set-top box or CableCARD. Additionally, consumers have been increasingly accessing premium broadcasting through satellite television, their phone companies, and over the internet through services like Hulu. Proponents of the elimination of this FCC rule claim that very few consumers would actually be affected if all digital cable becomes encrypted.

Repealing the FCC’s prohibition against encrypting digital cable will allow cable companies to hasten the transition to all-digital service, improve service quality and reliability, and reduce service change response times and service visits. Digital cable makes possible two-way communication through consumers’ televisions. This provides advanced interactive services to consumers like video-on-demand and interactive program guides.

Additionally, encrypting the entire digital cable spectrum will have the additional benefit of allowing cable service providers to activate and deactivate service remotely without sending a service technician to the activation site. This will theoretically reduce costs for consumers by reducing the number of technicians needed to perform these types of task as well as the associated vehicle costs of transportation for technicians. Reduction of activation trips will have the environmental side benefits of reducing gas consumption and vehicle emission pollution.

Negative Effects of Encryption

Opponents of the encryption plan argue that this just the latest effort by the cable lobby to try to bolster declining cable television subscription numbers.

http://blog.boxee.tv/2012/02/08/cable-companies-want-government-to-help-them-increase-your-bill-limit-competition/

Detractors are quick to point out that there are few advantages to consumers from the promulgation of this proposed rule change. Encryption of the digital signal would inconvenience millions of consumers while producing environmental benefits that are miniscule at best.

Cable Television Consumer Protection and Competition Act established a policy that the United State government wanted broadcast channels to be freely available. This proposal would be a divergence from that policy without a necessarily compelling reason to do so and it would create new challenges for consumers to economically receive the broadcast channels on their televisions.

This proposed rule change will mean that televisions that connect directly to cable antennas, devices like Boxee, tv-tuners built into computer video cards, and numerous standalone tv-tuner boxes will no longer be able to get broadcast channels if they will be able to work at all. While data on how many consumers actually use these devices is murky since cable companies do not track ClearQAM use, it is estimated that there are millions of such devices in use. Industry groups have suggested that many consumers use devices that rely on ClearQAM in addition to premium cable service subscriptions that rely on cable decoder boxes or CableCARD devices.

Additionally, detractors claim that the proposed cost savings to consumers and environmental benefits are merely illusory. Encrypting the basic service tier will force consumers to purchase additional set top boxes, costing consumers hundreds of dollars a year in equipment rental fees, and earning cable companies millions of dollars in additional revenue.

Cable service providers advocating for this proposed rule change tout the cost savings and environmental benefits of requiring fewer service technicians to go on-site to activate and deactivate cable service. Advocates for the status quo argue that the reduction of service calls will be minimal since many of the major cable service providers, including Comcast, TimeWarner Cable, Charter and Cox, already offer self-install kits. Moreover, the set top boxes that cable companies rent out to subscribers to decode cable signals actually consumer more energy than ClearQAM alternatives such as video cards and devices like Boxee Live.

To view the FCC proposed rulemaking and public comments: http://apps.fcc.gov/ecfs/proceeding/view?name=11-169

To add your own comment:

http://apps.fcc.gov/ecfs/upload/display?z=11d3j

(Proceeding 11-169)